In our blog post about how we expected the 2017 Earlybird Business Class and Premium Economy Specials to Europe to unfold, we explained that the start of the Earlybird season generally marks a reset of discounts to the lowest levels. From there, we predicted that as the specials expired we would see a gradual increase in prices as we got closer to peak travel times. This has played out as expected with prices increasing - and there have been interesting developments along the way.
Competition from Qatar Airways
Qatar Airways' arrival in the New Zealand market has provided Business Class travellers to Europe an exceptional product at remarkable prices. When it launched, Qatar Airways was very aggressive in keeping its Business Class prices below its direct competitors with routes via Middle East to Europe (Emirates and Etihad) and this has continued.
Although in some instances a cheaper Business Class can suggest lower quality, that is not the case with Qatar's Business Class. We see its current pricing strategy as establishing market share in New Zealand (and sometimes "putting the boot" into Air New Zealand).
Qatar Airways, and other airlines that started the 2017 Earlybird season with very low airfares such as Cathay Pacific, are now increasing Business Class airfares as we get closer to peak travel season for Europe.
Capacity vs. Expectation
With so many new airline entrants into the New Zealand market, and existing carriers adding capacity to routes between New Zealand and Europe, there has been speculation that Business Class airfares to Europe with established airlines would start to fall in 2017. There are two reasons we felt this was unlikely to happen.
Firstly, if travellers see prices comes down during the Earlybird sales, it can create an expectation of further price reductions. Travellers may then hold off buying their tickets in the hope of getting them even cheaper in the future. This leaves the airlines with empty seats for longer - something they want to avoid.
Secondly, undercutting earlier specials really annoys clients (and their travel agents!) who book early on Earlybird specials thinking they have secured the best price for what they want. This undermines confidence in specials as they are released and creates "badwill" towards the airline.
Ultimately the airlines' bottom line will dictate their pricing decisions, but at this stage, while we have seen airlines extending special offers to Europe, so far we have not seen earlier specials being undercut by the major airlines.
What do we expect next?
Although we don't expect a sudden end to all discounted Business Class flights for 2017 travel to Europe, for established carriers like Air New Zealand, Singapore Airlines, Qantas and Emirates we do not expect their Business Class prices to fall below earlier special levels. The same is likely to apply to Cathay Pacific, Etihad Airways and Qatar Airways. From here airlines with capacity pressure are likely to maintain current levels or prices will continue to increase.
As always, although special offers are available at sharp prices, the main challenge is for your Fine Travel Consultant to find the right special booking class on your preferred travel dates. The sooner you start looking, the more likely it is that the special airfares will be available.