With Business Class airfares to the UK and Europe at historic highs, we have been looking out for 2023 Earlybird specials or some indication that prices will start to normalise for travel in 2023. On its recent earnings call, Reuters reported comments from Singapore Airlines about passenger yields (a proxy for airfares) and their direction in 2023 which suggest relief may be coming next year.
Earnings and forecast price reductions
The Singapore Airlines' earnings call provided interesting insights into how the airline has recovered in 2022 after surviving the pandemic years. As reported by Reuters:
The airline reported record revenue in the second quarter despite flying only 68% as much passenger capacity as it did in 2019 amid strong pent-up demand for travel during the peak summer season.
After reporting record second quarter profits (Reuters calculated that Singapore Airlines' passenger yields across it group airlines were 32% higher during the quarter than the same quarter in 2019 (i.e. pre-pandemic)) and declaring its first dividend in three years, Singapore Airlines Executive Vice President Commercial Lee Lik Hsin told analysts and media:
"We would not expect yields to stay at the same elevated levels we were at in 2022".
This lines up with what we are seeing on the ground in New Zealand and what we have written about in previous articles - capacity / supply is tight due to the time required to bring aircraft and crew back online, but demand is high which has pushed up prices. As more capacity returns (including from Chinese airlines which we comment on below), and as the post lockdown travel bug subsides, we should see prices start to normalise.
More Capacity via China
In our recent article Are 2023 UK and Europe Business Class Earlybird Airfares Coming, we also commented on the absence of Chinese airlines and the impact this was having on capacity - recent announcements out of China suggest that the restrictions on air travel through China may start to ease. Bloomberg reported on 11 November:
China today took its biggest steps yet to open up since the pandemic began, releasing 20 new rules that will make it easier to travel and live in the world’s second-biggest economy. Major steps included a cut to mandatory quarantine for travelers and a pullback on testing, along with a renewed push to vaccinate the elderly.
The return of airlines like China Southern should make a big impact on prices between New Zealand and the UK and Europe depending on how quickly it can mobilise its fleet.
What does this mean for 2023 UK / Europe Business Class Airfares?
The comments made by Singapore Airlines on its earnings call support the expectation that increased capacity to the UK and Europe in 2023 should lead to prices starting to fall. The timing of this additional capacity coming online, and the flow on effect to prices remains uncertain and should still be balanced against the risk of missing out. Based on what we are currently seeing when booking Business Class and Premium Economy airfares to the UK and Europe our advice is:
Travel in next 4 to 6 Months
If you're planning to travel with one of the major carriers over the next say four to six months (Singapore Airlines, Qatar, Emirates, Lufthansa Group, Qantas) then "a bird in the hand is worth two in the bush". Given the already limited availability any 2023 Earlybird specials are unlikely to affect this period. Falling oil prices may see the base airfare comeback slightly, but the challenge will still be finding the cheapest booking classes due to high demand and limited capacity.
Our suggestion: Contact us now to investigate your flights rather than waiting any longer and missing out / paying more.
If you are thinking of including a cruise holiday as part of your itinerary, it is also a good time for us to investigate 2023 specials.
7 to 11 months
The further we look into the next 11 months the more availability we see of the cheaper booking classes towards the end of the travel range. Whether you commit now, or wait longer will depend on how you like to plan:
If you prefer certainty, and value certainty over the risk of missing out (even if that's at the cost of potentially seeing a cheaper airfare in the future) then you can act now.
If you're open to seeing how things unfold, and potentially seeing more capacity come online in 2023, and that having a flow on effect to prices, but accept that this comes at the risk of missing out on the cheapest booking classes if there are no Earlybird specials / additional capacity during your preferred travel period, then there is some wiggle room to wait - but not much - particularly in peak UK & Europe summer travel periods and travel periods affected by the 2023 Rugby World Cup in France.
As with all crystal ball gazing / forecasts about airfares, there are no guarantees.
2023 Rugby World Cup in France
The 2023 Rugby World Cup kicks off in France on 8 September 2023 and continues through to 28 October 2023. We are already seeing limited availability of the best priced Business Class and Premium Economy airfares over that period so if you are planning to book airfares, we recommend doing so soon.