BUSINESS travellers are going 'budget' and the growing demand has pushed fares of low cost carriers upwards.

A survey by the Hogg Robinson Group (HRG) showed that budget airline fares have risen by 10 per cent in the past year.

Low cost carriers are taking a larger share of the business travel market pie - the number of people travelling on low cost carriers has grown by 33 per cent - or over 12 per cent of the total market.

Economy class of traditional carriers still accounts for the largest proportion of business customers, but their overall share has fallen by 4 per cent to 59 per cent of the market.

As a result, the average cost of economy seats on major airlines has dropped by 5 per cent.

'We are seeing more businesses choose the budget airline option for domestic and some short haul flights,' said Mr Mike Platt, HRG's Group Industry Affairs Director.

On the business class front, ticket prices have gone up by 4 per cent, despite marginal change in the number of travellers choosing this class.

The findings show that first, business and premium economy shares of the market have remained relatively static at 0.3 per cent, 28 per cent and 0.8 per cent respectively.

'It is interesting to see business class ticket prices increasing by almost 4% despite ticket sales remaining static, reflecting the airlines' confidence in the popularity of the business class cabin,' said Mr Platt.

HRG, an international corporate services company, compiled their survey from actual flights booked and ticket rates paid by an indicative sample of over 250,000 business travellers booking from the UK between May 2006 and June 2007.

Top photo: Australian budget airline Jetstar [Photo courtesy of Jetstar]