Premium travel decline continues

PUBLISHED : Thursday, 19 February, 2009, 12:00am
UPDATED : Thursday, 19 February, 2009, 12:00am

Front-end airline cabin traffic is continuing to deteriorate amid an abrupt decline in business activity and global trade, the International Air Traffic Association (Iata) said yesterday.

Business travel continued a steep decline in December, with business and first-class passengers down 13.3 per cent from a year earlier, compared with November's 11.5 per cent slide, Iata said.

Asia continued to be the region most vulnerable to slowing premium traffic even though the global financial crisis originated in the United States and Europe. Premium traffic within the Far East fell 25.1 per cent in December, while on transpacific routes it fell 19.7 per cent, and on the Europe-Far East leg it dropped 17.3 per cent.

Most Asian countries, including China, South Korea and Japan, rely heavily on international trade, and a significant portion of their products is exported to the United States and Europe. In December, export volumes fell 35 per cent in Japan, while Taiwan saw industrial production slide 15 per cent.

Economy travel, at first glance, is less worrisome, with passenger numbers during December falling just 5.3 per cent year on year.

However, since leisure travel was at a peak during December, data for last month, when available, was expected to show an accelerated decline in economy travel, Iata said.

'The bottom has not yet been reached for air traffic, and even weaker numbers may become evident in the first few months this year,' the trade body said.

The accelerating trend in lay-offs across the board and declining consumer confidence would help fuel the tough situation for the airline industry, Iata added.

The weakness of demand combined with excess capacity has resulted in shrinking fares and yields in premium travel.

Average yields, or revenue per seat per kilometre, for premium traffic dropped about 6 per cent in November from a year earlier.

The trade body said premium revenues in December had fallen about 20 per cent below year-earlier levels.

Premium traffic accounts for about 8 per cent of total passengers but 15 to 20 per cent of revenues, Iata said. A 20 per cent loss in premium revenues could translate to a reduction of 3 per cent or US$15 billion in the industry's annual revenues.

Last year, premium traffic travel fell 2.8 per cent, while economy traffic showed 0.9 per cent growth.