Premium air traffic rise boosts trade hope
Airlines report substantial jump in business and first-class air travel in August, which could be an indicator of a recovery in world trade
The sustained recovery in premium air traffic may be a positive sign for world trade growth in the months ahead, the International Air Transport Association said yesterday.
The pickup in the volume of business and first-class traffic, also known as the front-end cabin, meant improved profit margins for airlines.
Worldwide front-end traffic shot up 8.6 per cent year on year in August, driven mainly by the intra-Europe routes and the transatlantic routes. Stripping out the impact of the timing of the Muslim fasting season Ramadan, premium traffic jumped 5 per cent, still above the year-to-date trend of 3.4 per cent, said the association that represents more than 240 airlines.
Premium traffic markets were driven largely by demand for business travel and world trade was a good proxy for business travel, the association said. This was an early positive sign for world trade growth in the months ahead, as well as for business-related premium class travel.
"It's positive news for airlines, especially for the likes of Cathay [Pacific Airways], which has a higher proportion of revenue from the front end," said Kelvin Lau, a transport analyst at Daiwa Capital Markets. "Premium traffic has been declining over the past few years while the sustained growth in premium traffic suggests a cycle recovery in airline business."
IATA projected the demand for premium traffic would continue towards the end of the year.