Business Class Air Travel Drops In December - IATA

February 18, 2009

Airlines sold far fewer business and first class seats in December, though economy travel in the Christmas period was buoyed somewhat by tickets bought before economic gloom set in, IATA said on Wednesday.

The International Air Transport Association said premium traffic was 13.3 percent lower in December than the same month in 2007, following the 11.5 percent year-on-year drop seen in November.

"This precipitous fall has been driven by the abrupt decline in business activity and international trade around the world," IATA said in its latest Premium Traffic Monitor.

Asia had the largest drop, with Far East flights filling 25.1 percent fewer top-tier seats compared to the year before, said the Geneva-based IATA, which represents 230 airlines.

Singapore Airlines, the biggest airline by market value, said on Monday it was cutting capacity by 11 percent in the year from April due to waning travel and cargo demand.

Overall, December premium traffic fell 8.8 percent in the North Atlantic region, 16.3 percent in Europe and 4.2 percent in the Middle East, according to IATA's data that excludes domestic flights.

Africa was an exception with 11.8 percent year-on-year premium traffic growth in December.

In economy class, the picture was less bleak. Some 5.3 percent fewer people took cross-border flights in December compared to the year before.

"Leisure trips at this time of the year may well have been pre-booked before the full extent of the recession was apparent, so an accelerated fall in economy travel numbers should be expected in January," IATA said.

"With jobs being lost at an increasing rate during January and consumer confidence falling further it seems that the bottom has not been reached for air travel and even weaker numbers may become evidence in the first few months of this year."

For 2008 as a whole, IATA said premium travel fell 2.8 percent while economy travel rose 0.9 percent.

Because economy tickets represent more than 90 percent of all tickets sold, overall passenger numbers on international markets flown by IATA airlines grew 0.5 percent last year.

Although sliding oil and jet fuel prices have given airlines some respite, IATA said weakening passenger and cargo demand has created new problems, causing both fares and yields to drop.

Premium tickets normally make up about 8 percent of total passenger numbers but 15 to 20 percent of revenues. IATA said airlines saw a 20 percent drop in premium revenues in December, which if sustained could cut 3 percent or USD$15 billion from the airline industry's annual revenues.

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