Premium airline growth set back six years by recession, IATA

Premium airline growth set back six years by recession, IATA

Losses seen in the premium air traffic market during the global recession have erased the previous six years of growth in the sector, according to the International Air Travel Association (IATA).

New IATA data reveal the number of premium passengers on international flights grew 1.7 per cent year-over-year in December 2009 - the first year-over-year rise in premium travel since May 2008. However, the longer term picture is considerably gloomier.

The IATA cautioned, even though premium travel has risen 11 per cent since a May 2009 low, December 2009’s levels are still 17 per cent below highs recorded in early 2008.

“With six years of lost growth, there is still a very long way to go despite the strong upturn seen since last May,” explained the IATA.

The Montreal based organisation noted 2009 was a year of two distinct halves, with the final stages of a severe recession impacting the first half and then the post-recession upturn taking hold in the second.

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May 2009 marked the low point for premium travel, when numbers were 25 per cent down on early 2008 levels.

The IATA argues, however, should passenger numbers recover, this may not represent the panacea desperately sought by the airline industry; questioning if recent falls were “a structural shift or a cyclical fluctuation”.

“The decline may have been cyclical (and we did see a similar 25 per cent fall in 2001 and a larger 35 per cent decline in 2003) but it is revenue that matters for an airline, and there are more grounds for thinking that there may have been a structural decline in yields from premium seats,” argued the IATA.

“Average premium fares are still 20 per cent lower than they were in the second quarter of 2008.”

The data was released in the IATA’s monthly Premium Traffic Monitor.

Finally, there are also regional differences in the premium market upturn. Routes covering the Far East were up 14.5 per cent in December 2009 while South Atlantic premium travel rose 7.7 per cent.

In contrast, North Atlantic premium travel was down 1.1 per cent year-over-year over the same period, largely owing to “large capacity cuts on both sides” and “weak economic recoveries” in the US and Europe compared to Asia.