Premium air travel falls in Dec; weaker numbers feared ahead


Posted at Feb 22 2009 12:45 PM | Updated as of Feb 23 2009 08:41 AM

Fewer people traveled on first-class and business-class tickets in December of last year, with premium travel suffering a 13.3-percent decline from the same period in 2007, according to the International Air Transport Association (IATA).

The number, IATA said, was also lower than November's 11.5-percent decline.

In a report, IATA said Asia led the slump in premium traffic, with travel within the Far East and across the Pacific slashed at 25.1 percent and 19.7 percent, respectively. On the other hand, premium traffic across the Atlantic fell at 8.8 percent, following a 9-percent decline in November 2008.

Premium travel in Europe was down 16.3 percent, with IATA warning of a "renewed deterioration" due to weaker industrial production across the continent.

Last week, United Kingdom flagship carrier British Airways admitted that it was "spending far more than we are earning," burning through 2.7 million pounds ($3.9 million) per day in its operations.

This, the airline said, has been "depleting our cash reserves" with the slump in premium demand.

The Middle East, meanwhile, was the only region to show growth in premium demand last year, with 9.4 percent increase year-on-year, IATA said.

Premium demand to Europe and Asia also increased by more than 6 percent as the region's airlines exploit their geographic advantages. Dubai-based airline Emirates and Etihad Airways, the national airline of the United Arab Emirates, are said to be aggressively expanding their capacity this year.

For December alone, premium travel within the Middle East region dropped 4.2 percent, with routes to Europe and the Far East falling 4 percent and 5.4 percent, respectively.

Race to the bottom

Meanwhile, IATA warned that weaker numbers on air travel may be more evident in the first months of 2009, "with jobs being lost at an increasing rate during January and consumer confidence falling further."

"It seems that the bottom has not yet been reached for air travel," IATA said.

Last year, flag carrier Philippine Airlines (PAL) removed its first-class seats due to low demand. The airline is the country's lone member in the IATA.

This month, PAL reduced its fuel surcharge by $38 on selected international flights from Manila as a response to the recent improvement in world oil prices.