Worldwide premium traffic declined by nearly 17 percent in January, providing further evidence that companies are trading down in class of service, according to International Air Transport Association data released today. First and business class traffic originating in Asian and European markets led worldwide declines, IATA noted today in its monthly Premium Traffic Monitor.
Although year-over-year economy traffic remains down—a trend established late last summer—traffic in the back of the plane has slowly crept up month over month beginning in November, as premium sales continued to spiral downward. "Economy travel has been falling at a slower rate than premium travel, and in fact has appeared to improve a little in the past two months," IATA noted.
As such, IATA said January data show a "slightly slower decline of total passenger numbers," which fell by 5.9 percent in January, compared with 6.1 percent in December. Still, IATA warned that the reversal in course is a "temporary reprieve due to the boost to economy travel given by the Chinese New Year falling in January rather than February. A correspondingly larger decline is to be expected in February."
The international aviation organization said premium traffic pressure was most marked in Asian markets, which witnessed more than a 23 percent decline within Asia and nearly a 25 percent transpacific decline. "What started as a financial crisis in the West has now become a crisis in manufacturing which has caused an unprecedented economic decline in Asian export-led economies," IATA noted.
IATA said European markets saw a more than 22 percent year-over-year decline in premium class use in January, while first and business class traffic on the North Atlantic slid by more than 14 percent.
"There is evidence that business passengers are trading down to cheaper tickets," IATA noted. "Economy travel has been falling at a slower rate than premium travel, and in fact has appeared to improve a little in the past two months."
IATA's analysis jibes with policies increasingly conveyed by corporations seeking to limit travel expenses, in many cases by shifting travelers from business class to coach, according to buyers and travel management company data
(BTNonline, March 16).
IATA estimated that the drop in premium demand, along with flagging fuel surcharges and further drops in average fare, have dented premium revenues among airlines by "at least a quarter" in January. As passenger traffic and revenues fall, U.S. and other airlines have begun to trim international capacity
(BTNonline, March 16).