IATA premium traffic falls 22% in April

Washington DC
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IATA has reported a 22% fall in premium traffic for April year-over-year despite a 20% drop in average premium fares.

The latest figures follow a 19% decline during the first quarter, according to IATA's premium traffic monitor.

"A distinct feature of this exceptionally severe downturn has been that premium fares have fallen further and faster than the economy, as airlines have sought to generate cash by offering very substantial discounts for business travel," IATA says.

At the same time that fares have tumbled, airline revenues have continued to falter.

IATA estimates that revenues from premium travel were down by roughly 44% in April, compared to the same month in 2008.

April was not the only month in which airlines posted declining revenues from premium passengers.

At the end of the first quarter this year, premium numbers fell to 8% of the passenger total but even larger fare cuts reduced premium revenues to 27% of the revenue total.

This compares to the end of the first quarter last year when premium travellers accounted for 9% of total passenger figures on international markets but provided 30% of passenger revenues.

IATA says the incremental impact has been greater as nearly 40% of the decline in total passenger revenue during the past year is due to the loss of premium revenue.

Of the major premium travel markets, intra-Europe overtook intra-Far East as the weakest region in April due to the larger impact of Easter vacation days on business travel within Europe, IATA says.

Intra-Europe premium travel was down 33.6%, compared to a 24.2% decline in the first quarter. Intra-Far East premium travel declines moderated to 25.7% in April after a 26.6% fall in the first quarter.

Long-haul premium markets offered a similarly mixed picture in April as Europe-Far East went from a 20.4% first quarter fall to a 26.4% decline in April.

The decline was 18.4% across the North Atlantic in April compared to a fall of 17.8% in the first quarter, while across the Pacific the deterioration moderated from 27.2% in the first quarter to 25.7% in April.

However, IATA says it is too early to tell if a turning point has occurred for either premium or economy travel as there is anecdotal evidence of renewed decline in May in some regions.

The number of passengers travelling on economy tickets was a positive 0.3% in April year-over-year following a 6.9% decline in the first quarter of 2009.

IATA attributes the improvement to the Easter holiday occurring in April this year versus in March last year.

Economy travel improved in April across the North Atlantic and within Europe, which jumped from first quarter declines of 9.5% and 7% respectively.

Long-haul economy travel on flight segments to the Middle East continued to hold in April.

Within Africa, international markets continued to grow, but at a rate too small to offset declines seen in most other markets.

Both premium and economy travel continued to rise within Africa, at 1.1% and 5% repsectivly. IATA suggests the increases are due to the lesser severity of the recession in Africa as well as a lack of alternative travel modes.