An encouraging increase in premium travel from the troughs experienced in May 2009 is being tempered by premium statistics remaining 20% lower than traffic levels posted in early 2008, says IATA.

The latest statistics published by the association show that the number of travellers flying on first or business class during November fell 6.7%, an improvement from a 9.3% decline posted in October.

Although premium traffic levels are roughly 5% higher than the low point reached in May, IATA warns that premium traffic is still 20% below 2008 levels.

IATA also highlights that although premium traffic levels represent less than 10% of total travel, higher yields are associated with those passengers. "As a result, the 30% fall in premium revenues in the first half of 2009 played a large part in the growth of airline net losses over that period," says the association.

Overall world trade also remains 16% below 2008 levels, leading IATA to suggest the majority of the decline in business traffic during the last year is cyclical, and a further rebound should coincide with economic growth.

IATA states that most forecasts for growth in developed countries - which support the bulk of business travel - show below trend growth during the next couple of years.

Developing economies in Asia and South America continue to post gains in traffic growth, says IATA. The US economy is showing reasonable growth while growth in Europe remains weak, and IATA's data show that premium travel was down about 18.5% on intra-Europe routes year-over-year in November 2009 and decreased 5.9% on transatlantic routes from Europe.

Economy travel continues to gain traction, rising 3.5% in November, and now sits at roughly 4% below 2008 levels, says IATA. Since economy passengers represent the majority of international passengers, the rebounds in economy travel have driven a 6% growth in that passenger category compared with early 2008 levels.

The trend of business travellers opting to travel in economy continues, says IATA, particularly on short-haul markets in Europe. But leisure and visiting friends and relatives segments still dominate the sector, and IATA highlights leisure travel remains tied to consumer confidence, which has stopped improving in recent months in the US, Japan and China. "Only half the 2008 decline [in consumer confidence] has been regained," says IATA.

Potential tax increases and rising unemployment could be keeping consumers cautious, says IATA. "This may limit the pace of further gains in economy travel, until the economic recovery spreads into rising employment and consumer incomes."

Source: Air Transport Intelligence news