A potential bottoming out in travel demand is growing harder to predict as IATA's latest examination of travel statistics for the month of May indicates premium travel numbers have declined for 12 consecutive months.

Both premium and economy passengers counts fell in May, 24% and 8% respectively. Economy passenger levels dropped for the month after showing 0.3% marginal growth in April. But the Easter holiday shifted to April this year, and overall IATA surmises that declines in economy travel in May were similar to drops posted in February and March.

IATA has also concluded that earlier signs of stabilisation in passengers numbers is more a reflection of a small rise in the average distance flown spurred by geographical shifts in travel patterns rather than a bottoming out of passenger demand.

In May IATA points to a sharper drop in economy travel on short-haul flights within the Far East, which halted the decline in average distance flown. "Knowing this was driving the apparent stabilisation of RPKs now makes it much more difficult to conclude that passenger travel has begun to stabilize," the association explains.

In fact, IATA reasons the total 9.2% decline in passengers in international markets for May was the largest decline posted so far this year. "Although passenger numbers were down 9.3% in March, that decline was exaggerated by the timing of Easter," IATA explains.

As premium traffic continues its fall, airlines appear to be discounting premium fares on average much more than economy seats, IATA concludes. "This is likely a sign that airlines are seeking to generate any cash they can by filling these seats."

Although economy traffic increased during the first two months of the second quarter on Europe-Middle East routes and Middle-Far East routes, the fall in premium traffic in those markets suggests a shift to the economy cabin, IATA reasons.

IATA sees positive trends in South America as those markets were less affected by the H1N1 virus versus Central American routes. IATA estimates travel within Central America fell 62% in May, while travel from Central to South America decreased 47%.

Economy travel in South America grew 3.7% in May followed by 17.5% growth in April and an overall 6% growth for the first quarter despite the region's largest economies being hit by the recession.

Some positive trends are appearing in North America and Europe as "signs that the recession is at least getting no worse have been emerging in the economies on both sides of the Atlantic and this appears to be supporting a levelling out in the recent decline of air travel activity in the region," IATA explains.

Premium traffic on the North Atlantic slowed to a 16.5% decline after an overall drop of 18% during the first quarter. Within Europe premium traveller counts fell 7% after declining 8.4% during the first quarter.

IATA concludes markets continued to weaken to and within Asia despite growth in China and Australia and signs of a resurgence of economic activity in Japan. Premium travel within Asia dropped 32% in May after falling 27% for the first quarter as economy travel in May decreased 16%, a further decline from an overall first quarter drop of 10%.

Pacific market also weakened as premium travel fell 31% in May following a 27% decline during the first quarter. Economy passenger levels also dropped 17% after a 12% decline in the first quarter.

Source: Air Transport Intelligence news