The global economic and financial crisis seems has hit th aviation industry in one of the most lucrative areas – business class travel. Global premium air traffic fell 16.7% on year in January 2009, and the downfall is still on as revealed by International Air Transport Association on Tuesday.
The IATA said that Asia has been topping the list of areas with maximum premium air traffic decline, suffering a fall of 23.4%, with a 24.7% decline reported across the Pacific region.
IATA blames the recent recession in the West for the downfall, “The financial crisis, which started in the West, has now become a crisis in manufacturing, which has caused an unprecedented economic decline in Asian export-led economies.”
IATA also does not expect the current scenario of to change for a while.”With economic conditions still deteriorating, despite bank bailouts and fiscal packages, the bottom for the decline in premium travel numbers isn’t yet in sight.” the agency said.
Various airlines around the world are taking desperate measures since the end of 2008. Airlines have been slashing capacity, parking planes and the layoffs and shutdowns are common now. Lufthansa is adding 22 more economy seats at the expense of business ones in its Boeing 747s. Qatar Airways is axeing the first class lounge on its Airbus A340-600s and adding 44 economy seats.
Revenues from business / first-class passengers were down by at least a quarter in January 2009, hurting the airline yields and profitability with fares and fuel surcharges falling significantly.
Premium-class travelers have not been flying as frequently as they used to. Association of European Airlines secretary general Ulrich Schulte-Strathaus says that “premium traffic passengers are either going to the back of the aircraft or not at all”. His member airlines carried 1.3 million fewer premium travellers last year compared to 2007. This is often because several companies have asked their empoyees to travel by economy class instead to save costs.
The biggest change is in the short-haul market, where premium traffic now makes up just 7.8% of the total compared to 21% in 2000.
However Africa has been one continent where a growth in the premium travel has been witnessed – up 18.9% in January – with fares appearing to be holding up, IATA said.
Premium fares excluding fuel surcharges fell 16% in Europe and 11% across the North Atlantic region. In comparison, average premium fares fell 6% on year in December 2008.
International cargo traffic also fell by 23% in January, as per the Association of Asia Pacific Airlines.
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