IATA: Premium air travel fell 8 pct in Sept.

ATLANTA – The number of passengers traveling on premium airline tickets dropped 8 percent in September, reflecting the severity of the global financial crisis and a slump in the confidence of manufacturers in the U.S., Japan and Europe, an industry trade group said in a report Wednesday.

The International Air Transport Association, which culled data about passenger traffic in first and business class on routes around the world, said business confidence fell sharply in October, and with the economic downturn worsening there likely will be a further decline in premium travel.

According to IATA, the September decline followed a 1.5 percent drop in August and was the third consecutive month of shrinking premium traffic, after growth of 1.5 percent during the first half of the year.

The slump is a bad sign because business travel helps drive airline profitability.

The number of passengers traveling on economy tickets fell 4 percent in September, IATA said, and total passenger numbers fell 4.4 percent in the month.

The report said the declines in premium travel volumes is expected to lead to a virtual standstill in premium revenue growth. It noted that until September, revenue growth had remained up, despite weakening volumes, because premium fares were still rising into the late summer. But with further declines in volumes likely in the months ahead, IATA said premium revenues are likely to begin to decline in absolute terms.

The decline in premium travel has spread to many markets around the world.

Premium traffic on North Atlantic markets fell 2 percent in September, while there was a 13.8 percent fall in premium traffic flying within the Middle East. As for travel between the U.S. and Asia across the Pacific, there was an 11.6 percent decline in premium traffic in the month. Travel between Europe and Asia also worsened in the month, IATA said.

It added that smaller emerging markets that had shown strength are now beginning to suffer from the global economic downturn. Premium traffic from the U.S. to South America is still growing.

IATA represents some 230 airlines.

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International Air Transport Association: http://www.iata.org