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 Airline Premium Ticket Demand Still Sputtering
January 18, 2010

Demand for first and business class tickets, accounting for nearly one-third of most airlines' revenues, remains weak and an improvement in November was a blip, the International Air Transport Association (IATA) said.

Premium tickets are mainly bought by passengers travelling on business and such demand is correlated with world trade, so economic recovery in Asia, Latin America and some other regions could boost premium travel in the months ahead, it said on Monday.

The number of passengers travelling on first or business class in November was 6.7 percent lower than a year earlier, less than the 9.3 percent decline in October, IATA said in its latest premium traffic monitor.

But this apparent improvement was entirely due to the slump in business travel a year earlier, and from month-to-month there was a slight fall in passenger numbers, it said.

"There has been a slight rise in premium travel in recent months, which is now around 5 percent higher than its May low point, but much of the upturn took place mid-year, since then there has been little further progress once seasonal fluctuations are taken into account," IATA said.

"Premium travel numbers are still over 20 percent lower than early 2008 levels," said IATA.

The industry body noted that economy travel was growing positively in year-on-year terms, rising 3.5 percent in November and just 4 percent below levels in early 2008.

Since economy travel represents 91 percent of total international passenger numbers, it has pulled total passenger travel back into positive territory to stand 2.4 percent higher in November than a year earlier.

But although premium passenger numbers represent less than 10 percent of total travel, they account for about 30 percent of passenger revenues for most airlines, underlining the importance of business and first-class sales for airline profits.

IATA noted that business travellers were increasingly flying in economy seats, particularly on short-haul routes, like those within Europe.

Demand varies sharply by route, reflecting the different pace of economic recovery. Premium travel in November was up 18.2 percent year-on-year within Latin America and up 13.7 percent between the Middle East and Far East, but down 18.5 percent within Europe and down 5.9 percent on the Transatlantic market.

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