Industry Research

First Class, Business Class Outpaces Economy Class

Posted on October 20, 2010 by LCT Staff - Also by this author - About the author

In a positive sign for luxury transportation, the travel industry is seeing higher growth rates in the front of the plane than in the back.

GENEVA — The strong recovery in air travel is slowing as the force of the economic upswing moderates, with growth in business travel continuing to outpace that in economy class, airline industry association IATA said on Thursday.

Besides pointing to the health of the airline industry the premium figures are a leading indicator of business activity.

Slower year-on-year growth in August than in recent months was partly due to the statistical effect of a big increase in August last year as a the post-recession rebound took hold, the International Air Transport Association said in its monthly premium traffic monitor.

But there was a fall of 1 to 1.5% between July and August in the seasonally adjusted number of passengers travelling in both premium and economy seats, it said.

"There are clear signs now that the post-recession rebound of international air travel is slowing," it said.

Luxury: Where luxury and flying go hand-in-hand

The number of passengers travelling in business or first class in August was 9.1% higher than a year earlier, against a 13.8% year-on-year rise in July.

Numbers at the back of the plane were up 6.2%, against 8.8% in July.

IATA, whose 230 members include Lufthansa, Air Canada and Singapore Airlines, said demand for premium travel had now risen 17 percent above its 2009 low but 99 percent of that rebound occurred by the end of the first quarter of this year.

In the five months since then the number of passengers travelling on premium seats — typically for business — had leveled off but whether this was a temporary pause remained to be seen.

Business confidence is slipping but remains positive and premium markets are still 11% below their early 2008 peak, it said.

Economy travel, driven by leisure markets and consumer confidence, has risen 11% from its 2009 low and passenger numbers in this segment are now above pre-crisis highs.

IATA said the near stagnation in month-on-month growth rates in recent months was not consistent with business travel leading indicators which though slipping should support trend growth of 5-6% a year.


Sources: Reuters/MSNBC.COM

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