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Global premium air travel edges up 1.2pc in Feb

Manama, April 18, 2013

The number of passengers traveling in premium seats on international markets was just 1.2 per cent higher in February compared to a year ago, down on the January result of 3.3 per cent, a report said.

Economy class passenger numbers were up 3.7 per cent in February on a year ago, a small improvement on the 2.9 per cent growth in January added the Premium Traffic Monitor released by the International Air Transport Association (Iata).

The timing of the Chinese New Year which occurred a month later in 2013 (in February) impacted year-on-year growth rates for markets connected to Asia. The effects were mixed.

Premium travel on Europe-Far East and North and Mid Pacific was down in February on a year ago (4.7 per cent and 4.9 per cent, respectively), with business closures suppressing premium travel during the holiday period, while in the Far East holiday-related travel supported strong growth in both premium and economy passenger numbers (up 7.3 per cent and 6.5 per cent, respectively).

Outside of the impact of the holiday, positive momentum in key Asian economies, particularly China, has helped air travel within Far East and on markets connected to the region perform strongly over the past several months, the report said.

The current levels of business confidence continue to point to expansion in the months ahead, even though there has been little further improvement in 2013. Intensifying debt problems in the Eurozone over recent months have raised doubts about a global economic recovery. Nevertheless, emerging regions continue to show solid growth and leading indicators are suggesting improvements in the business environment, which could translate to stronger growth in premium travel in the months ahead.

According to the report, premium travel markets are driven largely by demand for business travel. World trade by developed economies is a good proxy for business travel associated with international industries including services like banking and consultancy.

Over the last year, however, world trade growth has been expanding more slowly than premium travel growth. The weakness in developed economies, particularly in Europe, has caused international trade of developed countries to decline overall.

Offsetting some of the impact of this weakness is the strength of developing markets - like Asia, the Middle East and South America. In these regions, trade has been increasing at a stronger rate, in turn supporting demand for business-related premium air travel, the Iata report said.

Business confidence is a good leading indicator of premium travel growth. After solid improvement in the second half of 2012, business confidence has made little progress in 2013. Concerns over intensifying debt problems in the Eurozone have raised doubts about a global economic recovery. Nevertheless, the current level of business confidence indicates growth in the months ahead, which should provide support to premium travel demand.

Financial market sentiment can also provide an indication on the state of the global economy, and demand for business related travel.

The share price index tends to lead changes in premium travel demand by 2-3 months, as fluctuations in companies’ financial performance take time to affect business travel plans. Current financial market levels are suggesting we could see further support for business travel in the coming months.

Hussein Dabbas, Iata’s regional vice president for Mena, said: “Although the impact of Chinese New Year dampened growth on premium routes to the Far East in February, overall we are still experiencing solid expansion in business and premium travel in the region.”

“The Middle East is well placed to benefit from any upturn in East-West business, while new routes to emerging markets will offer further opportunities for growth,” he added. – TradeArabia News Service

Tags: China | Iata | Eurozone | Air travel | economy class |

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