There are early signs of an upturn in the number of air passengers traveling in business class worldwide but fares have remained low due to intense competition and airlines have remained low due to intense competition and airlines have seen a sharp drop in earnings from this segment.
According to the latest data compiled by the International Air Traffic Association, the July numbers were still well below the levels seen a year ago.
But the decline was a lower 14.1 per cent compared to the 21.3 per cent fall in June.” This means that premium passenger numbers rose between June and July,” the IATA report points out.
Commercial airlines including Air India and Jet Airways have also been offering freebies such as free tickets for spouses to woo business class travelers as these high – value seats are going empty.
Air India, which depends a fair deal on public sector companies and government officials to generate revenue, is expected to be further affected by the official austerity measures that have been put in place.
According to the IATA report, premium travel in international markets, which is mostly trade which bottomed out in May and started to turn up in June, the report says. This improvement in cross-border trade is boosting business travel but demand is still very weak compared to the recent past and there remain much excess capacity, producing intense competition among airlines.
“As a result, we estimate average premium fares remained 23 per cent down on last year,” the report states.
Business travel may be starting to return but, as a result of low yields, revenues from premium travel are improving much more slowly than passenger numbers and were still down 35-40 per cent on the year in July, according to the report.
Consumer confidence has been rising in most of the major economies since the end of the major economies since the end of the first quarter and the number of passengers traveling on economy tickets bottomed out at the same time.
The IATA report points out that economy class travel was also influenced by business travelers switching to cheaper seats. As a result , passenger numbers in this segment were down just 1.2 per cent in July on levels seen last year; a market improvement on the 5.5 per cent fall reported in June.
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