GENEVA (Reuters) - Increasing numbers of business travelers are foregoing executive-class seats and flying economy, especially in Europe, an industry body said on Tuesday.
Airline revenues from business and first class tickets were down by at least one-quarter in January from the same month a year ago, due to lower demand amid gloomy economic prospects, according to the International Air Transport Association (IATA).
“There is evidence that business passengers are trading down to cheaper tickets,” the Geneva-based body said in its latest Premium Traffic Monitor.
While European business travelers have been shifting to cheaper seats on short-haul flights in recent years, alongside a proliferation of low-cost airlines such as EasyJet and Ryanair, IATA said economic distress had amplified this trend.
Promotional fares meant to encourage continued travel in spite of increasing job cuts and financial turbulence have exacted further pain on the industry’s bottom line, according to IATA, which represents 230 airlines including British Airways, Cathay Pacific, United Airlines and Emirates.
“Fares are also now falling sharply, as well as passenger numbers,” it said.
Economy travel demand has also slumped in response to the global financial crisis, but at a slower rate than the premium segment airlines depend on for their bottom line.
The weakest business-class market in January was in Asia, where premium travel on flights within the region decreased 23 percent year-on-year and flights across the Pacific dropped 25 percent. Executive-class demand on flights between Europe and Asia fell 21 percent.
Intra-European premium travel dropped 22 percent in January, compared to the same month in 2008, and on flights across the North Atlantic there was a 15 percent fall. In the Middle East, where many airlines were adding flights in the time of financial boom, IATA said increasing numbers of seats were also empty.
Africa was the only region to record an increase in business-class passenger travel in January. Premium travel within the continent was 19 percent higher in January “and fares also appeared to be holding up,” according to IATA, whose member airlines run 93 percent of scheduled international air traffic.
Its data excludes domestic flights.
IATA has forecast that global carriers are set to post $2.5 billion in losses in 2009, after losses of up to $8 billion last year.
Editing by Stephanie Nebehay