Business travel growing faster than economy

By Reuters
Posted Oct. 14, 2010 at 6:19 a.m.

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.

The number of passengers travelling in business or first class in August was 9.1 percent higher than a year earlier, against a 13.8 percent year-on-year rise in July, the International Air Transport Association said in its monthly premium traffic monitor.

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

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 percent below their early 2008 peak, it said.

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

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

Economy travel, driven by leisure markets and consumer confidence, has risen 11 percent 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 percent a year.

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