First and business class declined

The number of international airline passengers travelling first class and business class in March declined the most since 2003, according to a trade group for international airlines.

The International Air Transport Association said the decline reflected a sharp slowdown in financial sector activity and a weakening US economy.

The loss of these high-paying fares is a blow to airlines already battling high fuel prices.

“Airline executives get concerned when they start to see falling traffic in the front of the plane because it’s the premium passengers that represent valuable revenue,” said IATA spokesman Steve Lott.

“Whether they are flying less or flying in coach, those are both worrying signs for airline managers.”

IATA said in a report that global first class and business class traffic in March fell 3.9 per cent from the same month last year, the biggest monthly decline since 2003.

Within North America, such “premium” traffic for IATA airlines was down 8.5 per cent in March from a year earlier and down 5.2 per cent for the year to March from the same period last year.

Within Europe, first class and business class traffic for IATA airlines was down 17.1 per cent in March and down 10.7 per cent for the year to March.

But air travel markets in the Middle East, Far East and Africa showed much stronger premium traffic. Year-to-date first class and business class traffic was up 18.5 per cent between Africa and the Middle East, up 7.9 per cent between Europe and the Middle East, and up 16.8 per cent between the Middle East and the Far East.

The decline in March business travel was exaggerated by this year’s early Easter, but even after adjusting for this, global first and business class traffic in March fell by between 1 per cent and 2 per cent, IATA said.

“Given the importance of premium passengers for airline profitability, the absolute decline in numbers is bad news, particularly since the price of jet fuel rose 70 per cent over the year to March,” the IATA report said.

Sky-high fuel prices and a weakening US economy have stalled the US airline industry’s modest recovery from the 2001-06 downturn.

Seven small airlines have filed for bankruptcy or stopped operating in the past five months and if oil prices stay at current levels or go higher, some major US airlines also face the prospect of seeking bankruptcy protection, experts say.

Oil prices have roughly doubled in the past year. US crude, which hit a record of $US135 a barrel last week, was trading around $US130 this week.

All of which made first class and business class passengers, paying much higher fares than economy class, so valuable to airlines as they struggled to counter fuel costs, IATA said.

Any more declines would sound alarm bells for the airlines. “Airlines fight vigorously to attract these valuable premium passengers through product and different amenities,” Mr Lott said. “Every dollar of revenue is so important to offset the high fuel prices – that’s what is so concerning.”

Reuters