Airlines hoping for rise in premium traffic in 2014 as end of recession means more corporate spend on air travel

Airlines are hoping the global economy is recovering, and continues to recover. Airlines make a disproportionate of their income from premium travel, so do all they can to compete for it. IAF and Air France-KLM have recently reported increases in their premium traffic, and a survey by “Buying Business Travel” indicated that some companies may be increasing their corporate travel budgets in 2014, and also plan to fly as much, or more, than in 2012. John Strickland, a consultant at JLS Consulting, said long-haul premium traffic should be the airline’s biggest focus – it makes most profit. He said: “Short haul is not the area where [premium travel volumes] are critical. Those glory days have gone.” EasyJet and Ryanair are trying to get the price-sensitive business passengers in Europe. Traffic out of emerging markets in Asia, the Middle East and Latin American would be increasingly significant with more premium travel. There is likely to be more growth in “premium economy” which is useful for people whose budgets won’t extend to fully fledged business class.  IATA premium traffic data each month indicates that the international growth is around 4 – 5% on average, with growth in 2012 of 4.8% over 2011.
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IATA Premium Traffic Monitor (international)

http://www.iata.org/publications/economics/Pages/ptmarchives.aspx 

Analysis of high-yield traffic growth by major market (in pdf format).

2013

2012

January July January July
February August February August
March September March September
April October April October
May May November
June June December

 

2011

2010

2009

January July January July January July
February August February August February August
March September March September March September
April October April October April October
May November May November May November
June December June December June December

PREMIUM TRAFFIC MONITOR
OCTOBER 2013  – 5.6% up on October 2012

KEY POINTS

International premium air travel recorded a rise in October with the number of passengers up 5.6% compared to a year ago. This is an improvement on September, when premium air travel rose 4.3% year-on-year.

http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Oct13.pdf

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PREMIUM TRAFFIC MONITOR
SEPTEMBER 2013  – 3.3% up on September 2012
KEY POINTS
 Growth in premium air travel moderated in September, after a strong rise in August. International premium passenger numbers were up 3.3% in September compared to a year ago, down on the 8.6% spike in August.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Sep13.pdf

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PREMIUM TRAFFIC MONITOR
AUGUST 2013  – up 8.6% on August 2012
KEY POINTS
 Growth in premium air travel improved in August, after months of sluggish expansion. International premium passenger numbers were up 8.6% in August compared to a year ago, a significant pick-up on July growth of 1.4%.
http://www.iata.org/whatwedo/Documents/economics/premium-monitor-aug13.pdf

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PREMIUM TRAFFIC MONITOR
JULY 2013  – up 1.4% on  July 2012
KEY POINTS
 Growth in premium air travel during July continued recent sluggish expansion, but there were more positive signs of faster growth in business travel in the months ahead. International premium passenger numbers in July were up at a similar rate to the growth seen so far this year, after accounting for the impact of holidays.
The number of passengers travelling in premium seats on international markets was 1.4% higher in July compared to a year ago, down on June growth of 4.1%. The slower year-on-year growth in July is a result of the timing of Ramadan, which took place mostly in July this year, a month earlier than in 2012
http://www.iata.org/whatwedo/Documents/economics/premium-monitor-jul13.pdf

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PREMIUM TRAFFIC MONITOR
June 2013  –  up 4.1% on June 2012
KEY POINTS
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Jun13.pdf
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PREMIUM TRAFFIC MONITOR
MAY 2013 – up 2% on May 2012
KEY POINTS
 Air travel markets showed signs of deterioration in May. The number of passengers traveling in premium seats on international markets was 2.0% higher in May compared to a year ago, a slowdown on the April result of 3.8%.
Economy class passenger travel rose at a faster pace, up 3.9% in May year-on-year, close to the 4-5% growth in April after adjusting for the timing of Easter.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-May13.pdf

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PREMIUM TRAFFIC MONITOR

APRIL 2013 – up 3.8% on April 2012

KEY POINTS
 The number of passengers traveling in premium seats on international markets was 3.8% higher in April compared to a year ago, slightly down on the March growth of 4.4%. Economy class passenger numbers were up just 0.9% in April on a year ago, a sharp fall from the 7.4% growth in March.
 The 6.5% point drop in economy class travel in April is not due to a slowdown in demand over the month. ….largely due to distortions from the timing of the Easter holiday.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Apr13.pdf

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PREMIUM TRAFFIC MONITOR
MARCH 2013 – up 4.4% on March 2012
KEY POINTS
 Growth in premium travel picked up in March. The number of passengers traveling in premium seats on international markets was 4.4% higher in March compared to a year ago, improving on the February growth of 1.2%. Economy class passenger numbers were up 7.4% in March on a year ago, compared to 3.7% in February.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Mar13.pdf

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PREMIUM TRAFFIC MONITOR

FEBRUARY 2013 – up 1.2% on February 2012

KEY POINTS
 The number of passengers traveling in premium seats on international markets was just 1.2% higher in February compared to a year ago, down on the January result of 3.3%. Economy class passenger numbers were up 3.7% in February on a year ago, a small improvement on the 2.9% growth in January.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Feb13.pdf

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PREMIUM TRAFFIC MONITOR
JANUARY 2013 – up 3.3% on January 2012
KEY POINTS
 Growth in premium travel slowed in January. The number of passengers traveling in premium seats on international markets was 3.3% higher in January compared to a year ago, down on the December result of 4.5%. Economy class passenger numbers were up 2.9% in January on a year ago, also slowdown on the December growth of 4.2%.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Jan13.pdf

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PREMIUM TRAFFIC MONITOR
DECEMBER 2012  – up 4.5% on December 2011

Up 4.8% for the whole year of 2012 compared to 2011

KEY POINTS
 The number of passengers traveling in premium seats on international markets was 4.5% higher in December compared to a year ago, in line with the solid November result of 4.4%. Economy class passenger numbers were up 4.2% in December on a year ago, a slowdown on the November growth of 6.0%.
 During 2012, expansion in economy and premium travel numbers slowed from the faster growth trend seen in late 2011 and early 2012, with the Eurozone crisis affecting demand for air travel throughout the middle months of the year. Nonetheless, for the year as a whole premium travel expanded 4.8%, which was only slightly down on 2011
when the market grew 5.4%. Economy international travel grew at a strong rate of 5.9% in 2012, and in fact improved on 2011 growth of 4.7%.
http://www.iata.org/whatwedo/Documents/economics/Premium_Monitor-Dec12.pdf

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PREMIUM TRAFFIC MONITOR
NOVEMBER 2012  – up 4.4% on November 2011
KEY POINTS
 The number of passengers traveling in premium seats on international markets was 4.4% higher in November compared to a year ago, an improvement on the October result of 2.7%. Economy class passenger numbers were up 5.8% in November on a year ago, also an increase on the October when year-on-year growth was 3.4%.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Nov12.pdf

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PREMIUM TRAFFIC MONITOR
OCTOBER 2012 – up 2.3% on October 2011
KEY POINTS
 The number of passengers traveling in premium seats on international markets was just 2.3% higher in October compared to a year ago, down on the September result of 3.8%. Economy class travel numbers were 3.1% higher in October compared to a year ago, weaker than the September year-on-year growth of 5.0%.
http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Oct12.pdf

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Focus on premium for 2014

by Martin Ferguson (Buying Business Travel)
9 Jan 2014

As the global economy recovers airlines must overcome complacency if they are to maximise their share of business travel traffic, according to one of the UK’s leading aviation consultants.

This week the International Airlines Group (IAG) and Franco-Dutch Air France-KLM both reported encouraging year-on-year rises in premium traffic for December.

While a survey conducted by The Business Travel Show in London also revealed corporate travel budgets would increase this year.

John Strickland, a consultant at JLS Consulting, predicted a lot of competition between carriers, and said those focused on the business development of premium products should capture the biggest share.

“If [corporate travel] budgets are improving airlines can’t be complacent. There is now a good argument for travelling in business class because people are going out to look for new customers and contracts and there is more justification to travel comfortably on a long haul flight,” he said.

“You can’t do business if you’ve been squashed up in economy for 12 or 24 hours. Airlines have to make sure they deliver the right destinations and a quality service.”

Strickland said long-haul premium traffic should be the airline’s biggest focus.

“It is the most valuable [cabin] for airlines. Short haul is not the area where [premium travel volumes] are critical. Those glory days have gone.

“Low-cost carriers have turned it around and people are focused on price more than anything.

“But even going through the recent tough economic times in Europe and, to a slightly lesser extent the US, we’ve seen pretty good premium flows and they’re starting to firm up even more.”

Strickland said traffic out of emerging markets in Asia, the Middle East and Latin American would be increasingly significant.

“And it’s not just traffic from traditional companies that are based in Europe,” he said.

Premium economy cabins would continue to be more prevalent, said Strickland, as carriers try to emulate the model made so successful by Virgin Atlantic.

“We’re still seeing this development of premium economy, which for those carriers that have got it, is a bridge for people whose budgets won’t extend to fully fledged business class but don’t want the-knees-in-your face experience in economy.”

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“Premium traffic, IAG’s most profitable traffic, increased 7.3% [year on year] in December. Load factor in the premium cabins increased more than in the non-premium cabins, IAG said, without giving figures.  link
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Buyers set for higher budgets in 2014

By Rob Gill (Buying Business Travel)
7 Jan 2014

The majority of travel buyers will have higher budgets in 2014 than last year – even though only 49 per cent are buying more trips.

Some 76 per cent of buyers said they would have more money to spend this year, according to a survey of more than 180 buyers by the Business Travel Show, which takes place at Earls Court in London on February 4-5.

The figure is an increase on the 72 per cent of buyers who said budgets would rise or stay the same in 2013, which was itself a rise on the 67 per cent seen in 2012’s poll.

The survey found that airline budgets were set to rise or stay the same this year for 76 per cent of buyers and 74 per cent said the same of accommodation budgets. While 83 per cent said that they would be buying more or a similar number of trips as last year.

Buyers said that the biggest issue for them over the next year would be the introduction of IATA’s New Distribution Capability (NDC), which is set to change the way airfares are distributed through TMCs, [Travel Management Companies] followed by travel management 2.0, data, sustainability and meetings management.

David Chapple, event director of the Business Travel Show, said: “The survey results are great news for buyers, who have faced intense pressure over the last couple of years to cut costs and stretch budgets.

“The figures in our survey also support the GBTA’s own predictions that the UK business travel industry is heading for very strong growth in 2014 and 2015 and, following a trying few years, western Europe’s major markets should see a bounce back over the next five years.”

businesstravelshow.com

http://buyingbusinesstravel.com/news/0721866-buyers-set-higher-budgets-2014

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Fewer premium class airline seats being bought across Europe

18.3.2013

The rate of increase in demand for premium air travel (any seats that are not in economy class) is not growing as much as economy. Globally there around 8% of seats are in  premium classes, though this was 9 – 9.5% in 2008. The demand for premium seats is not rising in Europe, and also not rising on transatlantic routes. However, in the rest of the world, especially in Asia, there is more growth in premium sales. The North Atlantic market between Europe and North America is the most lucrative premium airline market in the world – accounting for around 15% of all passengers and 22.9% of airlines’ total premium revenue.  Premium demand within the Far East rose by about 9% in 2012 and now accounts for  about 12% of the global premium air travel market. It appears more business flights within Europe are being made on economy flights, eg on easyJet, as European companies cut back on spending.http://www.airportwatch.org.uk/?p=2451 IATA’s Premium Traffic Monitor report November 2012

IATA’s Premium Traffic Monitor report August 2012 

IATA’s Premiym Traffic Monitor report July 2012

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This contrasts to the news in May 2013 by CAPA saying how premium travel was down.

http://centreforaviation.com/analysis/premium-air-travel-structural-demand-slides-provides-revenue-headwind-but-who-is-most-exposed-111132