Economy travel is now back to pre-recession levels: IATA Report

The domain of travel has been expanding. And if the International Air Transport Association (IATA) report is anything to go by, things are looking good for the coming future too. The IATA has published a report based on its study of the global airline industry. The number of passengers travelling in first and business class seats on international markets rose 10.8% in March from the levels seen the previous year. During the first quarter, premium travel expanded at an annualized rate of 25%, driven by the rise in business travel.

During and post economic recession, the premium travel saw a huge decline. So much so that the size of this market is still 15 percent smaller than it was before the recession, despite of registering robust growth over the past many months now. Additionally, the ash from Eyjafjallajokull volcanic eruption is sure to bring a dent to the overall expansion ' experts believe that the effect will be in tune of approximately 4 percent.

Economy travel has gone up too. With an 8.8 percent rise in March vis-à-vis same period last year, the quarterly figure for economy travel stands at a figure of 7.4 percent higher than a year ago. Compared to the premium sector, economy travel expanded at a respectable, but relatively slower, annualised pace of 10 percent.

Interestingly, growth in both seat classes is being driven by business travel as against leisure. The growing business capacities and trade have tuned the tables around. Business travellers are rising by numbers, but the consumer confidence still has not recovered in the same way as business confidence. Higher global levels of unemployment and consumer debt are considered as defining factors that led to only marginal improvement since the mid-2009. Experts expect slow business in leisure travel domain.

The Far East sector has shown the strongest growth overall. Premium market rose almost 24 percent in the first quarter this year. However, growth in travel has been weak for within Europe and North Atlantic markets. premium travel within Europe was down three percent in the first quarter.

Premium travellers generate 30% of international passenger ticket revenues. However, they represent less than 10% of passenger numbers, hence, total travel volumes are dominated by changes in the numbers travelling on economy seats. As Economy travel was 8.8% higher in March this year than a year ago, in the first quarter of 2010 its level averaged 7.4% higher than a year ago. Looking at the pace of expansion from the fourth quarter to the first it is clear that premium travel had the stronger impetus.

Although passenger markets are showing strong growth, post recession, there are still considerable geographic differences. In the most lucrative market ' Far East ' premium market grew by 24 percent while economy travel was up 13.5 percent. This indicates at the trend that business travel is driving changes in demand at present. The Europe-Far East market and the North and Mid Pacific markets for premium travel are also strengthening with first quarter rises of 11.5% and 8.3% respectively.

The Asian region has experienced confident economic growth. This makes Asia as the driver of these outperforming travel markets. Industrial production is 10 percent above pre-recession levels and confidence in the economic outlook in these regions is strong, generating substantial increases in trade and business travel.

Growth is also reflected by smaller markets like many South American economies that have been benefiting from Asian commodity demand and are free of debt and banking problems of the US and Europe. In the South American market, premium travel was up by more than 20 percent in the first quarter while economy travel grew by 10 percent. The Middle East market also grew strongly. This reflects economic growth in the region and also market share gains by Middle Eastern airlines on long-haul markets connecting over their Middle East hubs. Europe-Middle East was up 12.7 percent for premium travel. Middle East-Far East was up 29 percent.

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