Premium airline traffic down 1.5 percent

updated 12:50 p.m. ET Oct. 16, 2008

MINNEAPOLIS - The number of passengers traveling on premium airline tickets dropped 1.5 percent in August, according to the International Air Transport Association.

“Business travel is a key driver of long-haul and network airline profitability, so the fall in volumes is a major concern for financial performance,” IATA wrote in a report distributed on Thursday. However, IATA noted that airlines worldwide have been raising fares, so revenue from premium tickets has still risen despite the drop in the number of passengers.

IATA said August was the third consecutive month in which the number of travelers on premium tickets shrank faster than the month before. However, the number of passengers flying on premium tickets grew an average of 1.5 percent during the first half of the year.

Most premium ticket buyers are business travelers, and they are “highly sensitive to the economic cycle and to activity in key industries such as financial services,” IATA wrote.

The number of passengers traveling on economy tickets fell 0.2 percent during August.

The weakness in premium travelers is concentrated in Asia or markets linked to Asia, IATA wrote, “where both economic and travel growth had been expected to remain relatively robust.”

Still, some routes bucked the trend.

North Atlantic premium and economy passenger numbers each grew 4.1 percent in August. Given the weakness in financial markets, travel across the North Atlantic “will certainly fall in the future but should already have been weak,” the report said. Growth in the North Atlantic region has been driven by U.S. airlines, which have added capacity at around 10 percent per year, while European airlines have seen virtually no growth this year.

Other markets showing strength in premium travel include Europe-Middle East, which is still growing in double digits and showing no sign of a slowdown, and traffic within Africa, within South America, and between North and South America.

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