Tuesday, November 17, 2009

International Premium Traffic Plunges Again; U.S. Premium Traffic Also Off Sharply

The very big bet that airlines made on robust or at least resilient premium traffic on international routes is looking worse and worse. There's a word to describe the state of all of those fancy first-class and especially business-class seats over the oceans: Glut.

Continuing a year-long trend, premium traffic on international flights fell again in September -- by 13.9 percent -- over September 2008, the International Air Transport Association said today. Mostly reflecting steep discounts airlines have been forced to make in their front cabins, revenues declined 27 percent from September 2008.

North American airlines (U.S. airlines plus Canadian) reported a 10.7 percent drop in premium international traffic. If you discount the 26.9 percent drop in premium on the shorter-haul and relatively insignificent "within Europe" market, North American airlines accounted for most of the weakness.

Economy travel actually improved in the "within Europe" short- and medium-haul market, indicating that European business travelers who once flew business-class or first have switched to coach.

But a 14.5 percent decline in premium-class demand across the Atlantic likely reflects "weaker developments in the U.S. and UK economies" that caused a net decline in transatlantic business travel in any class, IATA said.

In the domestic U.S. market, business travelers hoping to score upgrades might take heart from the 20.4 percent decline in domestic U.S. premium-class demand within North America.

On the other hand, domestic airlines continue to slash capacity and reduce schedules, keeping planes full.

And, of course, with all of those double-miles-per-trips promotions on elite-status qualifying miles this year, there are going to be a lot more high-status fliers lined up for those upgrades.

Next year, platinum will be the new gold; gold will be the new silver. And silver? Good luck!


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