Monday, August 16, 2010

Premium Traffic Growth Looks Solid

[Continental's new international BusinessFirst class]

There was a sharp jump of 16.6 percent in June in international premium traffic -- that is, first-class and business class travel. That's according to the International Air Transport Association, and the figure is by comparison with June 2009.

International coach travel was up 9.5 percent in June, IATA says.

Even with the negative effects of the Iceland volcanic ash problem in Europe, premium travel grew 11.9 percent in the first half of this year compared with the first half of 2009. Coach travel was up 6.3 percent.

Still unclear: Premium fares. After almost two years of lower first-class and business-class fares on many key routes, it isn't yet apparent whether the airline industry will be able to regain the kind of pricing power that led to walk-up fares of $11,000 for business class and $16,000 for first-class on routes like New York-London up till the economic collapse. The people in the industry I have been speaking to about this say it's doubtful that those fares (even deducting maybe 40 percent for the very, very highest corporate-volume customers) will ever be sustainable again.

To which I say, yay -- as someone who consistently argues that companies that send employees on long-haul international trips owe those employees a degree of human comfort on those flights. If you can't send 'em business class on flights over 6 hours, don't send 'em, I say. Which makes me highly unpopular with a lot of penny-pinching corporate travel managers.


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