IATA: Premium rebound back on track after volcanic ash-driven slowdown

IATA reported that the recovery in premium travel resumed in May following April's volcanic ash-driven slowdown, rising 18.7% year-over-year for the month, a sharp contrast from April's 1.1% growth.

Premium traffic's growth rate continues to outpace that of economy traffic, which IATA said is hampered by weak consumer confidence. "Adjusted for seasonality, premium travel has risen almost twice as far in percentage terms as economy travel but, such was the depth of the fall in the premium segment, current levels are still 10% below pre-recession peaks whereas economy travel is now 5% above its pre-recession peak," the organization said in its latest "Premium Traffic Monitor" released yesterday.

It said growth in both the front and back of aircraft is being "driven by business travelers rather than holidaymakers." It noted that world trade and business confidence "continue to expand," a positive indicator for business passenger demand, while "risk of unemployment and consumer debt" is "high in most developed economies," leading consumers to take a "conservative approach" on spending including "cutting their travel budget for holidays."

The divergent pace of the recovery in different parts of the world continues, with premium routes linked to Asia showing year-over-year premium demand growth of above 20%, according to IATA. Middle East routes also are seeing steady premium demand growth in the range of 7%-22%, it added. But the North Atlantic market, which represents 18% of global premium traffic and 25% of revenue, "is still lagging behind Asia and Middle East routes."