By Pratap John/Chief Business Reporter
Longer-haul markets from the Middle East have performed strongly in March compared to a year ago with traffic to Europe growing by 7.5% and Far East 6.6%, according to a report by the International Air Transport Association (IATA).
Major economies in the Middle East, including Saudi Arabia and the UAE, continue to show robust economic performance, IATA’s premium traffic monitor shows.
Passenger travel on international markets rose 4.6% in March compared to a year ago, in line with the 4.6% result in February. But the growth trend over the past several months, particularly for premium travel, has flattened, IATA said.
The year-on-year comparisons continue to show some positive impact from the Lunar New Year. The holiday provided a boost for leisure travel for several weeks, this year extending into March.
For premium international travel (up 4.4%), there was an acceleration on February (up 2.3%), but the growth trend remains broadly flat when considering the past six months. Premium international air travel volumes are largely unchanged since August 2014.
This development reflects a lagged response to the gradual slowdown in improvements in business confidence throughout H2, 2014, with economic conditions in some emerging markets deteriorating.
In 2013 and during earlier parts of 2014, when premium travel was expanding at a faster pace than economy travel, there was a boost to the share of premium travel from total travel. This was positive for yield growth and revenues.
During the last couple of months, however, weakness in business-related premium travel has placed downward pressure on the share of premium seats from the total.
At the same time, IATA said a “rebound” in economy class travel has also contributed to a fall in premium’s share of total travel. Economy class leisure travel, the “relatively more price-sensitive” travel market, has been given a boost by falling fares.
Looking ahead, IATA said there might be some bright spots for growth in premium international travel. Premium international air travel was up 7.8% within Europe in March, compared to 0.4% in February. There are signs of a pickup in business confidence in the eurozone which could support growth ahead.“But it is important to note that weakness appears to be creeping in again in other regions, with business activity in emerging markets contracting in April for the first time during the past 12 months. This could mean a continuation of the flat trend in volumes we have been seeing since late 2014,” IATA said.
