Latest statistics from the International Air Transport Association (IATA) add to flickering signs of economic recovery, but offer little relief to the battered finances of airlines themselves as average fares remain weak, the Geneva-based group said.
In July, the number of first- or business-class travellers on international markets fell 14.1% compared with the same month last year, less than the 21.3% decline seen in June.
"Premium travel on international markets, which is mostly for business, is closely correlated to world trade which bottomed out in May and started to turn up in June," IATA said.
"This improvement in cross-border trade is boosting business travel, but demand is still very weak compared to the recent past and there remains much excess capacity, producing intense competition."
On Tuesday (15 September), IATA raised its forecast for total airline losses in 2009 by €1.37 billion to a record €7.5 billion.
Premium seats are the most lucrative sector for airlines. Many business people have downgraded to economy or shunned air travel during the economic crisis, prompting carriers such as Air France to try out new premium economy products.
The positive IATA traffic report underscored European data showing the euro zone's trade surplus grew more than expected in July, with exports rising from the previous month.
Airlines have also individually been reporting slowing declines in their traffic in August.
Slow growth in sight
Parcel giant and US economic bellwether FedEx said it detected a "modestly improving global economy".
Weak demand and a dearth of trade finance, two issues being tackled by G20 nations, have not only emptied business cabins but also severely depressed airlines' cargo operations.
Tens of thousands of airline jobs have been cut this year.
European planemaker Airbus expressed confidence that the crisis that had enveloped the industry was fading and predicted worldwide passenger growth of 4.6% next year.
IATA however said there was a "long way to go" before activity returned to levels seen in 2007 and early 2008.
"Moreover, with economic growth forecast to be relatively weak and much excess capacity (in the market), the problem of low yields remains." Yields represent the average revenue from each seat sold and help determine whether routes are profitable.
Those returning to premium class do not so far include many employees of large corporations, whose travel departments still have their teeth into costs. Nor has the high life returned to the Atlantic, where the rich and famous often flew first class.
"Bank bonuses may be back but it seems that travelling at the front of the aircraft is not," IATA said.
July's upturn was felt most strongly in Asia, IATA said.
European carriers hardest hit
According to IATA, European carriers are expected to post the largest losses compared to other world regions: €2.6 billion. This is more than double the previously forecast €1.2 billion loss. Key long-haul markets were hit by the world trade collapse and "delays in relaxing slot regulations prevented a timely reduction in capacity," it said (EurActiv 08/05/09).
(EurActiv with Reuters.)
