Audrey D’Angelo

Business class and first class travel within Africa and between Africa and the Far East was still growing year on year in October, according to the latest International Air Transport Association (Iata) survey.

But premium travel weakened month on month within Europe, between Europe and the Far East and on the normally busy north Atlantic route, while economy traffic on these routes held up better.

Iata economists suggest this shows a move down-market by business travellers to cut costs, rather than an increase in leisure travel.

Iata said: “African markets have shown positive performance in October, with economies in this region continuing to show good growth. Strong domestic demand and high commodity prices have helped support the region and enabled premium passenger travel to grow by 5.9 percent year on year in October.”

Forecasting further declines in European and North American business travel, Iata noted that travel had not stopped growing, but said: “The share of premium seats as a portion of total travel is contracting. Because stronger growth in economy travel has occurred in sectors of weaker economic performance – within Europe and Europe to the Far East – it is probable that there has been substitution away from premium travel to economy as a means of business cost-cutting in difficult economic conditions.”

It warned that “this changing seat class mix will undermine yields (for airlines). Moreover, stagnant international trade and declining business confidence point to further weakness in business travel.” As jet fuel prices had not fallen from their high third-quarter levels, these developments implied that the fourth quarter would be “more challenging for airline profitability” than the third.

Pointing out that travel across the north Atlantic normally represented the largest share of total premium revenues, Iata said despite the weak economic conditions in Europe and North America, this route continued to show strong growth until October, mainly due to demand for German industrial and consumer goods. But since the European debt crises intensified and the US economy remained sluggish “expectations have become increasingly negative”.

However, Iata points out that premium travel within the Far East has remained strong. “Indicators other than business confidence, such as electricity consumption and steel production, do not show the threat of a sharp slowdown and that could support continued activity and travel in the region.”