Thursday, August 21, 2008

Premium travel sagging


Business and first-class air travel in June shrank 0.4% year-on-year, the worst result recorded by the global aviation industry since May last year, due to the economic slowdown and impacts of high oil prices.

The prospects are for further deterioration during the second half of this year, reflecting the sensitivity of business travel to the downturn in the financial services sector and in general business activity, the International Air Transport Association (IATA) said in its latest traffic monitoring report.

However, economy-class air travel was still growing at 3.4% in June, but the growth was slower than the 4.9% recorded in the first five months of this year and the 5.4% recorded in 2007.

IATA noted that total international passengers, as measured on an origin and destination basis, slowed sharply in June to 3% growth compared to 4.5% in the first five months of this year and 5.1% in 2007 _ the first sign of a significant slowdown in air travel.

It was clear that travel markets are not being driven purely by US economic weakness and high fuel prices were starting to have an impact, said the Geneva-based industry body that represents about 240 airlines.

Although the US economy has been weak, it did expand almost 2% in the second quarter, while the German and Japanese economies both contracted.

China's economy was still growing by around 10% but the dominance of Japan in the region was depressing travel markets, which shrank 0.6% within Asia and by 0.7% on the previously robust Europe-Asia market.

Not all regions weakened in premium traffic. Growth was still seen in Africa and the Middle East in June (up 10.8%), within Africa (up 24%) and the Middle East-Far East market (up 9.8%) where economies were still strong and liberalisation is allowing new capacity and markets to be developed.

South American economies are also proving immune to the US slowdown, benefiting both from strong commodity demand, stronger external balance and better economic management.

Premium traffic within the Far East grew marginally in June at 0.5%, with those on Europe-Far East routes contracting 1.2%.

1 comment:

sabine said...

With rising oil prizes countries like Thailand which rely on foreign tourism will suffer.