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ECONOMY TRAVEL SLOWS

Premium passenger numbers post solid growth

London, February 18, 2014

The number of passengers travelling in premium seats on international markets expanded by a solid 4.2 per cent in 2013 compared to 2012, while economy international travel expanded 3.5pc in 2013, a significant slowdown on 2012 when growth was 5.9pc.  

While the figure is a slowdown on 2012 (4.8pc), growth has picked-up over recent months, reflecting
improvements in the business environment, Iata said.

In December, premium travel numbers were up by a strong 5.5pc on a year ago, in line with the November result of 5.4pc.

Growth in premium travel has been supported by positive developments in the business environment in the second half of 2013. Business confidence has been on the rise, with Europe and the US both showing signs of economic improvement. In addition, business-related premium travel has been buoyed by a recent pick-up in trade growth, particularly in Asia, as demand from advanced economies accelerates.

These improvements have translated to stronger growth on some key markets, including the North Atlantic, which contributes most to total international premium revenues. While expansion in 2013 was still weak (2.4pc), it is an improvement on the virtually no growth performance of 2012 (0.6pc), and confirms that business conditions in Europe and the US are improving.

But the largest share (21pc) of the rise in premium travel in 2013 was attributed to the Far East market. This market expanded 7.2pc in 2013, supported by regional trade growth in the second half of the year. Given recent indications of easing growth in China, however, the outlook for the market has weakened.

A key reason for the economy international travel slowdown in 2013 is the Far East market, where economy class travel expanded 4.3pc in 2013 - less than half the pace of growth in 2012 (9.6pc). While major economies in the region started to show improvement during 2013, growth in China was patchy throughout the year and likely slowed to rates not seen since the 1990s.

Given the size of the Chinese economy, there were knock-on effects for the region.

The outlook for premium travel markets is broadly positive, but improvements in the business environment seen throughout H2 2013 appear to have paused in January. Global business confidence continues to signal economic growth; levels are the highest they have been since Q1 2011, but there has been no increase over recent months.

The outlook for world trade growth remains positive, but while export orders are still growing, the rate of increase slowed in January. The weakness is coming from emerging market economies, who have responded negatively to US monetary policy tapering. Nonetheless, improvement in advanced economies which should help sustain growth in premium travel, at least at current rates.
 
Easing downward pressure on economic growth throughout the Eurozone also supported robust
growth on connecting markets, including Europe – Far East; and Europe – Middle East, which were up 4.9pc and 8.9pc respectively in 2013, similar to their growth in 2012. - TradeArabia News Service
 




Tags: economy | travel | premium |

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