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Strong premium class traffic fuelling growth for airlines: IATA

Strong premium class traffic fuelling growth for airlines: IATA

Tuesday, June 13, 2017

GENEVA — Growth in premium passenger traffic has exceeded its economy counterpart in many key markets in the past year, according to the latest stats from IATA.

IATA’s Airlines Financial Monitor for May 2017 shows premium airfares have generally held up better than those in the economy cabin. In only two of the main premium markets (Europe – Asia and North and Mid Pacific) are premium fares underperforming economy. Premium traffic accounted for 27.2% of total passenger revenues in Q1 2017, up from 26.4% a year ago.

Overall, global passenger volumes grew by 10.7% in year-on-year terms in April – the fastest pace in six years, said IATA.

Global airline share prices performed strongly in May, surging 7.8% to be up more than 20% over the past year. Gains were observed in all three regions (North America, Asia Pacific and Europe), but European airline shares led the way again this month, with a 14.3% rise.

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The latest financial results for Q1 provide further evidence of the squeeze on airline profit margins, reflecting higher costs and weak yields. Industry-wide free cash flow also eased in Q1, compared with the outcome in Q1 2016.

The fall in oil prices in April extended into May and despite some recovery, the monthly average price fell almost 4%. Jet fuel prices behaved in a similar fashion and were down 5.6% for the month overall, said IATA.

Passenger yields remain 3-5% lower than a year ago amidst ongoing signs that the downward trend in yields of the past three years may have bottomed.

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