PREMIUM TRAFFIC MONITOR
MAY 2015
KEY POINTS
 Passenger travel on international markets rose 6.2% in May compared to a year ago, accelerating on the 3.8% increase
in April. Economy class travel grew at a stronger rate than premium international air travel, and although the growth was
spread across most key markets, it was largely driven by the within Europe market;
 Economy class travel rose 6.4% in May year-on-year, a pick-up on April growth of 4.2%. The strong growth in economy
class leisure travel – the more price sensitive travel market – is being supported by lower fares. Premium travel also
rose in May, but at a slower (4.1%) rate. This reflects continued weakness in business travel demand drivers, with global
business confidence being dragged down by emerging markets;
 The key driver of the faster growth in international air travel is acceleration on the within Europe market. In May, the
market was up 5.1%, almost double the rate of growth seen year-to-date, supported by gains in business confidence
which confirm that the economic recovery is on track;
 Looking ahead, although adverse economic developments in some emerging markets continue to present downside
risks for growth in international air travel, better conditions in advanced economies are likely to sustain the recent
acceleration in passenger numbers;
 Economic weakness in Asia from declines in trade activity could lead to deterioration in business related air travel for
that region. That said, there has been no sign of weakness in demand so far. By contrast, improvements in the
Eurozone are already translating to stronger demand for travel in both premium and economy classes.
 Looking at international air passenger volumes (first chart above) reveals early signs of improvement, particularly for
economy passenger numbers. The increase in economy class volumes has been supporting by the fall in oil prices,
which has led to lower fares. Economy class leisure travel is more price sensitive than business related premium class
travel. Gains in premium passenger numbers have been dampened by overall weakness in business travel demand
drivers. That said, positive economic momentum in some regions has supported stronger travel demand on some key
markets. Most notably, data show a pick-up in business confidence in the Eurozone. It is important to note, however,
that developments in emerging markets present a downside risk to growth in business-related international air travel for
the coming months. Business activity in those economies has dipped into contractionary territory for the first time in 12
months.
Premium Traffic Monitor
May 2015
 In 2013 and during earlier parts of 2014, when premium travel was expanding at a faster pace than economy travel,
there was a boost to the share of premium travel from total travel. This was positive for yield growth and revenues. That
trend has reversed during the recent past, placing downward pressure on the share of premium seats from the total. At
the same time, a rebound in economy class travel has also contributed to a fall in premium’s share of total travel.
Economy class leisure travel, the relatively more price sensitive travel market, has been given a boost by falling fares.
 Even though there has been no marked gain in premium’s share of total traffic, growth on longer-haul markets has been
robust. This has helped support premium yields on some markets, which in turn has supported the financial
performance of the longer-haul network airlines, compared to shorter-haul mainly leisure travel focused airlines in some,
though not all, regions.
 The profile of air travel growth shows an improvement in Q2, driven by better demand conditions in some regions. In
early 2015, we were seeing the negative impacts of earlier economic developments. World trade and industrial
production accelerated during parts of 2014, but that trend failed to continue through to the end of the year – the lagged
impact of that weakness in late 2014 had been showing up in the sluggish growth trend for premium travel earlier this
year. However, recent improvements in advanced economies, in particular in Europe, show that the economic recovery
in that region is on track, and we are now starting to see the positive impacts on air travel.
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Premium Traffic Monitor
May 2015
TRAFFIC GROWTH BY MAJOR ROUTE
 Results for the within Far East market remain robust, up 13.8% year-on-year, despite weakening economic growth in
some key economies and declines in trade to/from the region. In China, a slump in Chinese export has weakened
manufacturing for the past several months, and trade to/from the region overall was down 10% in Q1 compared to Q4
2014. Although early Q2 trade data suggests that weakness in trade could be bottoming out, forward-looking indicators
like exports orders show further weakness ahead.
 Economic conditions in the Eurozone remain fragile in the midst of on-going troubles with the Greek economy, but
there have been some positive developments with June data showing increases in business activity. Efforts by the ECB
to stimulate economic growth have led to an improvement in business and consumer sentiment in the region, and this
has now started to translate to stronger demand for air travel with the region. Premium travel growth within Europe was
up 7.6% in May year-on-year, and economy class travel rose 5.0%, both well above their respective trends year-todate.
 Markets connected to the Middle East have also seen solid growth over recent months, particularly in premium class.
Premium travel on Africa – Middle East, Europe – Middle East and Middle East – Far East all increased strongly in May
year-on-year (22.8%, 7.1% and 8.3%, respectively). Major economies in the Middle East, including Saudi Arabia and
the United Arab Emirates, have seen notable declines in non-oil sectors in Q2 2015 (Markit), but the rates of growth
remain robust and this should help sustain solid growth in air travel demand to/from the region.
IATA Economics
Conctact: Julie Perovic
[email protected]
st
21 July 2015
3
ANNEX:
TRAFFIC GROWTH BY ROUTE – MAY 2015
Premium Traffic
Growth
Economy Traffic
Growth
Total Traffic Growth
May 15
vs. May
14
YTD 2015
vs. YTD
2014
May 15
vs. May
14
YTD 2015
vs. YTD
2014
May 15
vs. May
14
YTD 2015
vs. YTD
2014
Africa - Far East
-27.0%
-15.0%
-13.9%
-11.1%
-15.3%
-11.4%
Africa - Middle East
22.8%
10.1%
14.3%
7.0%
15.0%
7.3%
Europe - Africa
-5.4%
-5.3%
-0.4%
-1.7%
-1.0%
-2.1%
Europe - Far East
-1.3%
2.5%
4.7%
4.2%
3.9%
4.0%
Europe - Middle East
7.1%
7.1%
9.9%
6.6%
9.6%
6.7%
Far East - Southwest Pacific
2.3%
5.9%
8.1%
6.8%
7.4%
6.7%
Mid Atlantic
6.4%
9.3%
5.5%
5.0%
5.6%
5.4%
6.3%
Middle East - Far East
8.3%
7.8%
6.0%
6.1%
6.2%
North America - Central America
0.6%
2.4%
7.9%
6.9%
7.2%
6.5%
North America - South America
-7.7%
-7.7%
-5.4%
-4.2%
-5.7%
-4.6%
North and Mid Pacific
4.6%
3.1%
8.1%
6.1%
7.5%
5.6%
North Atlantic
2.9%
3.2%
3.4%
2.1%
3.3%
2.3%
Other routes
5.2%
-1.0%
7.9%
5.3%
7.6%
4.7%
South Atlantic
-4.4%
-0.9%
0.5%
0.3%
-0.1%
0.1%
South Pacific
8.1%
0.4%
5.7%
4.0%
6.0%
3.5%
-4.0%
Within Africa
-6.9%
-5.1%
-4.9%
-3.9%
-5.1%
Within Europe
7.6%
4.6%
5.0%
2.4%
5.1%
2.6%
Within Far East
9.5%
9.7%
14.1%
11.4%
13.8%
11.3%
Within North America
8.4%
3.3%
15.4%
8.4%
14.8%
8.0%
Within South America
2.8%
1.4%
6.1%
7.2%
5.9%
6.8%
Total
4.1%
3.7%
6.4%
4.7%
6.2%
4.6%
Source: IATA Origin-Destination Statistics
PREMIUM TRAFFIC BY ROUTE – PREVIOUS MONTH
Share of Premium
Traffic
Revenues
Share of Total
Traffic
Revenue
Africa - Far East
0.6%
0.8%
7.9%
25.8%
Africa - Middle East
1.8%
1.2%
7.3%
24.4%
Europe - Africa
3.8%
7.0%
6.5%
34.5%
Europe - Far East
9.1%
13.7%
10.2%
40.5%
Europe - Middle East
5.1%
5.8%
10.1%
44.2%
Far East - Southwest Pacific
2.6%
3.0%
7.8%
27.8%
Mid Atlantic
1.4%
1.9%
7.8%
31.2%
Middle East - Far East
3.1%
2.1%
4.5%
16.0%
North America - Central America
3.9%
1.9%
4.3%
10.7%
North America - South America
2.4%
3.2%
11.4%
32.3%
North and Mid Pacific
5.6%
11.7%
12.7%
40.0%
North Atlantic
14.0%
23.0%
13.9%
50.9%
Other routes
6.1%
4.7%
7.6%
26.1%
South Atlantic
1.9%
3.0%
11.6%
36.0%
South Pacific
0.8%
2.0%
11.9%
39.8%
Within Africa
1.5%
0.6%
7.6%
20.4%
Within Europe
17.7%
4.8%
2.9%
9.7%
Within Far East
17.1%
8.9%
5.3%
15.9%
Within North America
0.7%
0.5%
2.0%
7.1%
Within South America
0.8%
0.4%
4.8%
10.6%
Total
100.0%
100.0%
5.9%
27.9%
Source: Diio, IATA
Premium Traffic Monitor
May 2015
International Premium Traffic Growth by Route - May 2015
Africa - Far East
North America - South America
Within Africa
Europe - Africa
South Atlantic
Europe - Far East
North America - Central America
Far East - Southwest Pacific
Within South America
North Atlantic
Total
North and Mid Pacific
Other routes
Mid Atlantic
Europe - Middle East
Within Europe
Middle East - Far East
Within North America
Within Far East
Africa - Middle East
30%
20%
10%
0%
-10%
-20%
-30%
South Pacific
% Growth
International Passenger Growth by Route - May 2015
% Growth
20%
10%
0%
Africa - Far East
North America - South America
Within Africa
Europe - Africa
South Atlantic
North Atlantic
Europe - Far East
Within Europe
Mid Atlantic
Within South America
Total
Middle East - Far East
North America - Central America
Far East - Southwest Pacific
North and Mid Pacific
Other routes
Europe - Middle East
Within Far East
Within North America
Africa - Middle East
-20%
South Pacific
-10%
IATA Economics
Conctact: Julie Perovic
[email protected]
st
21 July 2015
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