Premium Air Traffic Surpasses Previous Year for First Time Since 2008

(MoneyWatch)  Remember May 2008? The economy had started heading downhill, but air traffic was still flying high. So why the heck am I talking about it? Well, December 2009 was the first time that we saw positive year-over-year comparisons for premium traffic since . . . May 2008. It's good see, but of course, year-over-year comparisons look much prettier when the previous year's numbers were as bad as they were in December 2008.

According to the International Air Transport Association's (IATA) Premium Traffic Monitor, the number of people traveling in Business or First Class rose 1.7 percent in December 2009 versus December 2008. That's the good news. The bad news is that premium traffic is still down 17 percent from its high point in early 2008. That's an eight point rebound from the bottom, but that's still concerning. Things are improving, but they're still nowhere near where they were.

Of course, traffic is only half the story. It's nice to have butts in seats, but only if they're paying a decent fare. The fare levels have also rebounded, but it's still ugly. Average fares in the premium cabins are a full 20 percent below where they were at their peak in Q2 2008. Believe it or not, fares have risen 10 percent since April 2009, so they are making progress, but it's unclear if they'll ever claw their way back to where they were.

The biggest weakness continues to be in the shorter haul markets. For example, premium traffic within North America was down 13.3 percent year-over-year. European traffic was down 9.7 percent. That, of course, means that other markets saw greater than average gains in passengers.

The heat has really been turned on in Asia. Intra-Asia premium traffic jumped a whopping 14.5 percent. Traffic from Europe to Asia was up 6.2 percent. But North American long haul traffic continues to lag. North Atlantic premium traffic was down 1.1 percent while North Pacific saw declines of 3 percent. Some of that could be due to tight capacity constraints - there just aren't that many seats to fill anymore - but it could also be a fundamental shift among some people. Teleconferencing and coach seats are two options that become more attractive as travel budgets are cut.

Photo by Telstar Logistics