Flying In Style: Premium Air Travel Rebound Begins

(MoneyWatch)  The International Air Transport Association (IATA) has released its January 2010 Premium Traffic Monitor and the news is very good. IATA is now officially saying that the drop in premium traffic appears to be cyclical and not permanent as had been previously posited. That's music to the ears of every airline, though it doesn't mean everything is great. If the cycle turns down again, well, yeah, you get it.

Despite the good news, premium traffic is still having a tough time. Premium air traffic is still 16 percent below its previous high, but at least it's now 9.4 percent above its most recent nadir. Revenues are still struggling as well. They're still 30 percent off the peak. Fares have, however, grown 10 percent in the last few months. So there are hints of good news, but they seem to be pretty positive that the decline was cyclical. How do they know? Check out this chart.

As you can see, throughout this entire process, premium air traffic has been very closely tied to developed countries' trade in goods. So there is a lot of optimism these days. As long as the trade numbers keep going up, then the expectation is that so will the premium passenger numbers.

This, however, doesn't mean that all segments will continue to rebound. Within Europe, for example, premium traffic feel another 7 percent in January 2010 vs 2009. That's on top of a 25 percent fall for January 2009 vs 2008. As IATA says in the report, "This premium market does appear to be in structural decline."

But overall, things are looking much better now that we have a couple of months of recovery stats coming in. So now we don't appear to need to worry about a structural decline overall, but we do have to worry about a double-dip recession, of course. As goes trade, so goes premium traffic.

[Photo via Flickr user garybembridge]