good news for global carriers is that the growth in international
traffic on the world's airlines continued through the first half of
this year, even slightly exceeding the full-year 5.9% growth rate
for 2006, according to an IATA report.
The bad news is that
there are warning signs that the trend may not continue.
increase in international traffic as measured by revenue-passenger
kilometers weakened to 5.3% for June, the lowest growth rate in
nine months, IATA said.
IATA's most recent
report on international first- and business-class demand for May
might be even more troubling to carriers.
Premium traffic in May
as measured by number of passengers was 0.7% lower than in May
2006. That's the first year-over-year decline since December
growth through May dropped to 2.2%, compared with 4.3% over the
same period in 2006.
"This general downward
trend in premium-traffic growth is of concern, given the strong
boost provided by premium-traffic growth to airline revenues and
profitability over the last two years," IATA said.
European carriers have
the biggest reason for worry. Premium traffic for routes within
Europe actually fell sharply year-over-year in May, which IATA
attributed in part to ongoing strong competition from no-frills
airlines on short-haul routes, even for business
Routes within Europe
still account for more than 28% of the world's premium traffic, so
a drop there has a big impact on the worldwide numbers.
But IATA said premium
traffic growth was disappointing on other key routes, such as
Europe-Far East and North Atlantic.
IATA did note that the
higher growth rate for premium traffic compared with economy-class
traffic on transpacific routes "suggests that there may still be
some boost to business-related traffic on these routes as
investment and trade links increase."
IATA spokesman Steve
Lott also noted that most economists were predicting a
re-acceleration in economic growth in the second half of the year,
which should provide a boost for premium traffic. But he cautioned
that the expectation, while reasonable, "cannot be