Premium travel hurting
The gradual decline in business confidence is slowing growth in premium-class air travel, which is largely business-related.
Premium travel grew by 3.7% last year compared with 3.4% growth for economy class.
The close growth rates signal a slowdown in business travel, according to a traffic monitor report released by the International Air Transport Association (IATA).
Business travel had been expanding at a faster pace than economy class in previous years.
In 2013, the annual growth rate was 4.2% for premium international air travel and 3.5% for economy class.
This development reflects a gradual slowdown in improving business confidence throughout the second half of last year, with economic conditions in the euro zone and China deteriorating.
Premium travel’s share of total traffic remained steady last year, but the growth of long-haul markets has been robust.
This has helped to support premium yields, as long-haul markets drive the greatest share of premium revenue.
In addition, this has boosted the financial performance of long-haul airlines compared with short-haul and mainly leisuretravel focused airlines in some regions.
But IATA said the outlook for world trade activity contained some downside risks.
Business confidence, a good leading indicator of trade activity and demand for business-related air travel, has not seen any improvement since mid-2014.
IATA said international air travel volume within East and Southeast Asia weakened considerably last year, posting a meagre 1.4% increase, below global average growth of 3.6%.