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Premium Class Travel Drops Like Crazy in December

Airlines around the world reported extremely weak demand for premium class travel in December, with a 13.3 percent drop over the previous December.  The Asian market faired worse, showing a 25.1% decrease in business and first class paid travel during the month.  Somehow, African premium traffic was up about 12% during the period.

Asia has been hit quite hard during this downturn, and to that end Singapore Airlines announced that it will be shrinking capacity by about 11% during the spring.

The drop in premium traffic is a significant concern for US airlines as well, since they have shifted capacity to international travel to try to capture the profitable premium traffic on those routes.  A number of airlines have introduced a Premium Economy product to try to capture some additional revenue from those who are willing to pay a bit more than coach but not as much as business class.  On domestic routes many US airlines have begun charging for exit rows and bulkheads, essentially creating a mini premium economy area.  I expect we’ll see a US airline (other than United) offering a true premium economy on their growing international business this year.

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