Number of premium airline passengers plummets in Sept.

The number of premium travelers worldwide dropped 14 percent in September, as compared with the same period last year, and dropped 23 percent from September 2007, according to a report released Tuesday by the International Air Transport Association. The drop in premium travelers is significant because it came during a time when leisure travel slows considerably and airlines rely on the higher ticket prices paid by business customers. The steepest drop in premium passenger numbers came on routes within North America and Europe. By contrast, business travel throughout the Middle East remained strong.

At the same time, the number of leisure travelers, typically represented by families flying in economy or coach seating, increased 1.2 percent in September over the same month last year, but down slightly from August, according to the monthly report.

Business and leisure travel numbers had begun to show improvements during the summer, but that trend ended in September.

Analysts said the latest passenger traffic numbers are disappointing but not surprising. With major worldwide industries continuing to lay off workers, analysts say travel budgets will continue to shrink. Making matters worse for airlines, analysts say many companies are requiring employees to fly in the economy or coach sections to save money.

“It's disappointing, because you are wondering where the bottom is,” said Ray Neidl, a New York-based airline consultant for Calyon Securities.

Julius Maldutis, an economist and airline consultant for Aviation Dynamics Inc., agreed.

“The airlines are taking a pummeling,” he said. “The big question is, when will the airlines show a significant recovery?”

Analysts don't expect the upcoming holiday season to pull the airlines from this slump, because holiday travelers typically pay discounted rates by reserving tickets far in advance. However, if business travel numbers do not begin to show improvement in the next few months, analysts say the airlines have no choice but to make further capacity cuts —eliminating flights and grounding airplanes — and perhaps increasing ticket prices and fees for baggage, food and other amenities.

Steve Lott, a spokesman for the transport association, said the airline industry already is poised to lose US$11 billion in revenue in 2009.

But he said the airlines are not shocked by the declining numbers. Until the overall economy shows significant improvement, fewer travelers will buy those premium seats, he said.

One sign of optimism in the report was an improvement in business travel throughout Central America, which had been hit severely by the effect of the H1N1 flu. Within Central America, the number of premium travelers dropped 2.3 percent in September, a dramatic improvement from the 34 percent fall in August. However, the report suggested further outbreaks during the winter months could signal another slump in airline passengers in the region.

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