KUALA LUMPUR (Feb 23): Broad weakness in key demand drivers resulted in a soft end to 2015 for industry-wide premium-class travel volumes, according to the International Air Transport Association (IATA).

The IATA in its premium traffic monitor for December 2015 said the lack of strong momentum on the demand side meant that growth was likely to remain only modest in the near term.

“Nonetheless, premium’s share of revenues is holding up on key routes, providing a buffer for airline financial performance,” it said.

The IATA said premium traffic volumes grew by an estimated 3.7% in 2015 as a whole.

However, it said much of the growth was seen early in 2015, and the upward trend in the premium market eased over the latter months of the year

IATA said the easing in the upward trend of premium traffic over the second half of last year relates to broad-based weakness in the drivers of premium travel demand, including the ongoing uneven pattern of global economic growth and the emergence of key economic risks.

It said comparatively strong economic performance in advanced economies has supported premium traffic on the North Atlantic, but slowing growth, and even recession, in a number of large emerging markets such as China and Brazil, has weighted on premium traffic growth in many markets.

It explained the second headwind for premium traffic has been the ongoing sluggishness of world trade growth.

“Admittedly, world trade volumes bounced back strongly in the second half of 2015 from the firm downward trend seen earlier in the year.

“Moreover, given the extent of the declines seen in the H1 2015, annual trade growth is likely to pick up sharply over the coming months too,” it said.  

The IATA said challenging conditions in some of the key industry sectors for premium travel – notably the banking sector, as well as the mining and energy sectors – presents a broader headwind for premium traffic growth.

“The lack of strong momentum in the key premium-class demand drivers, particularly world trade, means that premium-class traffic is likely to continue to grow at just a modest rate in the near term,” it said.