Global two-class passenger traffic continues to decline

The International Air Transport Association (IATA, hereinafter referred to as the "International Air Transport Association") released the *** two-class data report shows that in November 2015, the global two-class (first class, business class) and economy class passenger traffic continued to decline, and the growth rate of two-class passenger transport declined significantly. Global two-class passenger traffic increased by only 0.7% compared to the same period last year, and economy passenger traffic increased by 3.4%. Looking at 2015, the growth in economy passenger traffic was helped by lower fares due to lower oil prices. In contrast, the economy passenger market is more sensitive to fares. Two-class passenger traffic continues to grow, but business travel demand continues to be weak and the growth rate is relatively slow.

The outlook for international air passenger traffic growth is mixed, with previous growth supported by inland Europe and the North Atlantic markets. From a route perspective, the performance of the Europe-to-Far East market was largely responsible for the weak air passenger demand in November 2015. The Lufthansa strike has had a negative impact on passenger growth, and the inland markets of the Far East have weakened over the past few months, indicating that economic development in parts of Asia has begun to put downward pressure on air travel demand. China's overall GDP grew by 6.9% in 2015, down from 7.3% in 2014, and a further slowdown in China's economy has reduced passenger demand, especially for business travel. Growth in Europe's inland travel market, which had previously contributed to global air passenger traffic growth, slowed in November. Part of the weakness in the market was also affected by the Lufthansa strike, but the market covers long-haul travel and could also be affected by the slowdown in other parts of the world.

From 2013 to early 2014, the growth rate of two-class passenger traffic was faster than that of economy passenger traffic, which increased the proportion of two-class passenger traffic in the total global passenger traffic and played a role in promoting the total revenue and revenue growth of airlines. However, this trend has reversed in 2015, with relatively strong growth in economy class passenger traffic putting downward pressure on the two-class share of global passenger traffic. Falling fares provide strong support for the more price-sensitive economy passenger market. While there are no signs that the two-class share of global passenger traffic will increase further, the performance of the long-haul market remains encouraging. This performance will help boost two-class revenue in some markets compared to some (though not all) airlines that focus on short-haul leisure travel, which in turn will improve the financial performance of long-haul carriers.

In November, the two-class passenger market in the European region grew by 0.3% year-on-year. The North Atlantic market continues to improve, and while it remains unclear whether the US economy has fully recovered from the recession, economic indicators suggest that improvement is imminent, boding well for air travel demand. The eurozone economy remains fragile, but growth has been positive and stable for several months now, and the stronger performance of the eurozone economy has helped business air travel across the North Atlantic region.