Full service airlines, and especially premium class travel, is on the decline not just in India but also across the world. With around 80 per cent of the Indian domestic air travel market now cornered by low-cost carriers, premium travel, globally in full service airlines, is facing tough times.
According to the latest report from the International Air Transport Association, "the size of international premium passenger market has been shrinking for three successive months as business confidence deteriorated... premium travel has not yet recovered to the numbers seen before the recession.
The market is 5 per cent lower than it was in early 2008. If premium travel had continued to grow at pre-recession rates of 5 per cent then the market would have been over 20 per cent larger than it was in May this year.... The proportion of premium seat sales in total international air travel fell further in May to just over 8 per cent."
The revenue share of premium travel was down to 27 per cent and as against May last year, premium passenger numbers were up only 1.7 per cent, versus a 5.8 per cent year-on-year comparison in April.
While total international travel was still on the rise, that growth was starting to be sustained by economy rather than premium seat sales, with the number of passengers travelling on economy seats 5.4 per cent higher than in May last year and considerably stronger than premium travel.
"There may be a shift to cheaper seats by business travelers, or rather their corporate buyers. However, the main reason for this deterioration in seat mix is the weakness of European markets. The weakest markets in May and recent months were within Europe and the North Atlantic, between them representing 40 per cent of the international premium market by passenger numbers and 34 per cent by share of revenues," IATA says.