Expensive air travel reduces demand

Business travel keeps increasing but leisure travel falls back

Just as airlines were starting to see a return to healthy growth, higher fuel costs are pushing them to raise ticket prices – something that is having a direct impact on demand. According to the International Air Transport Association, signs of slowing demand are already clear. Growth in economy-class seating slowed to 3.3% in February year-on-year, from 5% in January. “Economy-travel volumes appear to have been trending downward since October,” IATA said in a report. “The 34% rise in jet-kerosene prices over that period and the impact on travel costs may now be causing price-sensitive passengers to cut back.”
British Airways increased its one-way fuel surcharge last week to a range of $150 to $170, while Qantas raised its fee by 52% to $303. Global business travel indicators, however, remain buoyant.
[pictured: Star Alliance lounge, Paris CDG Airport, Terminal 1]