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Airline Industry

Decline in travel spurs new airline enticements

May 24, 2009

The fall in air travel has not yet bottomed out and is sparking a range of new deals to lure passengers back.

Latest International Air Transport Association figures show the number of passengers travelling in March was 9.3 per cent down on the same month last year.

Unlike with air freight, there is no indication in the data yet that the decline in passenger travel has reached bottom, the association says.

Airlines have dropped leading fares to record low levels and are offering two-for-one deals and other inducements.

Passenger numbers in first or business class were down 19.2 per cent, compared with the previous month's decline of 21.1 per cent. The rate of decline in economy improved from 8.3 per cent to 8.2 per cent.

Adjusted for leap year and Easter, both travel classes remain in decline.

Premium travel in the Asia-Pacific region remained the weakest in March, with falls of 29.3 per cent across the Pacific, 29.2 per cent within the region and 20.1 per cent between Europe and the Far East.

The drop off in premium ticket sales is especially damaging for airlines. Although premium tickets make up around 8 per cent of total passenger numbers, they make up at least 25 per cent of airline revenues.

Airlines are going beyond low fares to fill seats.

Emirates airline announced last week it was offering New Zealanders a "Kids Go Free" promotion which will see two children aged 16 or under fly, eat and play in Dubai if they are travelling with a paying adult each. The deal runs until September 20.

Flight Centre says other added-value deals through various airlines have included $550 cellphone giveaways with business class fares and draws for upgrades to business class.

The travel agency says prices and offers now available are not likely to be sustainable medium-term.

While airlines had a tough March, figures from Cathay Pacific for April show an 8.8 per cent increase in passenger numbers compared to the same month last year, although they were helped by the later Easter this year.

Cathay and its regional subsidiary, Dragonair, are also reporting the number of passengers carried is up by 0.2 per cent for the calender year so far, against a capacity rise of 0.3 per cent.

Decline in travel spurs new airline enticements
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