Premium traffic - and revenues - in freefall (Transpac down 28½%)

[serfty]

Interesting Article:

Is the full service airline business model broken? Network airlines face a tipping point | Centre for Asia Pacific Aviation

It is only a matter of days before Asia Pacific airlines begin grounding aircraft, after yesterday's ugly traffic report from Singapore Airlines, today's dismal premium traffic report from IATA for Jan-2009 and statements by Cathay Pacific CEO's Tony Tyler that the airline has entered a time for "difficult decisions".

The battle over the dwindling premium traffic market is intensifying and there will be casualties along the way. Asia Pacific full service airlines are feeling the pressure of the ‘Great Recession" more than most and major changes to networks could be days or at most weeks away, if conditions continue to deteriorate as expected.

Cathay Pacific CEO, Tony Tyler, this week warned it may be necessary to take some "very difficult decisions about our network and about the company generally in order to secure the sustainability of this business".

The Hong Kong-based carrier would not be alone in contemplating wholesale changes to its strategy as the global economic downturn shows no signs of bottoming out. Across Asia - and the world - airlines are confronting a poisonous combination of weak revenues, falling load factors and too much capacity in the pipeline. Singapore Airlines (SIA) this week reported record load factor falls across its network in Feb-2009. Further network cuts (on top of those already announced) could be brought forward by SIA.

...

For the South Pacific, where growing competition between Qantas, United Airlines, V Australia and Delta will increase available premium seats by more than 50% over a matter of weeks, the Jan-2009 fall was a horrific 28.5%.

IATA Premium traffic growth (% change-year-on-year) by region: Jan-2009

Source: Centre for Asia Pacific Aviation & IATA

IATA estimates the reduction in average fares and fuel surcharges have resulting in revenues from premium passengers falling by at least a quarter in Jan-2009, which is "wreaking significant damage to network airline yields and profitability". ...

 

[JohnK]

Everyone feels sorry for the airlines, along with every other company in the world, but perhaps it is time to revise their long term strategies.

The airlines have had steady growth in their premium cabins for many years now. The world is changing so perhaps new aircraft should be configured with more WHY seats and less premium seats. All these improvements in First Class suites, lie flat beds is fine and dandy but who is going to pay for it? No point flying long haul with 1 passenger in First class and the business class half full....

 

[NM]

Everyone feels sorry for the airlines, along with every other company in the world, but perhaps it is time to revise their long term strategies.

The airlines have had steady growth in their premium cabins for many years now. The world is changing so perhaps new aircraft should be configured with more WHY seats and less premium seats. All these improvements in First Class suites, lie flat beds is fine and dandy but who is going to pay for it? No point flying long haul with 1 passenger in First class and the business class half full....

Shh, don't give them ideas. Those 450 seat A380s will soon become 550 seat sardine cans :shock:. The upper deck piano bars on the original 747-100s didn't last long before the airlines realised that sticking a few dozen Y extra seats made them more money than an F lounge.

 

[JohnK]

Those 450 seat A380s will soon become 550 seat sardine cans :shock:.

If you are lucky. More than likely the A380s will become 850 seat sardine cans. :shock:

 

[NM]

If you are lucky. More than likely the A380s will become 850 seat sardine cans. :shock:

Shhhhh, don't give QF ideas about how to utilise the A380 with an orange star on the tail!

 

[odysseus]

Interesting Article:

Is the full service airline business model broken? Network airlines face a tipping point | Centre for Asia Pacific Aviation

Interesting to look at that map, when they say that Australia is in the best position worldwide, yet the greatest falls in premium travel have been to and from the Asia/Pac region.

 

[anat0l]

The upper deck piano bars on the original 747-100s didn't last long before the airlines realised that sticking a few dozen Y extra seats made them more money than an F lounge.

Yeah well, so much for the ideas of the A380s sporting casinos, hair salons, dinner halls and the like, right?

 

[NM]

Yeah well, so much for the ideas of the A380s sporting casinos, hair salons, dinner halls and the like, right?

And don't forget the bowling alleys!

 

[dajop]

Interesting to look at that map, when they say that Australia is in the best position worldwide, yet the greatest falls in premium travel have been to and from the Asia/Pac region.

That would have to be because it is so far from everywhere else and fares were always way too high ...... (OK spurious emotional claim I know!

Interesting though that the Australia/Asia traffic seems to be the least worst of the bunch, which might explain why we're not seeing the dramatic fare drops like on other routes (EK flights not withstanding).