In the first quarter of the year, the airline industry suffered major losses and dwindling revenues. Almost all US airlines recorded a decline in passenger traffic, but the plunge experienced in March has given way to a mild fall in April. This has raised some faint hope that the worst of travel recession could be over, although analysts maintain that it is too early to predict.
Analysts attribute the escalation of passenger traffic emanating from consumers who are very conscious of their budget, hence are reacting to low-priced sales. Hunter Keay of Stifel Nicolaus & Co. said on Thursday that airlines have opted to sell seats below normal cost than not to sell at all.
Businesses do cut down on travel expenses during a recession, thus, high-paying business travelers, who are thought to be the best clientele for airlines have resorted economical coach seats in place of first class seats. Figures in American Express Business Travel indicate that the first quarter of 2009 for the average one-way fare of corporate travelers in the US was $213, $33 down compared to 2009.
Even though US airlines don’t calculate premium travel monthly, British Airways said the month of April experienced a 17.7 percent decline in the demand for first class and business seats, making it worse compared to the 13.3% decline during the month of March. The month of March saw all U.S airlines reduce passenger capacity considerably.
Adding the swine flu worries, passenger capacity, particularly to Mexico reduced considerably. Continental, top U.S. carrier to Mexico experienced a cut back of 50%. Nonetheless, despite traffic being below that of last year’s level, airlines are enjoying a bonus from lower fuel prices compared to last year. Pundits however still anticipate a loss amongst the six leading US airlines in the second quarter and probably for the whole of 2009.