• Tuesday, March 05, 2024
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BusinessDay

How premium travellers help to grow air travel

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f there is any set of people that is contributing directly or indirectly to the financial growth of the air travel sector, even, globally, it is the super-rich among us.

For these set of people, Airlines anywhere in the world would do anything to attract their loyalties.

They will forever travel in the expensive  Firstclass, Upperclass and Business class cabins of airlines no matter the price tags, therefore, a good number of airlines get their huge revenue from these set of people who would not think twice about what is in their purses before booking, even reserving seats for members of their families, business associates.

Staffs of big companies of the world are permanently on their lists of premium travellers and so the airlines do not hesitate to also offer incentives such as free access to exquisite lounges, free airport and ground transfers, free chauffeurs and other amenities.

The premium traveller enjoys super in-flight entertainment throughout their journeys, and are treated like kings in their cabins with exotic wines and drinks, thanks to the money they pay.

For instance the number of passengers traveling in premium seats on international markets was 5.5 percent higher in December 2013 compared to a year ago. According to the International Air Transport Association (IATA), growth in premium travel has been supported by positive developments in the business environment in the second half of 2013. The trend shows that demand for premium seats has been on the increase consecutively since 2011, with Europe and the United States both showing signs of economic improvement.

In Nigeria, a recent report shows that foreign airlines in the country made N158 billion from the country in 2012; N2 billion higher  than the amount it generated in 2011.

“The major revenue comes from the Buisnessclass tickets f those big airlines, they have now deliberately concentrated attention on that cabin because of the business travellers”, a travel analyst said.

British Airways, Lufthansa, Virgin Atlantic, Ethiopian Airline, Delta Airlines, Emirates and Air France/KLM top the list of the carriers with higher profits.

According to the report by the Nigerian Civil Aviation Authority (NCAA), British Airways had, in the past 48 months, improved its revenue generation in the country, realising N33.5 billion from tickets sold in 2012, compared to N31.7 billion it generated in 2011.

Following the British Airways is the Emirates, which sold at least N22.4 billion tickets in Nigeria in 2012, against the N30.5 billion it earned in 2011.

Besides, Etihad Airline got N2.5 billion in the same period, while Qatar Airways made N8.2 billion in the Nigerian market.

Air France, according to the report, earned N13.9 billion; Lufthansa, N12.1 billion, while Virgin Atlantic made N11.4 billion in the year under review.

Turkish Airlines was found to have recorded over 100 per cent increase in ticket sales in the years under review, as the airline sold N3.6 billion tickets in 2012.

In addition, business-related premium travel is being supported by a recent pick-up in trade growth, particularly in Asia as demand from advanced economies improves.

“Improvements in the business environment over recent months have supported growth on key markets, which contributes most to total international premium revenues. In the US, recent economic indicators have shown a solid fourth quarter, with manufacturing and services sector activity expanding at a rate only marginally slower than Q3, despite the disruption of the government shutdown in October”, Tony Tyler, IATA director general said.

The trend was similar for premium travel within Europe – with growth of 2.5 percent in 2013, up on the previous year (1.0 percent). Easing downward pressure on economic growth throughout the Eurozone also supported robust growth on connecting markets, including Europe – Far East and Europe – Middle East, which were up 4.9 percent and 8.9 percent respectively in 2013, similar to their growth in 2012.

“But the largest share (21 percent) of the rise in premium travel in 2013 was attributed to the within Far East market. This market expanded 7.2 percent in 2013, supported by regional trade growth in the second half of the year. Given recent indications of easing growth in China, however, the outlook for the market is questionable.

“Elsewhere, improvements in the US economy combined with strong growth of some emerging markets in Central and South America supported robust expansion in premium travel connecting these markets. Mexico’s economy showed a pick-up in second half of 2013 – because of stronger exports and government spending – after a notable slowdown in the first half of the year”, he added.

In South America, nations like Colombia, Chile and Peru continue to post Gross Domestic Product  growth rates in excess of 5  percent, supported by strength in manufacturing and export sectors.

Premium air travel on the North America – South America market, according to IATA was up 8.8  percent in 2013, and 5.9 percent for North America – Central America.

Also, according to Global Business Travel Association (GBTA), Premium air travel is on the rise. A study conducxted by the association finds that Asia will lead the way as 42 percent of premium travelers in that region plan to fly premium more over the next twelve months, with another 40 percent planning to fly the same amount as last year.

In Europe, 83 percent of respondents plan to fly premium the same or more over the next twelve months (with 27 percent planning to fly more) and in the U.S., 81 percent plan to fly premium the same or more (with 21 percent planning to fly more).

Data shows that travelers who make purchasing decisions based on aircraft type prefer Boeing airplanes nearly two to one over its competition in the long-haul segment.

The study, which identifies three categories of premium air travelers, noted that many of them look for airlines with strong financial reporting and  good safety records.

The ‘Safe and Sounders’, that is travelers who are risk averse and want airlines with a strong safety record and a history of financial stability. They prefer airlines that provide high quality in-flight products and services.

The ‘Experiencers’ – This group is slightly younger (39 years old versus 47).  They are excited about travel and look for airlines to enhance the experience. They are likely to change airlines frequently and enjoy flying the flagship airline of their destinations.  Experiencers also seek value and are likely to book based on price.

The ‘Loyalists’ – These travelers enjoy the treatment that comes with frequently flying the same airline. They like to build frequent flyer points, enjoy flying their national airline and want to be recognized with upgrades and special treatments. In general,  loyalists are less motivated to choose an airline based on amenities and safety record.

“84 percent of premium travelers rank an airline’s reputation and safety record as the most important motivating factor for choosing an airline while 67 percent rank the availability of lie flat seats as being an important factor, only half say that the availability of a pre-flight lounge is a determining factor. Less than half (47 percent) are motivated by the quality or selection of in-flight entertainment”.

The technological amenities travelers are looking for include: Wi-Fi, AC power and audio/visual capacity. Somewhat surprisingly, the ability to use cell phones including voice and excluding voice do not rank very highly as determining factors.

By: Sade Williams