Cheap airfares and major tourism investment initiatives in the Middle East have resulted in a surge in the number of economy-class passengers, according to the latest report from the International Air Transport Association (IATA). However, the rise in economy-class numbers affected the premium travel sector across the region. The number of passengers travelling business and first-class on Middle-Eastern routes in June was down compared with the same month last year.
This was due mainly to many corporate travellers downgrading from business to economy class, travel agents said. "People who generally fly in business class are now flying in economy class due to company cost-cutting measures," said Premjit Bangara, the travel manager at Sharaf Travel in Dubai. Mr Bangara said economy-class fares had been cut substantially, driving up passenger numbers. "That is encouraging people who were sitting on the fence to actually travel now," he said.
As a result of the surge in economy class, total passenger numbers for the Middle East increased across major global routes, data from IATA showed. "Partly, this reflects the investment in tourism in the Middle East and direct travel to the region," it said. Dubai and Abu Dhabi in particular have poured vast sums of money into developing their tourism industries, with cultural projects such as Saadiyat Island under way in the capital and dramatic expansions of their hotel sectors.
Passenger traffic at Dubai International Airport rose by 10.3 per cent in June as travellers took advantage of cheap tickets offered at Emirates Airline and the more than 120 other carriers serving the airport. The airport handled 3.36 million passengers, up from 3.04 million in June last year, Dubai Airports said. Airlines have been forced to lower fares an average of 20 per cent because of the global economic downturn.
Analysts have said that budget carriers stand to benefit the most from this trend, while regular airlines, which depend on revenues from premium-class travellers, will suffer. Budget air carriers such as Air Arabia and flydubai had helped boost numbers, said Niko Hermann, an aviation analyst at Oliver Wyman. "The Middle East has slowed down the capacity growth recently in light of the economic situation, but compared to other regions of the world certainly it has still been fast-growing," he said.
Passengers travelling in business and first class within the Middle East declined by 11.6 per cent in June compared with the same month last year, while for economy class there was a 8.5 per cent increase. The number of passengers travelling business and first class in June between the Middle East and Asia remained down on last year, but economy was up sharply, according to IATA. This helped boost total passengers numbers 14.6 per cent compared with June last year, following a 9.4 per cent rise in May. Premium-class numbers dropped by 5 per cent while economy passenger numbers were up 16.6 per cent.
For the Europe-to-Middle East route, total passenger numbers increased 7.5 per cent in June. Again, business and first-class were down, by 8.9 per cent. "Part of the growth in these two markets, compared to the decline in direct Europe-to-Far East markets, reflects the success of Middle-Eastern airlines in gaining market share from the direct flights by flying passengers via their hubs," IATA said.
Globally, passenger numbers in June were now showing some stabilisation in air travel demand, it said, but this was largely due to dramatic cuts in air fares. The decline in total passenger numbers travelling internationally slowed from 9.2 per cent in May compared with the same month last year to 7.1 per cent in June. "These figures are also driven by summer traffic," said Mr Hermann. "Also the capacity that has been added has driven the numbers."
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