People are spending money on business and premium seats after the pandemic

  • Travelers are buying more expensive seats as leisure travel recovers, the head of IATA said, according to Bloomberg
  • The trend comes despite an increase in oil prices that has resulted in an increase in air fares.
  • Demand for premium travel is helping the airline industry recover from the pandemic slump, said IATA director Willie Walsh.

Vacation travelers are fueling a recovery in premium air travel as more vacationers choose to spend their savings on business and first-class seats amid a return to the air, the head of the International Air Transport Association said.

Demand for premium seats is outpacing the recovery in the travel economy, helping the airline industry recover more quickly from the pandemic collapse, and despite the impact of higher oil prices on fares, IATA director general Willie Walsh said Monday, according to Bloomberg.

“There is a strong pent-up demand for travel,” Walsh told media on Monday at the Changi Aviation Summit in Singapore, Bloomberg reported. “Consumers had disposable income in the two years of the pandemic. People have saved and so they are willing to spend that money.”

Air traffic slumped during the pandemic, but is steadily recovering as countries ease their restrictions on overseas arrivals. International travel in the first quarter of this year was 48% of 2019 levels, Walsh said in a keynote address at the summit, an improvement from 2021 when traffic was 25% of 2019 levels.

Travel is picking up despite rising fare prices, as the income saved during the pandemic, coupled with an appetite for travel, means people are willing to pay extra for a more comfortable flying experience, Walsh said.

“It basically comes down to what we call premium leisure, which again supports the idea that consumers have discretionary spending and that they are willing to spend for a premium experience,” Walsh said, according to Bloomberg.

That income has so far helped to overcome the impact of oil prices on tariffs, he added.

Higher oil prices – driven by the recovery after the pandemic and, more recently, international sanctions against Russia – now account for up to 38% of an airline’s costs, he said, compared to 27% in the years leading up to 2019. That is airfares pushed up 10% in the first quarter of this year, Walsh said, according to Bloomberg.

“It is inevitable that those higher oil prices will find their way to consumers in the form of higher ticket prices,” said the director.

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