British Airways sees fall in premium class passengers

British Airways, the troubled airline, said yesterday its premium first-class and business travel fell more than a quarter in April, confirming fears the air travel industry is still in the grips of a decline.

Passenger traffic across the airline fell 2 per cent on the same month last year. BA, which has slashed thousands of jobs and cut its flight capacity over the past two years in response to the downturn in air travel, said its outlook remained uncertain. "Revenue and forward bookings continue to be impacted by global economic weakness, Sars and the situation in Iraq," the company said. "Forward visibility on revenue and traffic remains limited."

BA's Asia-Pacific routes had the biggest fall in passenger traffic in April, down 22.1 per cent on the same month last year, after the outbreak of Sars. The company's seat load factor, which measures the number of seats filled as a proportion of available seats, worsened 0.4 per cent to 69 per cent compared with April last year. Capacity was reduced by 1.3 per cent, but more travellers have begun flying across the Atlantic to North America.

The airline has faced cut-throat competition from the onslaught of no-frills carriers that have offered customers rock-bottom fares. BA said ticket promotions and the timing of the Easter holidays helped cushion the overall drop in passenger traffic.

A general malaise in the travel industry is, however, affecting many airlines and, even the low-cost carriers are starting to feel the pinch. EasyJet is set to report today a first-half loss of up to £50m, after write-downs from its acquisition of Go and a fall in margins. "BA is seeing a massive drop-off in the number of business travellers – that is a market easyJet is also reasonably exposed to," Gert Zonneveld, an analyst at West LB Panmure, said.

Ryanair, the Irish no-frills carrier, yesterday reported a strong increase in its passenger numbers, up 34 per cent to 1.47 million on the same period last year. But its load factor has dropped 1 per cent on the period last year to 79 per cent.

"Our capacity has increased and with our new Boeing planes, we can take on board 189 passengers. We are also consistently adding new routes – we began flying to 25 new destinations this week," a spokesman for Ryanair said yesterday. Ryanair has this week restarted flights operated by Buzz, the low-cost airline it bought from KLM airlines. Analysts are more concerned at the average price of its fares. EasyJet said in April that in the first half of the year its average fares were down 10 per cent to £37.44.

"We are waiting to hear what easyJet has to say about how the market in the summer will develop," Mr Zonneveld said. "Throughout the winter months we have seen a steep decline in average fares. The market has been very difficult for everyone and there has not been a pick up in bookings. It is hard to see strong pricing in the coming months."