2 Premium Traffic Monitor March 2014
Growth in international trade is a good indicator of business travel. This is not only because of the obvious link to the manufacturing sector, but also because international trade is a good proxy for the drivers of business travel in other key sectors, such as finance and consulting. Toward the end of 2013, there was acceleration in world trade growth, driven mostly by emerging Asia and improvements in advanced economies. In 2014, however, that acceleration has slowed and latest data are showing declines in world trade volumes. Looking ahead, however, increases in export orders suggest that the slowdown in trade growth could be temporary.
The second chart below shows business confidence (measured here by the JP Morgan/Markit purchasing managers’ index), indicating a pick-up in growth in business activity since mid-2013. The acceleration in global business conditions over the past several quarters reflects better performance of advanced economies. Over recent months, however, the improvement in business conditions has slowed. While the deceleration in growth has occurred in several major economies, the most significant area of weakness has been China.
Financial market sentiment can also provide an indication of the state of the global economy, and demand for business related travel. The third chart below shows the MSCI World share price index and its movement relative to premium travel growth. The share price index tends to lead changes in premium travel demand by several months, as fluctuations in companies’ financial performance take time to affect business travel plans. Current financial market performance, as indicated by the MSCI World share price index, shows a fall in share values in 2014 compared to late 2013. Much of the decline is due to the emerging market asset sell-off as the US tapers its quantitative easing program. So far there are some signs of weakening in emerging economies as they adjust the outflow of funds, but the duration of these impacts as well as the impact on premium travel remains to be seen.
% c h a n g e o v e r y e a r
Premium passengers and world trade growth
Premium Travel GrowthWorld Trade in Goods Growth
Source:Netherlands CPB, IATA
C o n f i d e n c e I n d e x % C h a n g e o v e r Y e a r
Premium Travel and Business Confidence
Source: IATA, Markit/JP Morgan
Premiux PaxPMI Index (manufacturing)
P r e m i u m P a x , Y o Y % g r o w t h M S C I W o r l d i n d e x , Y o Y % g r o w t h
Premium Traffic and Global Financial Market PerformanceSource: IATA, ThomsonReuters
MSCI World IndexPremium Traffic Growth
First / BusinessEconomyTotal
Traffic Growth by Route -March 2014
Within EuropeNorth AtlanticWithin Far EastEurope-Far EastNorth and Mid Pacific
% G r o w t h , Y e a r - o n - Y e a r