Corporate travelers forced to fly coach during the recession may never return to business-class cabins as employers seek permanent cuts to their travel budgets, the International Air Transport Association said.

While premium bookings advanced 1.7 percent in December from a year earlier, the first gain in 18 months, economy-class traffic rose 5 percent even as consumer confidence leveled off, suggesting business travelers are staying in coach, IATA said.

With carriers such as British Airways Plc relying on corporate flyers to make services profitable, a permanent shift to coach would pile more pressure on an industry that’s facing losses of $5.6 billion this year. Revenue per passenger is still 5 to 10 percent below 2008 levels, showing that airlines are struggling to raise fares even as demand picks up.

“Premium fares are absolutely critical for airlines and this will heighten fears that the market may never return to the same level,” said John Strickland, an aviation specialist at JLS Consulting Ltd. in London. “It looked like we might see a structural shift when business travel fell off after 9/11, and it seems even more likely this time.”

First- and business-class bookings increased in December for the first time since May 2008, IATA said in a statement Sunday, recovering from declines that reached 25 percent in May last year. All-told, the credit crunch and global recession have wiped out six years of growth, the association estimates.

“The question is, to what extent is that lost growth a structural shift or a cyclical fluctuation?” IATA said.
TravelWise Group Ltd., which books business trips for small and mid-sized U.K. companies, said business travelers consigned to coach in the slump shouldn’t expect an early return to the front of the plane.

“Once people go to the back they tend to stay there,” sales manager Stephen Baxendale said in a phone interview from the company’s offices near Leeds, England.

December’s gain was led by a 15 percent surge in premium bookings within Asia and by long-haul trips involving emerging economies, IATA said. Traffic was down 1.1 percent across the North Atlantic, the biggest corporate travel market.

Coach-class sales have traditionally been driven by leisure bookings, with the market fluctuating in tandem with measures of consumer confidence, IATA said. In the current slump, though, economy bookings continued to grow at a 6 percent annual rate for the six months after confidence began to decline. (Bloomberg)