BA sees signs of improvement

The rate of decline in passenger numbers is slowing

British Airways says it has seen signs of "measurable improvement" in market conditions.

Although BA's passenger numbers fell again last month, the new figures show the rate of decline is continuing to slow, raising hopes that the sector could be heading for less turbulent times.

Passenger traffic fell 10.4% in December compared with the previous year, against falls of 17.8% in November and 24.7% in October.

Shares in BA had already jumped more than 10% in anticipation of good news, and the gains were maintained with BA up 10.7% at 235.75p by mid-afternoon.

Earlier on Friday, the budget airline Go - a BA spin-off - reported another rise in passenger numbers, continuing the impressive performance of the low-cost carriers.

Encouraging signs

Traditional airlines such as BA have undergone a torrid time recently, suffering from both the post-11 September downturn in the industry and intense competition from low-cost carriers.

The latest figures from BA showed that within the overall passenger traffic figures - measured as revenue passenger kilometres - premium traffic fell 18.3% while non-premium business dropped 9.2%.

Low-cost airlines like Go have been taking market share from traditional carriers

But the airline said it was encouraged by recent trading.

"Market conditions in December continued to be difficult but showed a measurable improvement on the previous month," it said in a statement.

"Promotional activity, particularly in the economy cabins, has been successful in supporting both seat factor and revenue."

It added that overall revenue, despite being far below last year's level, is "exceeding initial expectations."

Earlier on Friday, passenger figures for the Dutch airline KLM had shown a similar picture - with passenger numbers down, but falling at a reduced rate.

"In comparison with the 12% and 10% declines in overall traffic in October and November respectively, December continued to show a relative improvement by realising 8% less traffic versus last year," KLM said in a statement.

Go keeps going

Since the 11 September terror attacks low-cost airlines such as Go, EasyJet and Ryanair have cut fares aggressively in an attempt to maintain passenger numbers and to win market share from traditional carriers.

So far the strategy appears to have worked.

The latest numbers from Go showed its December passenger numbers were up 57% from a year before.

The load factor - which measures what percentage of seats the airline managed to fill - also edged up over the same period from 68.9% to 70.5%.