Fall in premium traffic is greater than that of economy travel, Asia-Pacific remains weakest at 29.3% decline.

Premium travel remains weak - Despite rallies in equity markets and talks of economic recovery, premium travel remain weak, underscoring the view that business confidence remains weak. Still March's 19.2% yoy decline was a marginal improvement over February's 21.1% yoy decline. The steepest decline came from the Asia-Pacific region which saw a 29.3% decline, building on February's 27.3% yoy decline. IATA also estimates that premium fares have been falling as well and that premium revenue would have fallen by 35-40% in 1Q09.

Economy travel slowed down by 8.2% yoy - March's traffic fell 8.2% vs 8.3% in February. However IATA believes that both economy and premium traffic would have shown mom declines after adjusting for leap year and earlier Easter. It is worth while noting that SIA's passenger traffic numbers has fallen by greater than industry average of 23%. y IATA data represents full service carriers. The data excludes traffic on LCC carriers.

Bottom line- There is no sign of an airline recovery. Yields are expected to remain under pressure. Aside from cost savings from lower fuel costs, there will be little organic growth for the sector. Maintain Underweight.