Qantas Airways Ltd is facing increased competition at the low-fare end of the market but business travel is picking up, the airline group comprising Qantas and low-cost offshoot Jetstar observed in its May traffic statistics report, released today.

"Increased competition continues in the low-fare aviation market," according to the report.

"The premium market, including the business travel market, continues to improve demonstrating the positive effect of the portfolio strategy."

The group's monthly operating figures indicated returns remained weak despite a 7.6 per cent rise in the number of passengers in the year to May.
Compared with the previous corresponding period, yields across the Qantas group, excluding the impact of foreign exchange, were 11.4 per cent down in the year to May.

Domestic yields decreased 3.4 per cent, while the yield for international travel on Qantas and Jetstar's international operations had slumped by 12.2 per cent.

At 10.47am (AEST), Qantas stock went down 3c, or 1.35 per cent, at $2.20, on a day when the broader market was 2 per cent lower.

Meanwhile, international passenger traffic surged by double digits in May from the same month last year to above pre-recession levels, according to the International Air Transport Association.

Overall international passenger traffic, determined by revenue passenger kilometres, ascended by 11.7 per cent in May, compared with a year ago.
Director general and chief executive Giovanni Bisignani of IATA said demand "rebounded strongly in May following the impact of the European volcanic ash fiasco in April.

"Passenger traffic is now one per cent above pre-recession levels, while the freight market is 6 per cent bigger," the IATA chief revealed in a statement.
According to IATA, solid traffic growth was fortifying the industry's bottom line.