19 October 2017

Business Travel / MICE


All-business airlines pay off
July 2007 13
With all-business-class airlines carving out a new market, CLARK KELLY looks at how the industry is fighting back

Kick back, lie flat and leave the sleepless nights to travellers in cattle class.

Airlines are increasingly democratising business travel with the introduction of all-business-class jets flights that offer fares far below those for regular business and first-class seats, while throwing on the extra amenities with a trowel.
With a small number business travellers generating the largest volume of revenue for airlines, carriers are now looking at rewarding these frequent fliers in a number of ways.
First, the start-ups. Four new airlines want to reach just this class of passenger. Eos and MAXjet, which began flying in late 2005, and Silverjet and l’Avion, which took off this year, offer only trans-Atlantic services, the industry’s most lucrative.
All four say the demand has exceeded their expectations, the New York Times reported. In June, for instance, the four reported that they filled 70 percent or more of their seats.
Eos CEO David Pottruck was quoted by US News and World Report: “On a typical 777, which holds 250 people, the 195 passengers in coach class lose money for the airline. But the 50-plus people in first and business are so profitable that they not only cover losses in economy but make a net profit. Why not just cut out the coach customers?"
Why not indeed is also what established carriers are asking, including British Airways and Virgin Atlantic.
“There clearly is a demand for a niche for an all-business-class offering,” Virgin Atlantic’s Richard Branson said, according to aviation.com. Within 18 months, the airline plans to be plying these routes. Branson has been quoted as saying that Virgin’s research showed a ‘mood change in the last five years’ among business travelers, who ‘want to sit in an airplane with people who are also working’.
“It’s a status thing,” he added, “and a psychological thing.”
Willie Walsh, the chief executive of British Airways, was also quoted as saying his airline was studying plans for similar flights. BA would look at outfitting smaller aircraft with a a modified version of its existing business-class service.
Also in the fray is Lufthansa, which is to begin an all-business-class service with a flight between Newark and Frankfurt in late October.
Other airlines are fighting back by vamping up their international business-class cabins with better seats (flatbeds are increasingly the norm), gourmet food (sky-chefs, anyone?) and high-tech entertainment. These include American Airlines, Delta Air Lines and United Airlines.
According to estimates from JP Morgan, specialist airlines now command a 17 per cent share of the UK to US business-class market. And this at prices less than half that of major trans-Atlantic carriers.
How that will play out in the Gulf remains to be seen. But industry watchers will not have long to wait, with 14-hour flights across the world now routine in this market.




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