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Published: 17/10/2011 - Filed under: Home » Archive » September 2011 » Special Reports » Home » Archive » October 2011 » Special Reports » Home » Archive » October 2011 »

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Despite the rocky recovery from the recent global economic unpleasantness, the numbers for 2011 show that business travelers are apparently unwilling to forego entirely the creature comforts of premium class to save money.  At the height of the worldwide downturn, company travel policies clamped down on most high-dollar fares in the first- and business-class cabins in favor of economy seats for all but the longest trips or the most-senior level travelers.

With the recent turnaround in world markets, the airline industry seemed poised for continued profitability, and premium services were expected to lead the way.  But 2011 draws to a close with less than rosy prospects; Eurozone uncertainty, a US economy that refuses to shake off the doldrums, and the possibility of a severe slowdown in emerging markets (who’d have thought a 7 percent growth rate in Chinese GDP would be considered a ‘hard landing’?).

Nonetheless, according to a study from the Global Business Travel Association, premium air travel is still on the rise. The number of corporations in North America that permit premium-class air travel was up five percent to 56 percent in 2011 over 2010 levels, the GBTA study found.  Meanwhile in Europe, 46 percent of European travel managers are approving premium-class airline travel to North America compared with 34 per cent a year ago. “As we’ve seen the travel industry slowly recover after the Great Recession, the comeback in premium class has been driven primarily by business travel,” according to Joe Bates, director of Research, GBTA Foundation. 

“We were experiencing a recession in 2009 which resulted in a decline in the corporate travel market of over 30 percent compared to 2008,”   says Donald Bunkenburg, managing director of sales for Lufthansa North America. “Currently, business travel is back to 2008 levels due to a moderate rebound in Europe and North America, and much stronger business travel growth rates in markets like Brazil, Russia, China and India.”

“Even though there’s been a softening in leisure travel, we see business travel still vibrant,” agrees John Jackson, Korean Air’s vice president of marketing and sales for the Americas.  “The strongest trend is business travel between Asia and South America. Meanwhile, governments are loosening aviation restrictions so there are joint ventures emerging, similar to what’s happened in Europe.”

No surprise, the GBTA survey finds that Asia’s premium travelers will lead the way, with 42 percent anticipating an increase in their travel over the next 12 months; another 40 percent  planning to fly the same amount as last year. In Europe, 83 percent of respondents plan to fly premium the same or more over the next 12 months with 27 percent of those planning to fly more.  In the US, 60 percent of premium travelers plan to fly about the same amount as this year, with 21 percent planning to fly more. 

But while the study, which was funded by Boeing, offered encouraging signs that the renaissance in first- and business-class travel will continue, it also revealed some significant differences among premium travelers in different parts of the world.  When it comes to the deciding factors that determine airline choice, the study found:

Asian travelers look for superior food and beverage options and high-tech amenities. 

US travelers want availability of a premium class of service. 

European travelers are looking for lounge access as well as new or updated aircraft.

THE SEAT OF YOUR PANTS

 In general, the trend seems to be heading toward blurring the lines between the premium cabins. “Today, it’s upper-premium first class,” says Mike Boyd, president of Colorado-based Boyd Group International, a major commercial aviation consultancy. The idea is to “attract higher-yield people.”   That means putting money behind such amenities as upgraded inflight entertainment systems, airborne WiFi and, of course, the food.

To that end, in June American Airlines began deploying Samsung Galaxy 10 tablets in  first- and business-class for both transcontinental and international flights.  And of course, there’s a race to the top among carriers to add one of the myriad inflight connectivity options; not only is it becoming a necessity for the business traveler, such services are money makers for the airlines, as they add travel features and shopping options. “We know email accessibility is immensely important for business travelers,” says Bunkenburg.  “Therefore, Lufthansa is continuing to invest in our Business Class customers’ needs with FlyNet. This in-flight broadband connectivity offers passengers high-speed wireless access to the Internet via their laptop, iPad or smartphone. This enables business passengers to connect to their corporate server via a Virtual Private Network (VPN).”

Many airlines, Delta and American among them, have tapped renowned chefs to lend their names and creativity to the culinary offerings in the premium cabins. They know the folks who fly up front frequent “Michelin-starred restaurants in London, New York and Los Angeles,” says Delta spokeswoman Leslie Parker. “So when they pay for a BusinessElite ticket, they want that same experience.”

Of course, the centerpiece of any business cabin is the seat. “Our research definitely shows that customers prefer flatbed seats internationally,” says Don Cox, Delta’s director of customer experience in the marketing department. “We’re installing flatbeds on over 160 widebody aircraft.” So far, that means the airline’s entire Triple-Seven, and 767-400 fleets. The 767-300 is getting the treatment now, as are 747-400s. The airline is studying whether to install flatbeds on its intercontinental 757-200s.  Similarly, British Airways’ Club World lie-flat bed is a six-foot, six-inch affair replete with four pre-set positions, and the bed width is a fulsome 25 inches. 

Korean Air’s generous premium cabins permit some extra perks for the long-haul high-end passenger.  ‘Business travelers are looking for comfort in their long haul fights and Korean Air’s A380 is the most spacious yet, with six feet between seats in Prestige class and more between the Kosmo Suites in First,” according to Jackson.  “The entire upstairs is devoted to the business class traveler and features a hosted lounge, while a duty free shop is located downstairs where retail items are on display. “

When the seats become beds, the important features are privacy and comfort.  Airlines are playing with various arrangements to increase both; instead of open floor space, seating pods are surrounded by partitions that act as mini-enclaves. Each seat offers significant storage space, a large entertainment screen, and individually controlled lighting.  To complete the comfort package, flight attendants in the premium cabins will smother you with all kinds of luxury;   American is offering pajamas, slippers and a quilted bed topper as part of its turndown service in first, a premium duvet and pillow and slippers in business.  

The lie-flat option for long-haul flights has become the gold standard for most business travelers; airlines that have it consistently get better reviews than those that don’t.  In the GBTA survey, two-thirds (67 percent) of respondents ranked the availability of lie flat seats as being an important factor in choosing an airline. Still many carriers are opting for the so-called ‘angled lie-flat’ or other reclining options.  This saves precious real estate on the aircraft and makes more room for additional seats, either in the premium cabins or in economy.

LOUNGE ACTS

While some carriers are scaling back premium offerings, among Middle Eastern carriers, the focus is on the first-class cabin; business class benefits by association.  For example, Qatar Airways offers a business class with fully flat beds and access to its award-winning Premium Terminal at Doha, with business facilities, secretarial services, and complimentary Wi-Fi. 

Etihad Airways is currently focusing on updates to their Diamond First Class.  The airline has just completed an update of its entire fleet of 3-class aircraft to include the new Diamond First Class Suite.  In addition, Etihad plans to open new premium lounges in three locations: New York, Paris and Sydney.

According to the GBTA study, the inclusion of ground-side amenities in the business class experience is a focus for carriers catering to European travelers.  “In addition to on-board comfort, Lufthansa also caters to business travelers with our ground product,” says Lufthansa’s Bunkerburg.  “We offer fully revamped and expanded Business Class lounges at our European hubs in Frankfurt and Munich. And, in order to cater to our premium passengers in North American destinations, new lounge openings and the upgrade of already existing lounges has been underway.”

On the other hand, the study finds that premium travelers based in Asia are on average younger, meaning that the growth in the premium long-haul sector is likely to continue. In addition, they tend to be more tuned into technology, so they to choose airlines based in part on high tech amenities.  Among all premium travelers, the technological amenities they are most likely to look for include: Wi-Fi (51percent), AC power (48 percent) and audio/visual capabilities (45 percent). 

THE MIDDLE KINGDOM AND BEYOND

For the time being, the slowdown in the developed economies is being offset by the continued rise of the so-called BRIC countries – Brazil, Russia, India and, most notably, China.  With a lack of ground-based infrastructure, air travel to and within these countries is the most reliable and most economical way to get around.  As a result, the demand for long-haul flights, and thus the requirement for  premium travel, are both likely to continue to rise.

“Airline competition is growing in the transpacific market and the bar is being raised pretty high,” Korean Air’s John Jackson says.  “This increased transpacific business travel is why we added A380 flights to New York and Los Angeles.”  He adds: “It makes sense to increase capacity where there’s the demand. And the demand is there: our A380 loads are running around 90 percent. “

But China is not the only game in town. The worldwide network of airline routes is constantly expanding to embrace virtually any place on the globe where business opportunities can thrive. What were once considered remote and exotic destinations have become critically important to business travelers – and to the carriers that serve them.  

“There are many options and opportunities,” Jackson notes. “The biggest opportunities overall will be in the BRIC countries. We fly the only nonstop from LAX to Brazil and have a presence in Russia, India and as I mentioned, China.”

“Apart from the traditionally strong business destinations of Munich and Frankfurt,” explains Lufthansa’s Bunkenburg, the carrier continuously “monitors high load factors and a consistently growing demand for business travel especially on routes to India. This developing market has become increasingly important for Lufthansa outbound from the United States as many American corporations are expanding their business presence in India.”

Bunkenburg also points to the growing markets in “Eastern European destinations like Moscow and Warsaw,” which, he says, “figure among the busiest Business Class routes within the network.” Regions rich in natural resources are on the radar, too. “We also identify oil business routes, for example to Lagos (Nigeria) and Luanda (Angola), that show outstanding load factors for Business Class.” 

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