View Full Version : Business Travellers Opting for Economy Seats
March 17th, 2009, 05:04 PM
More business travellers flying economy-airlines body
GENEVA, March 17 (Reuters) - Increasing numbers of business travellers are foregoing executive-class seats and flying economy, especially in Europe, an industry body said on Tuesday.
Airline revenues from business and first class tickets were down by at least one-quarter in January from the same month a year ago, due to lower demand amid gloomy economic prospects, according to the International Air Transport Association (IATA).
"There is evidence that business passengers are trading down to cheaper tickets," the Geneva-based body said in its latest Premium Traffic Monitor.
While European business travellers have been shifting to cheaper seats on short-haul flights in recent years, alongside a proliferation of low-cost airlines such as EasyJet and Ryanair, IATA said economic distress had amplified this trend.
Promotional fares meant to encourage continued travel in spite of increasing job cuts and financial turbulence have exacted further pain on the industry's bottom line, according to IATA, which represents 230 airlines including British Airways, Cathay Pacific, United Airlines and Emirates.
"Fares are also now falling sharply, as well as passenger numbers," it said.
Economy travel demand has also slumped in response to the global financial crisis, but at a slower rate than the premium segment airlines depend on for their bottom line.
The weakest business-class market in January was in Asia, where premium travel on flights within the region decreased 23 percent year-on-year and flights across the Pacific dropped 25 percent. Executive-class demand on flights between Europe and Asia fell 21 percent.
Intra-European premium travel dropped 22 percent in January, compared to the same month in 2008, and on flights across the North Atlantic there was a 15 percent fall. In the Middle East, where many airlines were adding flights in the time of financial boom, IATA said increasing numbers of seats were also empty.
Africa was the only region to record an increase in business-class passenger travel in January. Premium travel within the continent was 19 percent higher in January "and fares also appeared to be holding up," according to IATA, whose member airlines run 93 percent of scheduled international air traffic.
Its data excludes domestic flights.
IATA has forecast that global carriers are set to post $2.5 billion in losses in 2009, after losses of up to $8 billion last year.
April 16th, 2009, 03:02 PM
Fewer people taking long-haul business trips -IATA
GENEVA, April 16 (Reuters) - Airlines worldwide filled 21 percent fewer executive class seats in February than the same month a year ago as fewer people took long-haul business trips, industry group IATA said on Thursday.
The data suggest more trouble ahead for airlines, which have seen numbers of coveted premium class passengers shrink along with the economic downturn that has reduced demand for corporate travel.
Flights within Central America, between Africa and the Far East, and across the Pacific had the most vacant premium seats, according to the International Air Transport Association, which looks only at cross-border flights.
"Average travel distances are now getting shorter," it said in its latest snapshot of the top-tier air segment.
IATA, which represents 230 carriers including British Airways, Cathay Pacific, United Airlines and Emirates, has said the airline industry would lose $2.5 billion in 2009 as a result of lower demand.
The industry lost $8.5 billion in 2008, pinched by high oil prices and the onset of the global credit and financial crisis.
IATA estimated that premium revenues fell about 30 percent in February as a result of the decline in high-end passenger traffic and aggressive fare reductions by airlines worldwide.
"This revenue stream is key for the profitability of most network airlines and so this reversal will be putting significant pressure on first quarter financial performance," it said.
May 12th, 2009, 11:32 AM
Business jet flights show sharp drop in Europe
GENEVA, May 11 (Reuters) - Business aviation flights have shown a sharp drop of nearly 20 percent across Europe over the first quarter of this year as companies cut back on costs to fight recession, according to figures issued on Monday.
Eurocontrol, the European Organisation for the Safety of Air Navigation which tracks aircraft movements from and across the continent, said traffic recovery in the long booming category was unlikely until the spring of 2010.
The drop echoed similar falls in the commercial airline and cargo-carrying sector which worldwide has been suffering from a decline in world trade shrinks cargo while the demand for mass passenger travel has also been drying up.
Business aviation -- which includes flight operators, taxi firms and companies operating their own aircraft as well as plane makers, airports and maintenance firms -- accounts for some 8 percent of air traffic movements in Europe.
The European Business Aviation Association says overall the sector -- whose planes in Europe are almost entirely owned by firms and governments and only 3 percent by individuals -- contributes some 20 billion euros, or 0.2 percent of GDP, to the European economy, and provides jobs for some 164,000 people.
The Brussels-based Eurocontrol released the statistics in Geneva on the eve of the annual European Business Aviation Conference and Exhibition (EBACE), at which aircraft makers, flight operators and their suppliers parade their wares.
But while industry officials in Geneva for the 2-day EBACE agreed the atmosphere was downbeat after years in which business aviation saw annual growth of some 10 percent, they argued that the medium-term outlook was good for the industry.
"This is an industry that is growing, an industry that is in demand," said Brian Humphries, president and chief executive officer of the EBAA which organises EBACE.
"We are going through a downturn but we have great potential ahead, and that it what we have to work on," he told a news conference with Eurocontrol and the International Aircraft Owners' and Pilots' Association, another industry body.
Among companies exhibiting at EBACE are Canada's Bombardier , Brazil's Embraer, Boeing Business Jets division, and Airbus, as well as airport groupings, navigation equipment providers and the aviation industry's main publications and journals.
Officials say the presence at EBACE 2009 of a wide range of companies across the industry shows continuing confidence, although they agree that its image even in Europe could have been affected by scandals in the United States over the use of high-luxury plans by executives of failing companies.
"The difference is that in Europe we come from a slightly different perspective, in that we have tended to use business aircraft modestly with little of the ostentation that has been seen across the Atlantic," he added.
May 14th, 2009, 09:25 PM
That "food" looks grose
July 16th, 2009, 02:45 PM
Empty business class dims airline prospects-IATA
GENEVA, July 16 (Reuters) - Airlines, deserted by premium class passengers, are increasingly gloomy about the prospects for the coming year and some do not expect recovery until early 2011.
The International Air Transport Association said on Thursday that fears of a prolonged recession and resurgent fuel prices had caused "renewed pessimism" for operators, which delivered their gloomiest ever assessment of profitability.
"Even the optimistic respondents don't see significant recovery before the fourth quarter this year and others not until early 2011," it said about its latest quarterly business confidence survey.
Leading carriers have been slashing seat prices to overcome anaemic demand during the downturn, which has also depressed cargo traffic at a double digit rate.
But passenger numbers have continued to drop, especially in the lucrative business class sector, said IATA, which represents 230 carriers including British Airways, Cathay Pacific, United Airlines and Emirates.
In its latest snapshot of premium travel, also released on Thursday, the Geneva-based group said ticket sales in the sector dropped 23.6 percent in May, adding to the 22 percent decline in April.
This was due both to more corporate travellers moving to the back of the aircraft and buying cheaper economy seats, and an overall decline in passenger numbers that shows no sign of ending soon, IATA said.
Top-tier passengers typically make up 7 to 10 percent of numbers but 25 to 30 percent of revenues.
IATA estimated that the decrease in premium traffic plus heavy discounting of high-end tickets bled airlines' business class revenues by 40 to 45 percent in May.
"Premium seats are being discounted on average much more than economy seats, despite the latter usually being the more price-sensitive segment of the market," it found. "Airlines are seeking to generate any cash they can by filling these seats."
Economic woes explained much of the drop in business class demand for flights within Asia and from Europe to Asia.
But in the Americas, IATA said the emergence of pandemic influenza was a major factor for the sharp declines seen in May, affecting both premium and economy seats.
Overall air travel within Central America fell 62.4 percent in the month. Ticket sales for flights between Central America and South America were down 46.7 percent and from North America to Central America fell 22.9 percent.
While the epicentre of the H1N1 flu was considered to be Mexico, the virus has now spread worldwide and is causing mainly mild effects. The World Health Organisation is not recommending any border or travel restrictions as a result.
IATA has previously said the airline industry would lose $2.5 billion in 2009 as a result of lower demand. The sector lost $8.5 billion in 2008, pinched by high oil prices and the onset of the global credit and financial crisis.
July 23rd, 2009, 08:08 PM
It's back to the future as airlines chase corporates
Business travel and MICE: a special advertising report
24 July 2009
BUSINESS class airfares have dropped to 1970s prices, with some airlines slashing prices beyond 30 per cent.
The financial downturn has hit the pointy end of the plane the hardest, as companies continue to tighten their travel budgets.
``Like all other airlines, we have been impacted by the current economic circumstances,'' a Qantas spokeswoman said.
``Domestically, demand is still quite strong-most of the impact has been international, particularly in first and business class.''
Qantas has responded by taking first class off some of its routes, such as Sydney to San Francisco and Melbourne to London via Hong Kong. Meanwhile, Virgin Atlantic has removed upper class pods from some of its London-based 747 fleet and replaced them with economy seats.
Virgin Atlantic spokesman, Nick Larkworthy, said flights remained at around 75 per cent capacity despite the downturn, but ``it's the yield that has taken the hit''.
``Prices at the moment are unsustainable and we've already seen Emirates up their prices in the last few days in an effort to boost yields,'' Mr Larkworthy added.
However, Mr Larkworthy said the downturn provided advantages in some instances, with companies that have traditionally flown with legacy carriers, changing airline contracts to get a better deal or choosing a best fare of the day system. Meanwhile, premium economy class has remained strong across the board. ``Our premium economy has always been an in-demand product, and is now absorbing passengers who would have otherwise travelled in business class,'' the Qantas spokeswoman said.
Mr Larkworthy agreed, saying premium economy had been popular among small to medium businesses since its inception, but larger corporations were now getting on board. ``Blue chip corporate clients are now switching to mid-cabin to save their pennies,'' Mr Larkworthy said.
He added that this was particularly evident on shorter legs, such as Sydney to Hong Kong.
While fares flash back to the 70s, the offerings are becoming increasingly futuristic.
Virgin Atlantic's upper class, for example is reminiscent of science-fiction cult classic Gattaca. Its ``valids'' dress in identical sleep suits while they watch on-demand films in glossy white pods. With a press of a button the seat flips over to create a flat bed, while a well-stocked bar caters to more lively travellers.
``When you consider that you can fly with us to London in a fully flat bed, with an onboard sit-down bar and chauffeur-driven transfers for a price that is pretty much the same in real terms as it was 30 years ago-it's pretty incredible,'' Mr Larkworthy said.
July 28th, 2009, 06:17 PM
Delta Air Lines giving extra benefits to elite fliers, could help lure business travelers
28 July 2009
ATLANTA (AP) - Delta Air Lines Inc. is taking a page from the cell phone industry and will be allowing elite frequent fliers to roll over miles earned above their qualification status in a given year so they have an easier time maintaining that status or improving to a higher one the next year.
The world's biggest airline operator planned to announce Tuesday enhancements to its SkyMiles Medallion program that will go into effect over the next nine months.
The changes come at a time of weak demand in the airline industry amid the recession. Business travel, in particular, has been in a slump, and giving extra advantages to elite frequent fliers could be one way to lure in more business travelers.
Atlanta-based Delta has three elite frequent flier statuses -- silver, gold and platinum -- and will be adding a fourth, diamond. Customers reach those levels by flying a lot -- you reach the lowest level after flying 30 segments in a year -- and in return they get extra benefits like priority boarding, waived checked bag fees and free upgrades.
Now, Delta says it will allow customers to retain any Medallion qualification miles earned above a Medallion threshold at the end of the year, supplementing the ability to earn status the following year. For example, should a member accrue 40,000 Medallion qualification miles in one calendar year, the 15,000 Medallion qualification miles that exceed the 25,000 threshold for silver status will be rolled over to the following year.
Delta said there is no limit to the number of miles rolled over, and the benefit takes effect immediately.
The rollover idea is similar to one offered for several years to some AT&T cell phone customers, who can roll over unused minutes in certain plans to the following month.
Among other changes coming from Delta:
--The new diamond level for flyers who earn 125,000 MQMs or fly 140 segments per calendar year will include a complimentary Delta Sky Club membership, among other benefits.
--Diamond, platinum and gold Medallion members will have ticketing fees waived for all bookings, whether completed by phone, online or in person.
July 30th, 2009, 12:25 PM
Many companies used to fly their executives/sales personel in Business Class. When the crisis struck, they started cutting down on operation costs and approve only Economy class tickets now, unless for top-ranking managers/executives.
December 12th, 2009, 08:44 PM
US airlines see recovery in business travel demand
CHICAGO, Dec 9 (Reuters) - The U.S. airline industry is seeing consistent signs of recovery that point to improved outlooks in 2010, executives at several top carriers said on Wednesday.
Speaking on webcasts of an analyst conference, industry leaders said business travel demand, which sagged earlier this year amid economic recession, was improving.
"I think we are seeing improvement in both leisure and premium traffic at this point," said Beverly Goulet, treasurer at AMR Corp , parent of American Airlines, at the Next Generation Equity Research Conference.
"We continue to see strength in close-in bookings," she said.
The U.S. airline industry has grappled in the last year with falling demand -- especially for high-end business travel -- as the recession eroded travel budgets.
Several airlines executives have noted improved demand in recent months and said on Wednesday the outlook continues to improve.
Delta Air Lines , the world's largest carrier, said demand would remain strong and that it expects to see improvements in unit revenue in 2010.
"When is unit revenue going to go positive? I think we've seen a steady step progression," Delta Chief Financial Officer Hank Halter said. "I don't want to give a specific date or guidance, but clearly it's going to be in 2010 and likely it's going to be in the front half of 2010."
Kathryn Mikells, chief financial officer at United Airlines parent UAL Corp , also noted "signs of recovery on the horizon."
"We did begin to see corporate and premium traffic improving (in the third quarter)," Mikells said.
US Airways Group President Scott Kirby said the airline also is seeing evidence of recovering business travel demand.
Gary Kelly, chief executive of Southwest Airlines , said, however, that business travel still lagged leisure and that he did not expect a rebound in business demand in 2010. Low-cost carrier Southwest caters less to business travels than its major rivals.
The Arca airline index <.XAL> was down 1 percent at mid-afternoon.
January 18th, 2010, 04:36 PM
Airline premium ticket demand still sputtering-IATA
GENEVA, Jan 18 (Reuters) - Demand for first and business class tickets, accounting for nearly one-third of most airlines' revenues, remains weak and an improvement in November was a blip, the International Air Transport Association (IATA) said.
Premium tickets are mainly bought by passengers travelling on business and such demand is correlated with world trade, so economic recovery in Asia, Latin America and some other regions could boost premium travel in the months ahead, it said on Monday.
The number of passengers travelling on first or business class in November was 6.7 percent lower than a year earlier, less than the 9.3 percent decline in October, IATA said in its latest premium traffic monitor.
But this apparent improvement was entirely due to the slump in business travel a year earlier, and from month-to-month there was a slight fall in passenger numbers, it said.
"There has been a slight rise in premium travel in recent months, which is now around 5 percent higher than its May low point, but much of the upturn took place mid-year, since then there has been little further progress once seasonal fluctuations are taken into account," IATA said.
"Premium travel numbers are still over 20 percent lower than early 2008 levels," said IATA, whose members include British Airways , Cathay Pacific and Emirates [EMIRA.UL].
The industry body noted that economy travel was growing positively in year-on-year terms, rising 3.5 percent in November and just 4 percent below levels in early 2008.
Since economy travel represents 91 percent of total international passenger numbers, it has pulled total passenger travel back into positive territory to stand 2.4 percent higher in November than a year earlier.
But although premium passenger numbers represent less than 10 percent of total travel, they account for about 30 percent of passenger revenues for most airlines, underlining the importance of business and first-class sales for airline profits.
IATA noted that business travellers were increasingly flying on economy seats, particularly on short-haul routes, like those within Europe.
Demand varies sharply by route, reflecting the different pace of economic recovery. Premium travel in November was up 18.2 percent year-on-year within Latin America and up 13.7 percent between the Middle East and Far East, but down 18.5 percent within Europe and down 5.9 percent on the Transatlantic market.