Blog

Business Class was that quiet and spacious retreat for the well-heeled people, at least until the pandemic destroyed global aviation. But while the flights are sneaking back, this once exclusive port is occupied by the crowds.

Holiday travelers who are washed up on the ground with cash and a record number of airline miles after a year enjoy premium seats for their first return trips. You’re not just after the overcoated food, champagne, and small cosmetics that usually come with the higher tariffs. Rather, they are trying to minimize the risk of catching Covid in the coach’s cheek-to-cheek crush.

The popularity of these lucrative seats – especially with passengers who typically get into the economy – is an unexpected boon for airlines weathering a crisis that is likely to have cost them an incredible $ 174 billion in losses by the end of 2021 in the Middle East , In the UK and US, free-spending vacationers are emerging as a new market that airlines can use to reclaim their revenue.

Jennifer Arnold, who lives in New York and is an avid diver, will fly to the Maldives via Doha with Qatar Airways in May. Although vaccinated, Arnold, who is retired, said securing a seat in business class was essential.

“It was strictly trying to sit in an area with fewer people,” said Arnold, who used points for the outward journey and paid for her return flight. “I would not have made this trip if I had to fly on the bus while the virus is still raging in so many parts of the world.”

More than 944 million shots given: Covid Vaccine Tracker

There is every chance these people will become permanent residents by the end. Airlines from Deutsche Lufthansa AG to Virgin Atlantic Airways Ltd. are now beginning to wonder whether, as the world once knew, business travel will ever return to pre-crisis levels. This means that for the next few years at least there will be a steady supply of premium class seats, the price of which is intended for sale to the general public – for cash, loyalty points or a mixture of both.

Fares are already far from their peak as airlines encourage recovery. Transatlantic business class tickets for Delta Air Lines Inc., British Airways and American Airlines Group Inc. are priced at just over $ 3,000 at the end of May. Those places, especially for last-minute bookings, could have cost up to $ 9,000 before Covid, said Brian Kelly, founder of travel advice website The Points Guy.

Kelly flew from New York to Miami last month and found that prime seats on every single flight from all New York airports were sold out three weeks in advance. “I’ve been in New York-Miami for years and I’ve never seen it before,” he said.

“People swim in points,” Kelly said in an interview. With more than 3 million people receiving coronavirus bumps daily in the US alone, demand for air travel is “skyrocketing,” he predicts.

According to Qantas Airways Ltd. Recreational passengers take up a larger share of the business class cabin when they upgrade or redeem loyalty points. Redemption flights have now more than doubled to a record level when domestic travel restrictions eased in November, the airline said.

The desire of leisure passengers to sit in a posh cabin partially compensates for the stunted relaxation of traditional business class customers. Companies around the world have scaled back travel, either out of caution or to save money. And executives who flew in the blink of an eye to face-to-face meetings are more likely to get by with video calls, which shaped remote work during the crisis.

Qantas staff speak to passengers aboard a flight to Auckland on April 19.

Photographer: James D. Morgan / Getty Images

“Personally, I believe business travel is falling,” said Shai Weiss, Virgin Atlantic chief executive officer, at the World Aviation Festival last week. “We will see the emergence of the premium leisure market. People saved a lot. You will treat yourself. “

Jeff Paine, a Canadian who lives and works in Singapore, flew to Bangkok last month with points and cash in Business Class and then with Singapore Airlines Ltd. to Phuket felt Flight awards in the middle of a health crisis would be less stressful.

“I was trying to make part of this trip easier,” said Paine, 51. “I had to get health insurance, Covid insurance, an entry permit, a visa that is not normally required, and quarantine bookings.” It was a challenge. “

Premium economy cabins, which can be even more profitable than business class areas, could play a key role in restoring aviation, said Rob Morris, global director of advisory services at aviation data and analytics firm Cirium. The premium economy is a mix of Spartan economy and opulent business class and could capture both companies on tight budgets and leisure passengers who want a little more comfort, he said.

“I can see the premium economy becoming a bigger part of total real estate,” said Morris.

Of course, traditional business travel can get back on its feet faster than expected if vaccinations in multiple countries allow quarantine-free travel. That would likely increase premium cabin fares and squeeze out some recreational flyers. A flight corridor between New Zealand and Australia finally opened last week and there is still talk of a long-awaited travel bubble between Hong Kong and Singapore kicking off in late May.

Right now, the pent-up demand for friends and family in some markets is so strong that it is companies that are coming under pressure. Qantas only recorded 65% of its business traffic, even if travel is booming in Australia. Delta’s domestic leisure bookings are at 85% of normal levels while the business recovery is “slow but steady,” the US carrier said this month.

The catering staff is working behind an empty restaurant at Schiphol Airport in Amsterdam on March 1st.

Photographer: Siegfried Modola / Getty Images

“Summer is about managing the demand for leisure time,” said Delta President Glen W. Hauenstein in a call for earnings. “There are a little fewer opportunities to secure the last seat for the business customer.”

Tim Clark, president of the golf airline Emirates, sees the echoes of the global financial crisis more than a decade ago as business subsided. But even if that happens again, airlines can sell their business class and premium economy cabins by cutting fares by 15% to 20%, Clark said.

“You take what you can get and make sure you fill your plane,” he said at the World Aviation Festival.

– With the support of Guy Johnson, Siddharth Vikram Philip and Christopher Jasper

Before it’s here, it’s in the Bloomberg Terminal.

LEARN MORE