Amenities give lift to first class

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Passengers on British Airways Flight No. 176 leaving from New York will all land in London at the same time. But those in the front of the plane will pay as much as 20 times more than their fellow travelers in coach.

Such a disparity-a $10,000 ticket vs. a $500 one-seems difficult to justify, especially in an economic downturn. So to keep first- and business-class sections full, airlines have begun to offer a host of financial incentives and posh amenities to lure the premium traveler.

Perks such as gourmet meals, in-flight manicures, personal DVD players and luxurious airport clubs are among the enticements airlines now serve up. Some carriers have even appealed directly to the corporate pocketbook. In mid-May, Northwest Airlines and Delta Air Lines slashed their first-class advance-purchased ticket prices by as much as 60%.

EARNINGS NOSE-DIVE

The push to promote first- and business-class ticket sales comes as airlines contend with the faltering economy. After years of soaring profits, several major U.S. airlines reported dramatic declines in first-quarter earnings. Delta, for example, suffered a net loss of $133 million on a 2% drop in revenue to $3.84 billion. In the same period a year earlier, Delta boasted $217 million in net income. In a Securities & Exchange Commission filing, Delta explains: "The slowing U.S. economy reduced the demand for air travel, particularly among higher yielding business travelers."

Things don't look like they'll ramp up anytime soon.

"All indications are that air travel is down," says travel author Edward Hasbrouck. "Advanced bookings for the summer are down. The airlines are going to be hurting badly."

Cost-conscious companies have urged employees to trim travel expenses, including first- and business-class airfare. Hewlett-Packard Co. and Intel Corp., for example, have put restrictions on their business travel expenditures by steering employees to the back of the plane.

Many corporations have reduced the number of first- and business-class tickets they're buying, confirms Steve Loucks, public relations director for Minneapolis-based Carlson Wagonlits Travel, the world's second-largest travel agency. Some companies, in fact, "are saying, `Everybody flies coach.' "

Goldman Sachs, watching its bottom line (the company cut loose about 150, or 12%, of its investment bankers late last month), recently canceled a global conference for several hundred executives and instead opted for a teleconference. Since no travel was involved, the cost was significantly lower. "It just turned out to be a much better way to do it," a Goldman Sachs spokeswoman says. "We are being very careful and watchful of our expenses."

In another belt-tightening move, many U.S. companies have reduced the number of delegates they're sending to industry conferences and events. "When three people might have gone on a business trip, a company is now only sending two," says David Buda, exec VP of New York-based travel agency Tzell Travel. "It's a cautious, measured response to the general worry about what's going on in the economy."

Travel experts say that carriers, looking to snare their share of the profit-generating first- and business-class tickets, are becoming more competitive than ever. One-upmanship is now commonplace as airlines vie to offer the best deals and services.

`PINCHED AND UNDER PRESSURE'

"We're going to see airlines being pinched and under pressure to do new and creative things this year," says Mr. Hasbrouck.

In April, British Airways opened its "Terraces" concept of luxury airport lounges for first- and business-class customers. Services include a cappuccino bar, fresh juice stand, a meditation room and a spa. Airlines across the board now provide showers at terminal lounges for executives who don't have time to freshen up at their hotel before a business meeting.

Many in-air amenities are just as grand as those offered in the on-ground lounges. Elite meals, always a staple of first class-with airlines offering rotating wine lists and gourmet dinners served on fine china-also are getting an upgrade. Northwest recently began a $23 million food and service enhancement to entice fliers into its cabins.

Comfort is a key component in luring big-spending travelers on international flights. Globe-trotting road warriors are now not only provided with seats that fully recline, but some carriers also hand out designer sleepwear, as well as high-end shaving and beauty products.

Singapore Airlines offers its first-class passengers "sky suites" that include 6-foot-6-inch recliners, satin-finish pillows, down duvets and 14-inch personal digital Sony monitors. A Singapore Airlines spokesman says the carrier spent in excess of $100,000 on each individual seat. To further enhance the trip for premiere travelers, the airline is installing a $100 million global e-mail and Web browsing system in its fleet.

The spokesman added that even during "economic ripples," Singapore Airlines is committed to "rolling out more bells and whistles for our fliers ... We continually innovate-to be first to market with products like in-flight e-mail and [high-end] entertainment systems."

INTANGIBLE BENEFITS

For their part, many fliers themselves say the tangible and intangible benefits of first and business classes are worth the price of a more expensive ticket. Executives say coach often is too loud and cramped to get any work done. Others add that it's difficult to get a good night's rest on overseas flights if they're not in a comfortable, reclining chair.

"If you're in the back of the plane and not getting any sleep, it makes a huge difference in your productivity," says Mr. Loucks, who's often on the road himself. Valuable time also is wasted at the ticket counter for an executive who's traveling on a less expensive ticket, he notes. Instead of easy flight changes available in first class, executives on reduced-fare tickets often have to go through many more hassles to make changes.

"A number of passengers will only fly first class because they really value being able to get a good night's sleep," adds the Singapore Airlines spokesman. "It creates a feeling of well-being. On arrival you can literally roll off the plane and be able to do business."

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