After spending millions to spruce up their first- and business-class cabins and add premium-economy seats to their planes, airlines are facing huge losses as recession-hit corporations around the world slash their travel budgets.
In fact, the International Air Transport Association reports that premium-class bookings have dipped as much as 18 percent on some long-distance routes — nearly double the slump in air travel bookings overall. In December, premium-class traffic fell 13 percent worldwide. But the airlines’ bad timing is a boon to leisure travelers looking to fly in comfort: Carriers are now offering their premium-class seats at bargain-basement prices rather than see them go empty.
I was able to enjoy this largesse not long ago on a flight from New York to Amsterdam, lazing in a capacious leather business-class-style seat and dining on smoked salmon and beef bourguignon washed down with a vintage Château Margaux.
After dinner, I drifted off to sleep, for once arriving in Europe without feeling I'd spent the prior eight hours on a rack. The fare for all of this cosseting was $1,100 round-trip, just $320 more than what I was quoted for a cramped seat in coach on another airline — and thousands less than a conventional business-class seat would have cost.
My flight from New York to Amsterdam was on OpenSkies, a new carrier launched by British Airways last June that may be the best airline you've never heard of. I was traveling in Prem Plus, a sort of amped-up premium-economy class that's more like business class than economy.
Dale Moss, CEO of OpenSkies, describes the carrier as a "test kitchen" for the notion that a small start-up can offer upscale service at affordable fares. Of course, the company didn't know it would be testing its thesis during a global financial crisis, and plans to expand beyond the three cities it currently serves — New York, Amsterdam and Paris — have been put on hold.
Meanwhile, even the majors are doing all they can to lure passengers into the front of the plane. At press time, British Airways was offering New York-London round-trip business-class fares for $1,800 — a whopping 84 percent off the standard business-class fare. Experts say that we are not looking at a short-term fire sale: These bargains are here to stay as long as business travel remains soft.
"I've been in business 35 years, and I have never seen it so bad," says Al Thomas, a former airline executive who is now with Etravelbid.com, a Web site that sells discounted business-class travel. In February, United Airlines announced that it is reducing the size of its premium-class capacity by 20 percent, and other carriers have already cut flights significantly in response to decreased passenger demand.
According to Thomas, the airlines are loath to reduce many more flights for fear of losing their slots at major hub airports when business bounces back. The result: They will continue to discount their most expensive seats as long as cash-strapped companies rein in business-travel spending. "We expect this situation to continue well into this year, perhaps even into next," says Simon Talling-Smith, British Airways' chief for North America.
Premium properties
While the term "premium economy" may sound like an oxymoron, this class of upgraded service has been gaining momentum since it was introduced by Virgin Atlantic in the early 1990s recession to appeal to business fliers whose companies wouldn't let them buy business-class tickets.
Not surprisingly, premium economy is the new favorite class in the current economy. At least 15 airlines now offer it, including recent converts Qantas, Japan Airlines and Air France, which is phasing it in later this year.
Sandwiched between coach and business, the service varies greatly from carrier to carrier and is priced accordingly — on airlines like Qantas, where the extra legroom can make a big difference on a transpacific trip, a seat can cost three times as much as one in coach, yet the airline reports that bookings are strong.
In 2007, Virgin Atlantic expanded its premium-economy class from 32 to 62 seats per plane, and tarted up the service with wider leather seats — in response to what it called "off-the-charts" demand.
Air France is adding a premium-economy cabin this fall on its entire long-haul fleet, with the exception of its 747s. The cabins will offer upgraded entertainment, food and other amenities, as well as a new seat that swivels on its base. At press time, Qantas was reconfiguring all its long-haul aircraft with its new premium-economy class, which will have a generous 42 inches between seats (versus 31 inches in coach).
The service is already offered on flights to the West Coast and will be available on flights to New York by summer's end. Japan Airlines has also made room for the new class on planes flying between North America and Asia and, unlike most of the other carriers in this league, gives premium-economy fliers access to its club lounges.
These seats can be more than twice the price of coach, but even some thrifty travelers find them worth the added expense, since flying in premium economy allows them to arrive rested and ready to begin their travels without the day or two of recovery time usually required after a long flight in coach. "For me, it's a health issue," says Biyana Lemise, an investment adviser in New York who frequently travels overseas. "I feel so much better that it's worth the extra money."
Flying under the radar
OpenSkies, whose planes have a 40-seat premium-economy class as well as 24 sleeper seats in its business class, and Virgin America are among a group of relatively unknown newcomers offering unparalleled value.
The U.S. outpost of Richard Branson's travel empire, Virgin America was launched in August 2007 and now operates a fleet of 28 A320s and A319s to eight cities, including Boston, Las Vegas, Los Angeles, New York and Washington, D.C. It offers a first-class section with fares that are typically well below what the legacy airlines charge, and with far superior amenities, and it also has a watered-down premium-economy class called Main Cabin Select, which gives those sitting in the exit and bulkhead rows free meals and drinks in addition to the added legroom.
However, these seats are vastly overpriced for what you get: When I tried it on a recent Los Angeles-New York red-eye, the fare was four times what I would have paid for coach ($574 versus $129 one-way), and the six inches of legroom and free chardonnay and chopped salad hardly seemed worth almost $450. At press time, Virgin America still had no mileage-sharing program with Virgin Atlantic — though it does have its own awards plan.
Another newcomer that's garnering interest is V Australia, an affiliate of Australia's Virgin Blue, which recently launched nonstop flights from Sydney to Los Angeles and is offering three classes of service on its Boeing 777 — coach, premium economy, and business/first. V Australia had postponed its launch twice, but with Delta planning to jump into the Aussie market this summer, it couldn't wait any longer.
It promises to bring fares down in what has been a high-priced route for U.S. travelers: In February, V Australia was offering round-trip fares as low as $549 in economy for its upcoming Los Angeles-Melbourne nonstops and about $2,000 in premium economy, about half the going rate on Qantas and well below what other carriers are charging.
The odds of survival are slim for a new airline, and a number of all-premium-class carriers — Eos, Maxjet and Silverjet among them — have come and gone in the past two years. But this new crop of upstarts are backed by major airlines, meaning that even if they go bust, ticketed passengers are less likely to lose their money.
Class consciousness
The global scale-back of business travel means that now may be the most affordable time in memory to fly in business or first class. Cash-strapped companies are not just cutting the number of trips they authorize — fewer executives are allowed to fly up front, leaving airlines desperate to fill these coveted seats.
There are several paths you can take to the front: One is to purchase advance-purchase business- or first-class fares on the top international airlines, such as American, British Airways or Lufthansa. Although they don't publicize it, these carriers often offer deep discounts on premium seats more than 45 days before a flight — sometimes as many as 60 or 90 days.
But you have to act fast: The stealth sales come and go so quickly that you have to make an effort to seek them out. Saturday nights are reportedly one of the top times for airlines to release deeply discounted seats. You can also pay a commission and book a discounted premium-class seat (savings vary widely) through a consolidator such as Etravelbid.com or Cook-American Express.
Another way to save big on first- and business-class fares is to book on a foreign carrier that you might not expect to fly a particular route. Some examples are Air Tahiti from Los Angeles to Paris; Malaysia Airlines from Newark to Stockholm; Air India from Chicago and New York to Europe; and even Kuwait Airways, which flies thrice weekly from New York to London's Heathrow.
Many other carriers that are household names may offer significant savings on some unexpected routes. These include Air New Zealand from Los Angeles to London, Cathay Pacific from New York to Vancouver, and Singapore Airlines from Houston to Moscow — surely one of the strangest routes, but one that made perfect sense when it was launched in early 2008, when oil prices were on their way to record highs and no one could have predicted what was to come.