The race to make money at 37,000ft
The competition to pamper high-paying passengers begins even before the aircraft takes off. That's because a business-class flyer is worth 10 times as much as one in economy class.
Sunday 11 December 2005
That fleeting glimpse of the world of business-class as you look to the left on boarding an aircraft suggests a promised land where all is serene and soothing. And, to those passengers able to afford it or lucky enough to be upgraded, that is the case. But the aura created by fine wines, flat beds and cabin crew who actually seem pleased to serve you, masks one of the most vicious turf battles in the airline industry - the scramble for high-paying customers.
An indication of just how much the business-class airline market matters emerged recently when British Airways announced plans to spend £100m on updating the cabin - the airline's first big product investment for five years. The airline, which introduced the first flatbed in business class in 2000, recognises it has to compete in what Martin George, British Airways' commercial director, acknowledges as a "fiercely competitive" market.
With prescient timing, Virgin Atlantic - which launched its own £70m upper-class suite in 2003, offering in-flight beauty therapists and a bar - ran an advertising campaign in the national media directing a broadside at BA, which listed services that Virgin's equivalent cabin offered but BA did not.
Other airlines are also scrambling to pamper business-class travellers. Emirates said that 10 per cent of passengers on flights from the UK travel in business class, and the airline now offers a "sleeperette" seat with a pitch (the length from the front of one seat to the front of another) of 117cms-160cms.
The stampede to pamper passengers begins before the aircraft has taken off. Earlier this year, Virgin opened its Upper Class lounge at Heathrow, which features a spa pool, sauna and steam room. Virgin and Emirates offer business-class passengers a chauffeur-driven ride to and from the airport and operates a drive-through check-in, which bypasses the check-in desks in the terminal. Earlier this year, Singapore's Changi airport opened an upgraded £3.75m British Airways and Qantas business lounge fitted with dark wood and 20 shower suites, and serving free wines.
Most airlines are coy about divulging exactly how much the front end of the aircraft is worth. According to Hilary Cook of Barclays Stockbrokers, the typical business-class passenger is worth 10 times as much as one in economy class."The premium you pay in business class is huge," she said. "British Airways knows where to go for its profits, which is why it places such importance on business class.
"The competition is extremely stiff, so you do see these catfights over who offers what service - particularly on the transatlantic routes, which are so profitable."
According to Ms Cook, business-class fares are integral to the pricing structure of any flight. "You cover your costs by filling the back of the aircraft with headline fares and your profits come from business class," she said. "It doesn't cost much more to develop business class as opposed to the other parts of the cabin, but the returns are greater."
Joe Ferry, head of design for Virgin Atlantic, acknowledges that airlines put their heart and soul into capturing the business-class market.
"It's vitally important. It's the most profitable part of the aircraft," he said, adding that airlines now need to attract both the business and the leisure traveller. "It's partly about being maverick and partly about gut instinct. If you ask customers what they want, they will say a cup of tea, a good bed and nice toilets. They won't come up with ideas like Jacuzzis - we have to do that.
"The business traveller may just want to get on the plane and sleep or use their laptop. Others may want to enjoy the whole experience. We look to cater to both."
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