Is business-class travel going extinct? Part 2 of 2

The conclusion reached in the previous article on this topic was that all-business airlines are indeed going extinct, and they have to innovatively collaborate with full-service carriers for long term survival. The discussion today moves on to whether all-business class travel on full-service airlines has any future.

Full Service airlines with specific all-business routes: Verdict – Here for now

Legacy airlines are becoming more enamored with all-business-class service. Four European airlines — Lufthansa, Swiss, KLM and Air France— are offering some all-business-class flights to the USA. The flights are operated by PrivatAir, based in Geneva. Lufthansa runs an all-business flight to Pune, India and Dubai, UAE as well. ANA runs one between Tokyo and Mumbai, India. Singapore Airlines began it’s much awaited Newark-Singapore all-business service last month. Lastly, British Airways subsidiary OpenSkies plans to start New York-Paris flights with a Boeing 757 jet configured with more than 60% of the seats for business-class fliers, on June 19.

Why the big rush? As we all know, airlines make a bulk of their profits from the business class passengers – they pay for those at the back of the plane too. Some of these routes have been carefully studied and started only because there is ample business-class demand to fill a whole wide-body. For example, Singapore Airlines’ previous flights on the same route, with a two-class configuration, were almost always over-booked up-front, but there was generally room in the economy section. Hence, the decision to do away with economy class completely. It is a similar case with ANA’s and Lufthansa’s all-business flights to India – the demand resulted in the product.

But not all routes are conceived the same way. A number of cross-Atlantic routes were started in response to competition from all-business airlines, or other airlines. It is these routes that may have a problem surviving in the long term, because the competition is no longer there, as a result of lower demand.

In the air, and beyond

The economically viable solution may be to offer services inside the airport to minimize inconvenience to the delayed business traveler. That means better lounges, with wireless internet and plenty of desks, restaurants suitable for meetings, gym facilities, and showers and so on.

Business travelers can then feel confident that delays won’t waste their time. This should be relatively easy for airlines to deliver, especially as they could probably charge a lot for them: market segmentation and price differentiation are easier to do on the ground than in the air.

Hence, to survive in the long run, not only should all-business flights by full- service carriers be based on demand, but they should offer complementary on-the-ground services catering to the business traveler. In the end, it is customer need, and the resulting customer satisfaction which will drive this industry segment.

Ponder that!

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Links

1. Lufthansa launches all-business flights to India
2. Costs of flying – how airlines make money
3. ANA’s all-business flight to Mumbai