WHEN BMI announced its decision to cut business class and other ‘frills’ on its flights from Heathrow, few in the industry were surprised. In recent years, most European airlines have been gradually cutting back their business-class services, or scrapping them altogether.
Business-class cabins of more than a few rows deep are now rarely seen on flights.
Driven by the arrival of no-frills competition, a general reduction in corporate travel budgets due to economic slowdown, and the higher visibility of fares on the Internet, demand for premium classes on short-haul flights has fallen and airlines have reacted accordingly.
“A lot of people feel if you’re travelling for two hours or less, why do you have to pay a higher fare?” said Travel Industry Associates travel and event manager Andrew Solum. “Interestingly, some of the no-frills airlines that are popular with business travellers are now adding some of the traditional executive frills – for example EasyJet’s adding lounges.”
Advantage Travel Centres director of business travel, Norman Gage, said business travellers have become used to travelling at the back of the bus.
“They don’t want to be fed on a day’s business trip to Vienna, when they’re going to go straight to a client lunch anyway. And when there are plenty of other people in shirts and ties, they’re no longer embarrassed to be travelling down the back.”
Solum believes the shift has also influenced the axeing of commission. “Travel management companies are still getting a fee whether they’re booking a £2,000 ticket or a £5,000 one. Have the airlines shot themselves in the foot here?”
Instead, airlines have turned their attention to the corporates themselves, incentivising business travel customers with ‘mileage’ rewards in return for bookings, said Gage.
Before making its decision at the end of May to scrap business class, BMI undertook a six-month study surveying the views of 10,000 travellers. Chief executive Nigel Turner said: “More than half of our passengers travel on business – but most of them do so in the rear of the aircraft. They, or their companies, choose to travel in economy.”
As a result, BMI is now flying a one-class service on all but four routes and has restructured its fares into three types, according to the level of service and flexibility. BTI UK managing director Mike Platt said other airlines are likely to follow suit. “Business travellers will still pay for the flexibility and although BMI only has one cabin, it is making sure they are all sitting together down the front. The reason most corporate travellers say they don’t want to fly in economy is because of the people they will be sitting next to. They prefer to sit with their peers.”
He said the premium-economy products offered by the likes of British Airways and Virgin were also selling well. “It’s a very successful approach, giving companies the option to downgrade but still retain some degree of separation from other passengers.”
Carlson Wagonlit Travel commercial director UK, Steve Savage, said dynamic pricing is also giving companies more flexibility.
He said: “With the new one-way fares, they can book the best buys on the day for their outbound flight when they know exactly when they need to travel, and then go for a full flexible fare for the return journey if they don’t know what time their meeting is going to end.”
But while airlines are downgrading their business-class products on short haul, they are investing more heavily in their long-haul business-class services.
“Airlines are definitely upping the ante on long haul as they know that people are prepared to pay for a premium service,” said Platt.
Ickenham Business Travel commercial director Vanessa Beesley agreed: “On long haul, companies are looking at the comfort and well-being of their staff.”
