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Business Class Emptier Due To Financial Crisis?  
User currently offlineAlexA340B777 From Indonesia, joined Oct 2008, 135 posts, RR: 0
Posted (5 years 9 months 2 weeks 10 hours ago) and read 4916 times:

Hi all,

I was just wondering if due to the world´s financial crisis there might have been a drop in selling business class seats for the airlines as companies might want to save money spent on travelling...

So what´s the situation like? Is business class now emptier than it used to be? Is there a significant decline in business travel generally?

Thanks for sharing your experiences/thougts!


Alex


So far travelled to 64 countries on 5 continents on 398 flights
21 replies: All unread, jump to last
 
User currently offlineUtapao From Thailand, joined Jul 2005, 645 posts, RR: 9
Reply 1, posted (5 years 9 months 2 weeks 10 hours ago) and read 4894 times:

From my experience the last 4 weeks (USA-NRT-USA and USA-LHR-USA) the cabins were more or less as full as normal.

However, if the companies are cutting back on Business Class and forcing Coach travel, a huge portion of the people in Biz would be frequent travelers with enough miles or system-wide VIP upgrades so that even if they are booking Coach, I would bet many of them are upgrading -- thus the cabins are not empty by any means.

Sames goes for domestic USA flights -- frequent flyers will continue to upgrade, and with reduced caqpacity, even though there might be a reduction of some percentage in business travelers, those that are flying are still upgrading, so judging by First/Business Class might not be as good a guage as Coach.

But the revenue from Business, I would imagine, is down.



Sawasdee khrab!
User currently offlineEddieDude From Mexico, joined Nov 2003, 7561 posts, RR: 43
Reply 2, posted (5 years 9 months 2 weeks 10 hours ago) and read 4865 times:

I think demand for air travel will shrink across all classes of service. A recent story on CNN En Español dealt precisely with this subject. According to the presenter, BA is thinking about reducing capacity in its LHR-JFK/EWR routes either by downsizing the planes it uses for these flights, or cutting frequencies. The presenter of the news story mentioned that the profitability of this and many other routes of BA and other airlines depend on premium passengers and that the global crisis is expected to take its toll on airlines because demand will decrease notoriously.


Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineViscount724 From Switzerland, joined Oct 2006, 24883 posts, RR: 22
Reply 3, posted (5 years 9 months 2 weeks 10 hours ago) and read 4849 times:

An article on the October 13 edition of Aviation Week magazine on how the global financial crisis is affecting European airlines included the following excerpts on BA/VS/LH.

British Airways’ numbers most clearly illustrate the situation, with its vital premium traffic down 8.6% in September over last year’s results. Overall, traffic for the carrier was down 4.8%. While a slowdown was expected, “this volume drop was greater than anticipated,” say analysts at financial institution Dresdner Kleinwort. The associated 4.3-percentage-point load factor decline “represents the worst performance since the Gulf war in 2003,” except for the one-off disruption associated with opening Terminal 5 at Heathrow, the analysts note. British Airways, to some extent, may be among the more vulnerable to upheaval in the financial markets—13 of its 50 largest corporate clients are in that sector; some represent the largest firms.

Virgin Atlantic CEO Steve Ridgway notes that “business traffic is holding up better than thought,” although he concedes there will be more pressure in the winter months. Ridgway is hopeful Virgin will suffer less than others because the airline doesn’t have a huge exposure to the financial sector among its corporate clients. He also notes that capacity reductions were already decided on 18 months ago, so the airline finds itself properly sized for the current situation.

The outlook is similar at Lufthansa. “There is some turbulence in the air” when it comes to forward bookings, admits Karsten Benz, sales and services vice president in Europe, but he adds that the carrier’s corporate business is much more diversified than BA’s, with a healthy amount of business from pharmaceutical and energy companies. Many of those markets remain strong. For instance, the all-business flight between Frankfurt and the Indian business center Poona is approaching the 70% load factor target with no indications of a downturn on that connection, he adds.


User currently offlineWarRI1 From United States of America, joined Sep 2007, 8846 posts, RR: 10
Reply 4, posted (5 years 9 months 2 weeks 9 hours ago) and read 4760 times:

I flew to Lax from PVD throught IAD last week and there were no vacancies in whatever classes they had forward. It was a 767. Return on the Red Eye, 767, it was the same. The aircraft looked 99% full both ways. UA.


It is better to die on your feet, than live on your knees.
User currently offlineOlympic472 From United States of America, joined Jun 2008, 456 posts, RR: 0
Reply 5, posted (5 years 9 months 2 weeks 8 hours ago) and read 4691 times:

Flew Air Canada at the end of September to FRA in the business cabin and it was 100%. Flew LH in October FRA to YVR with 2 empty seats in Business. These may be flights ticketed before the financial meltdown.

The following observation is valid to an extent:

Quoting Utapao (Reply 1):
huge portion of the people in Biz would be frequent travelers with enough miles or system-wide VIP upgrades so that even if they are booking Coach, I would bet many of them are upgrading --

The oil price crisis MAY have helped the US airlines. With the impending downturn, they may be prepared to weather it because they (at least UA) are flying an almost bare-bone schedule.



Civil Aviation has a "Need for Speed"!
User currently offlineJFKPurser From United States of America, joined Mar 2007, 486 posts, RR: 4
Reply 6, posted (5 years 9 months 2 weeks 8 hours ago) and read 4616 times:

I have not personally witnessed any recent drop in premium traffic on JFK-LHR despite announcements by AA that the premium traffic ex JFK is substantially down from pre-depression levels. All of my flights (since the August break) have been running about 3/4 full in F and C classes. Not sure what the future holds, though.

User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5369 posts, RR: 7
Reply 7, posted (5 years 9 months 2 weeks 6 hours ago) and read 4540 times:

It's worth remembering that air traffic is a lagging indicator - it declines and increases after the general economy. Seeing the declines in traffic already probably means that deeper declines lie ahead.


I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineVHSMM From Australia, joined Jul 2008, 132 posts, RR: 0
Reply 8, posted (5 years 9 months 2 weeks 6 hours ago) and read 4524 times:

QANTAS CEO, Geoff Dixon, has stated that demand is dropping off in all classes on QANTAS, so I expect that all airlines are in the same boat.

http://business.smh.com.au/business/...ling-dixon-says-20081020-54a8.html



Flown: 727,737,747,757,767,777,DC9,DC10,A300,A319,20,21,A330,A340,A380,CRJ-200,BAe146,AVRO100,Saab340B,MD82,F100,Dash8
User currently offlineSSTsomeday From Canada, joined Oct 2006, 1276 posts, RR: 1
Reply 9, posted (5 years 9 months 2 weeks 6 hours ago) and read 4513 times:



Quoting WarRI1 (Reply 4):
I flew to Lax from PVD throught IAD last week and there were no vacancies in whatever classes they had forward. It was a 767. Return on the Red Eye, 767, it was the same. The aircraft looked 99% full both ways. UA.



Quoting Utapao (Reply 1):
From my experience the last 4 weeks (USA-NRT-USA and USA-LHR-USA) the cabins were more or less as full as normal.

Yet don't we have to keep in mind that capacity is being cut (fewer flights, and/or smaller A/C). So that would mean the flights that still go stay as full, right?



I come in peace
User currently offlineAlexA340B777 From Indonesia, joined Oct 2008, 135 posts, RR: 0
Reply 10, posted (5 years 9 months 1 week 6 days 23 hours ago) and read 4329 times:

Thanks all for your replies.

Quoting Utapao (Reply 1):
However, if the companies are cutting back on Business Class and forcing Coach travel, a huge portion of the people in Biz would be frequent travelers with enough miles or system-wide VIP upgrades so that even if they are booking Coach, I would bet many of them are upgrading -- thus the cabins are not empty by any means.

Good point, so at least until those miles are used we won´t see the business class emptier as usual.

Quoting MasseyBrown (Reply 7):
It's worth remembering that air traffic is a lagging indicator - it declines and increases after the general economy. Seeing the declines in traffic already probably means that deeper declines lie ahead.

Will be interesting to see what happens within the next weeks/month.

Cheers


Alex



So far travelled to 64 countries on 5 continents on 398 flights
User currently offlineB752OS From United States of America, joined Dec 2005, 1322 posts, RR: 0
Reply 11, posted (5 years 9 months 1 week 6 days 23 hours ago) and read 4313 times:

It's only natural that company travel will take a hit. Give it another 1-2 months and the airlines will begin to see lighter loads in first and business. When you can save money by sending someone in coach versus first or business, companies will do it to help the bottom line.

Quoting SSTsomeday (Reply 9):
Yet don't we have to keep in mind that capacity is being cut (fewer flights, and/or smaller A/C). So that would mean the flights that still go stay as full, right?

Sure, but companies are going to cut back on travel, it's a certainty. In the next few months companies will begin to scale back.


User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5369 posts, RR: 7
Reply 12, posted (5 years 9 months 1 week 6 days 22 hours ago) and read 4251 times:



Quoting B752OS (Reply 11):
When you can save money by sending someone in coach versus first or business, companies will do it to help the bottom line.

When planes again fly with the middle coach seats empty, directing your employees to fly coach won't seem so heartless.  Wink



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlinePnwtraveler From Canada, joined Jun 2007, 2226 posts, RR: 12
Reply 13, posted (5 years 9 months 1 week 6 days 22 hours ago) and read 4190 times:

AC has removed seats from their J class cabins in the A319 and A320 fleet. While the seats may be full some of those are upgrade passengers. I believe they removed one row and two rows respectively but someone can correct me. They haven't touched the larger aircraft, yet. I suspect that longer haul and overseas traffic may have a higher percentage of paying bums in the seats but that is just a guess by me.

User currently offlineAFKL From Netherlands, joined Feb 2008, 219 posts, RR: 0
Reply 14, posted (5 years 9 months 1 week 6 days 21 hours ago) and read 4166 times:

I have already heard of companies adopting a "no-fly policy" for the up coming several months, which obviously has its respective impact on the airlines.


ALLARD.



ALLARD. First flight: KLM DC-10, LLW - AMS.
User currently offlineFlySSC From United States of America, joined Aug 2003, 7403 posts, RR: 57
Reply 15, posted (5 years 9 months 1 week 6 days 21 hours ago) and read 4086 times:

All the important political/financial events have an impact on air transport business.

One if the best example is the recent decision of AF to pull out from THR. While the route was successful until a year and a half ago (flights increased to daily, increased capacity from A332 to A343) the political and economical sanctions taken against Iran by most of the western countries emptied out the Business class and impacted severely the profitability of the line.


User currently offlineReadytotaxi From United Kingdom, joined Dec 2006, 3191 posts, RR: 2
Reply 16, posted (5 years 9 months 1 week 6 days 20 hours ago) and read 3988 times:

In the UK there is no sign of cutting prices on Business class seats to bring in the customers, guess they will cut capacity and hold up the price.


you don't get a second chance to make a first impression!
User currently offlineLipeGIG From Brazil, joined May 2005, 11418 posts, RR: 59
Reply 17, posted (5 years 9 months 1 week 6 days 18 hours ago) and read 3854 times:
AIRLINERS.NET CREW
FORUM MODERATOR

It continues to be hard to find a C seat to Brazil from the US (i flew the new TAM service GIG-MIA with Full Business Class). However, in this case, we will have some additional capacity during the IATA winter, and considering some markets (financial) might produce some slow down, next year scenario, at this time, isn't so perfect.


New York + Rio de Janeiro = One of the best combinations !
User currently offlineDLPhoenix From United States of America, joined Aug 2007, 416 posts, RR: 0
Reply 18, posted (5 years 9 months 1 week 6 days 14 hours ago) and read 3210 times:

After the .com bust in 2001 numerous start-ups and hi-tech companies that found themselves in survival mode changed travel policies and eliminated premium class travel. This shift was overshadowed by the 9/11 aftermath.
We should expect the same now in finance and other sectors. An IT professional can travel in coach and be effective the next day (Coach travel is the norm in this industry). Nothing prevents a financial analyst, automotive industry manager or anyone else that does not bill work done during flight hours from doing the same. Now that the demand for such skills is dropping I expect those industries to make the shift as well.

DLP


User currently offlineTonystan From Ireland, joined Jan 2006, 1414 posts, RR: 2
Reply 19, posted (5 years 9 months 1 week 6 days 14 hours ago) and read 3147 times:



Quoting EddieDude (Reply 2):
BA is thinking about reducing capacity in its LHR-JFK/EWR routes either by downsizing the planes it uses for these flights, or cutting frequencies. The presenter of the news story mentioned that the profitability of this and many other routes of BA and other airlines depend on premium passengers and that the global crisis is expected to take its toll on airlines because demand will decrease notoriously.

Indeed,
The problem with BA is that they invested huge sums in increasing the size of their premium cabins at the behest of economy. As any of you who have travelled with BA on board the 747 or 777 will know just how small the Y cabins are in comparison to many other airlines.



My views are my own and do not reflect any other person or organisation.
User currently offlineB777a340fan From United States of America, joined Oct 2005, 765 posts, RR: 0
Reply 20, posted (5 years 9 months 1 week 6 days 12 hours ago) and read 2597 times:

I don't think there will be a noticeable change. I think there may be a lesser demand of J class seats, but in coordination with a decrease in daily flights, the cabins will still be apparently full.

User currently offlineEDICHC From , joined Dec 1969, posts, RR:
Reply 21, posted (5 years 9 months 1 week 5 days 23 hours ago) and read 1964 times:



Quoting B777a340fan (Reply 20):
I don't think there will be a noticeable change. I think there may be a lesser demand of J class seats, but in coordination with a decrease in daily flights, the cabins will still be apparently full.

So with a decrease in capacity/frequency, you have a/c sitting on the ground for longer periods losing money. There may not be much visible difference in the premium cabins on individual flights, the difference will be seen on the balance sheet.


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