TWA first introduced "Ambassador Class" back in the '60's I believe... as I recall it was the first business class of its kind. I think TWA's first class was called "Royal Ambassador" service... but I could be mistaken.
Technically, it was the other way round. The early clippers had first class service on board, making flying only accessible to the elite few. Then the sixties and seventies saw the package holiday revolution that enabled the middle and lower classes to travel for pleasure. Now we have the no frills revolution that assimilates flying to a bus trip.
Both afficiondos and the 2 carriers concerned, QF and PA, couldn't agree on who was first. The more accepted argument is it was Qantas that started it, however they were merely offering normal economy seating but slightly better service and a dedicated area at the front of Y for "full fares" with middle and centre seats the absolute last to be allocated to anyone. QF were certainly the first to create a *class* between First and Economy that became known as Business, but it's generally accepted that PanAm had the first true business *cabin*, hotly followed by QF. (Think that's right - it may be the other way around, but one had the class first and the other had the cabin config & service first). Most will agree however that it was Qantas who was first and PanAm's claims were on a technicality. Guess as that particular PA is no longer around, the way to call it is QF is the longest serving airline with J class as we know it. Solves all arguments !!
"The final 707 flight operated from Auckland to Sydney on 25 March 1979 under the command of Captain Phil Oakley. With the sale of this last Boeing 707, Qantas boasted the world's only all-747 fleet, with 17 of the aircraft. In the same year Qantas launched the world's first Business Class."
UA offered "red white and blue" 3-class service on transcons in the late 60s; there was a short mention of this in the June (perhaps May) issue of Airways. It didn't last more than a couple of years but I think it may have been the first. "White" was equivalent to today's business class.
OK, so I got out the history books to settle the arguments:
(1) KLM introduced FFF service 'Full Fare Facilities' in 1975 on selected long-haul routes. From October 1975 to March 1979 the FFF passengers were seated among the other Y class passengers and given coupons for free drinks as an extra service. Other Y class pax continued to pay for drinks.
In March 1979 KLM introduced a separate cabin for FFF passengers introducing the term Business Class, but still used Y-class seating. These seats sold as 'Y' but had extra service. All passengers travelling on discounts were downgraded to a new M class.
So in reality KLM introduced a new discount Tourist Class, while naming full fare Y service Business Class. This service has grown into today's C class.
(2) Qantas did it differently. QF introduced J class as a separate cabin. QF charged an additional fee on top of Full Fare Y. So traditional full fare Y passengers on QF remained in economy - hard luck.
This explains why some airlines still offer 'J' class today (following Qantas) while others operate 'C' class (following KLM). J class has always been more expensive than C class.
So both airlines initiated Business Class, but in different ways.