FROM the airlines’ point of view, these are tough times for premium overseas travel. In May, according to the International Air Transport Association, global demand for business- and first-class seats was down over 26 percent from May 2008. It was the 12th consecutive month of year-on-year declines in demand for those premium seats, which at one time were a gold mine for airlines.
But a crisis for airlines has also created opportunities for business travelers bound overseas and determined to make the trip in productive comfort (lots of space to work in and those cushy lie-flat beds to rest in, for example) — without buying a ticket that can cost as much as a good used car.
With a degree of flexibility in travel plans, you can now fly overseas in business class for a fraction of what it used to cost. Airlines started introducing spot fare sales for international premium seats last fall when demand fell in a deteriorating economy. Now, as conditions have worsened, airlines seem to be settling into a basic restructuring of international premium-class fares that resembles the way airlines have long priced leisure fares in the back of the plane.
“I don’t know even what counts as a sale anymore,” said Joe Brancatelli, who publishes Joesentme.com, a subscription Web site for business travelers. “Airlines are now yield-managing fares up front like they do in the back. It’s looking like a permanent sale environment.”
Airlines adopted yield-management strategies in the 1980s to sell coach seats efficiently. Yield management assumes that airline seats are perishable and can be marked at fluctuating prices based on calculations for demand, starting months in advance and continuing until the time the plane takes off.
Because of reductions in corporate spending, business travelers have begun behaving more and more like leisure travelers, eschewing immediate convenience for lower prices — even in the international premium niche.
I can’t begin to summarize the current discount fare environment. But here are a few current and arbitrarily chosen examples. Contemplating a business trip to Shanghai? With a little flexibility, you can travel in luxury and sleep in a lie-flat bed. Air Canada has a sale in which a first-class ticket between Los Angeles and Shanghai is available for less than $3,500. A year ago, a traveler could have easily paid over $15,000 on various airlines for that ticket.
Business class from New York to London? For the British Airways swanky Club World cabin, that will be about $2,544 round trip for late summer travel, with an advance purchase. The walk-up fare for Club World on that route used to be about $11,000 and is still about $7,500.
New York to Amsterdam? On the mostly business-class planes operated by OpenSkies, a British Airways subsidiary, the summer fare is about $1,300, round trip.
As always, you need to check individual airline Web sites for the fine print on advance purchase restrictions and fees.
Or, given the current free-for-all in high-end fares, you may even want to consult with a real live travel agent. That’s because finding the right premium fares at the right time has become cumbersome even for business travelers who used to book travel themselves in a less frantic environment.
“We all know the airlines are reducing capacity, but that’s going to take time,” said Fran Kramer, who specializes in international bookings for DePrez Travel, a big agency in Rochester with clients all over the country. “While they do that and figure out what works,” she added, “there are certainly a lot of opportunities” for finding major fare discounts on international premium travel.
Ms. Kramer said that airlines, desperate for whatever revenue they can get, sometimes reach out to agents with last-minute offers for premium seats that are unsold, even at promotional fares, just before a flight. “Yesterday, we got a call 24 hours in advance offering my client the option to go to Europe in business class for $500 extra,” she said.
Airlines can’t continue losing money indefinitely, but they’re still flying those fancy cabins overseas. So big discounts on premium travel will continue until supply can be brought into some profitable relationship with demand. Even then, those stunning $11,000 round-trip business-class fares between, say, New York and London may be a thing of the past.
Airline executives have been looking ahead with reduced expectations.
“This industry can always reduce prices,” said Willie Walsh, the chief executive officer of British Airways. “The challenge now is, can you adjust your cost base to reflect that different price point, or ideally can you take the costs out quicker than the prices are going down?”