Cheaper business class not helping airlines

Posted Oct 9th 2009 2:30PM by Tom Johansmeyer
Filed under: Delta Air Lines (DAL)

Business travelers still aren't coming back to the good seats, despite airlines' best efforts. FareCompare.com reports that many business class tickets to Europe are going to be 33% to 66% cheaper this fall relative to last year. Companies are being careful with their cash – which means stacking people in coach rather than giving them a little leg room on overseas flights. With back-of-the-plane tickets going for a quarter of the price (or less) than their business class equivalents, this isn't exactly shocking.

On Wednesday, Delta's (NYSE: DAL) cheapest NYC-to-London's cheapest roundtrip coach fare was $716 (for an October 23 departure and October 30 return), according to a report in USA Today. To take the same trip in business class, you were looking at a hefty $4,634. So, even though prices are down year-over-year, it doesn't mean that business travelers are being allowed to enjoy the opportunity.

And, it's unlikely to change.

Next week, the National Business Travel Association is going to release a report saying that premium travel will continue to be constrained next year. This is tough on the carriers, which derive 25% to 30% of their revenue from the folks shelling out big cash for better meals. The number of top-shelf ticket buyers plunged 20% in the first seven months of 2009, according to the International Air Transport Association. Overall, IATA expects airline industry revenues to drop 15% from last year.

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