Recreating the Business class

In the last decade, Business class changed a lot. The european Business class we remember from early 2000s is gone today. Unfortunately, with deregulation and rapid growth of low-cost carriers, legacy airlines were forced to reduce costs rapidly, which affected also the business class product. Also, living with the new possibilities, mainly around and after 2008, business travelers almost halved the prices they pay for flight tickets, by flying more in economy class and avoiding the premium products. But are the global economic situation and the growing trend of low-cost flying the only reasons business class cabins are not full like they were?

Evolution of business travellers revenues (one way)

 The short-haul business class in Europe, we fly today, brought  at least two paradoxes, which can be another reason for business travelers to avoid these kind of premium products.

Business class we flied a decade ago

One of these is the comparison of changes in business class products on short and long-haul routes. While on long-haul routes business class became much sofisticated and luxurious, offering full-flat beds, high-quality meal service and IFE, european short-haul services in business class have been reduced rapidly. Most of the airlines reduced the seat pitch in business classs cabins to only 32-34 inches and also installed six-abreast rows instead of the four-abreasts, in order to increase the density of seating, ergo decreasing the cost/seat and also make the seating more flexible. Also the meal service fell to much lower level, and is comparable, in most of times, with economy class catering on long-haul routes. This paradox can be a plus reason for a business traveler for not choosing the 3-4x more expensive business class ticket.

Business class we fly today

Proportion of Business passengers travelling in different classes

The second paradox is connected to the first one - paradox of pricing. If we count a fare for a business class seat in 1990s by space it uses, we have to calculate with about twice a price of a economy class seat, because the business class seat uses about 2x more space in Boeing 737 (we need to earn 2x higher revenue on this seat, which could be in other case replaced by 2 economy class seats). Than we also have to calculate with costs for premium services in Business class (50-70EUR on a EU route these days). For example on Brno-Paris route, where cost/seat would be around 100EUR one-way (E195, 116 seats), the business-class ticket would cost between 250 and 300EUR one-way. It is actually more, because of the higher profit-margin airlines add to these premium flight tickets, but the paradox is, that these prices haven´t fallen down by 50% after switching to double-density seating (in many times) in business class cabins, they stayed about the same, and fell down more because of the economic crisis. Very few peple have motivation to pay 3-4x higher price for "not-so-premium" premium service. In 1996, 41% of UK business travelers (London airports) flied business class within EU, today it is only 5%. There is a hope for rising demand after business class in the next years, in consequent with regeneration of european economy, but is the product we offer today enough for this future demand? And how about recreating business class into a new product?

When rebuilding the product-deffinition of business class, european airlines should take inspiration from business classes we know from other continents. Mostly Asian business classes are increasing their standards while keeping the right efficiency. The prices of business class tickets of today should stay only for the highest possible level of booking classes, which includes unlimited flexibility in every possible aspect. But there should exist business class product for passengers using economy premium class, or economy flexible products today, on lower, but profitable prices. Again take Brno-Paris route for example - if we reconfigure Embraer 195 for 114 seats, when 6 business class seats will be on 37´ pitch in 2 three-abreast rows, they will use  about 150% of space used by an economy class seat. On the 100EUR/economy seat price it means 150EUR+50EUR for additional business class services, total of 200EUR one way. That is a half price compared to prices of nonstop business class tickets from Paris to Vienna to Prague, and comparable price with economy-flexible product. If a business passenger is willing to pay 50EUR more for a high-standard (and due to european studies they would be willing), luxurious service in Business class in advantage to his economy-flexible ticket, this would be an ideal deal for a passenger like this, while it would also be a high-profit maker for an airline, and another highly diversified possibility of travel in comparison to Economy class. Also, according to recent studies, also more passengers traveling for leisure would be able and willing to pay this price for this level of product - this could be an important factor on teritories with lower percentage of business travelers on flights, such as eastern-central europe.

Remember, when flying in business class was luxurious, and worth it? Airlines should bring this option to european air travel back, with a new approach to optimalization, pricing, product standard and efficiency - that is the way to recreate a high-level product and attract again the business traveler sector while making high profits of it.




Resources :
- Civil Aviation Authority of United Kingdom
- Airlinetrends.com
- Eco World Airways project calculations