THE LAST TABOO
By Joe Brancatelli
April 24, 2007 -- Business travelers love to beat the airlines at their own game—which means Washington communications lawyer Bob Thompson is a most happy fella. I recently tipped him off to an unbelievable business-class fare deal and he jumped right on it.
He and his wife scored seats 2A and 2B in Continental’s well-regarded BusinessFirst cabin for late-summer flights between Newark and Brussels. “I only paid $799 a person each way,” Thompson told me over the phone after he nailed the seats. “$1,600 roundtrip. That’s hardly more than coach!”
I don’t throw the word bargain around lightly when it comes to business- and first-class travel, but Thompson’s deal surely makes the cut. Continental wants someone who paid $951 per person roundtrip to sit wedged in coach on the very same flights that Thompson and his wife booked. And Thompson’s $1,598 roundtrip fare is an eye-popping 77 percent off Continental’s business-class list price of $7,001.
Welcome to the brave new world of international business-class airfares. After decades of stiff-necked resistance, the airlines have broken their last pricing taboo. Now they are happily discounting their best seats with the same slice-and-dice precision they use to price coach travel.
Check out these sublimely cheap and ridiculously overpriced examples:
- If you need to zip from New York to London tomorrow to close a deal, expect to pay British Airways about 10 grand roundtrip to sit in its newly renovated Club World business-class cabin. But if you want to fly this summer and can book before the seasonal promotion ends this week, the price will be about $2,500.
- Headed to Tokyo? A flight from San Francisco on Japan Airlines tomorrow will cost you more than $7,300. But book as little as three days in advance and you may snag one of JAL’s midweek “business saver” fares and pay just $4,600.
- Lufthansa normally charges $10,718 (including the fuel surcharge) to fly roundtrip to Frankfurt from Los Angeles. But the German carrier’s recent “summer business class” sale cut the price to $2,988 roundtrip.
Why have the airlines suddenly gone deal-crazy up front? Revenue, of course. They see an opportunity to sell seats that would otherwise go empty.
“Our ‘no-discount’ policy stopped making sense,” says Lufthansa executive Don Bunkenburg. “Now we’ve moved to yield-managing the business-class cabin using the same tools we use in economy.”
What that means in English: The airlines have decided that when business in the front sections is slow, they will cut their prices to attract well-to-do leisure fliers and bargain-hunting business travelers who can accept the restrictions that the carriers once imposed only on discounted coach fares. The very best business-class bargains are seasonal, usually reserved for slow times like summer, Thanksgiving, Christmas, and New Year’s. Ironically, of course, that is also when people most want to vacation. So business travelers like Thompson, who almost never fly coach on a business trip, can easily fly in business class for pleasure.
“Even affluent folks aren’t going to pay $10,000 to sit up front on a holiday,” says Mark Bergsrud, senior vice president for marketing programs at Continental Airlines. “But there are plenty of high-end leisure travelers around if you make the price more attractive. I have 48 to 50 business-class seats every day on a [Boeing 777], whether there is any business travel demand or not. Why not maximize my revenues by selling those empty seats to leisure customers who are willing to pay?”
The competition has become very good at matching Continental’s deals. Lufthansa, for example, offered its first business-class summer sale last year and “the results were quite good,” Bunkenburg says. “We had been somewhat skeptical that there were leisure travelers who wanted to pay more. We’ve learned otherwise.”
The major international carriers have learned that lower fares will fill business-class seats during non-holiday periods too. Most airlines supplement their seasonal sales with year-round business-class discounts. Getting those bargains—sometimes as much as 70 percent below full-fare business class—requires flexibility, however. To grab the lowest fares, you may have to purchase your tickets as much as 50 days before departure. You’ll also be expected to stay over a Saturday night. Low-priced business-class seats are almost always nonrefundable and carry stiff fees for itinerary changes. (Airlines generally have a spread of less heavily discounted business-class fares that require 3-, 7-, or 28-day advance purchases.) Naturally, lower fares aren’t available for every seat and aren’t always available on the days that business travelers prefer to fly (Sunday, Monday, and Friday).
If all this wheeling and dealing sounds too much like the goofy games that the airlines play in coach, you’re thinking like Jack Foley. Executive vice president of Dublin-based airline Aer Lingus, Foley slashed his business-class fares by 35 percent in 2004. He’s been living happily and profitably ever after with the one-price-fits-all model.
“Business travelers appreciate the consistently lower prices. We increased our load factor [the number of seats filled] and our yield [the revenue per seat],” he says. “And we eliminated all sorts of administrative costs by adopting a simplified pricing policy.”
The Fine Print
Most full-fare, fully refundable business-class fares are coded J or C in airline and travel agency computers. Discounted business-class fares are most often coded D, R, or Z. Beware those two-for-one business-class offers from the American Express platinum card and other elite credit cards. The programs usually require that you buy a ticket at the full business-class fare to receive the free companion seat. That often costs more than buying two deeply discounted business-class tickets.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2007 Condé Nast Inc. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2008 by Joe Brancatelli. All rights reserved.