By Joe Brancatelli
September 23, 2008 --As Wall Street remade itself last week and world financial markets buckled, I pored through some interview transcripts to reacquaint myself with the Horny Banker Theory of business travel.

It goes something like this: Airlines can charge corporate fliers 10 or even 12 times more than vacationers because business travelers need to get where they are going fast, with no advance notice and no price questioned.

Surely, I said to an airline chief executive a couple of years ago, there was a breaking point. As corporations cracked down on travel and entertainment spending, wouldn't they demand airlines stop soaking them?

"Joe," the C.E.O. said knowingly, "there's always an investment banker who needs to get home in time for a date."

"You're saying the entire airline pricing system rests on the mating practices of horny bankers?"

"Well…uh…well…I wouldn't say it exactly that way. But what's a couple of hundred dollars or even a couple of thousand more or less to someone who's working a billion-dollar deal on one coast and has a dinner date that evening on the other coast? Breakfast meeting in London to lock up a deal and then a flight home to New York in time for the opera—what's that worth to someone generating billions and earning millions?"

I've never been convinced that the Horny Banker Theory held water, but we'll certainly find out now, won't we? No one argues that bankers and brokers, hormonally charged or otherwise, make up a disproportionately large slice of the airlines' most profitable segment: walk-up, full-fare, and premium-class fliers. In fact, the frequent-flying financial sector is what makes markets such as New York, London, Hong Kong, Shanghai, Tokyo, and Dubai so attractive to profit-hungry airlines.

"This will be ugly," one glum airline executive distractedly mumbled last week as I was interviewing him on an unrelated matter. "If your highest-paying fliers disappear, your reason for flying the plane disappears."

Although airline math is often slippery and approximate, it's not difficult to figure out why it's hard to replace a banker flying on business. Take the NyLon (New York to London) route, for example. Off the record, airlines say their best corporate clients pay about $5,000 for a business-class round-trip. While that's about half the published walk-up business-class fare, it's also about 10 times the lowest advance-purchase fare that leisure fliers pay.

In other words, for every Lehman banker or Merrill Lynch broker who was laid off last week and now won't fly on business between New York and London, an airline will need to find 10 vacationers to take his place. And while 10 fliers paying $500 each in coach equals the revenue of one grounded banker, the profit margin isn't the same. Discretionary fliers are more difficult to reach, more expensive to convert into customers and must be advertised to and sold to again the next time they fly. Not to mention all the extra space, extra luggage, extra fuel, and extra attention that 10 leisure fliers require.

Low-fare coach passengers are "ballast," one brutally honest airline executive told me not too long ago. "You fill up the back of the plane with them and hope you break even. They are there to allow you to fly five or six times a day between cities so you can offer the frequency of schedule to the high-paying business traveler."

I didn't use the NyLon run as a random example. New York to London is the premier international route in the Western world, and its primary customers have been financial types. As banking and brokerage firms shifted employees between the key English-language financial centers, New York-London traffic boomed. According to British aviation regulators, about 1.7 million people traveled between the United States and Britain in June—and almost one in four of them flew the NyLon route.

Five U.S. and British carriers (American, Delta, Continental, British Airways, and Virgin Atlantic) fly the route dozens of times each day. Three all-business-class carriers (Eos, Maxjet, and Silverjet) tried to crack the market in recent years; two of them flew into London's Stansted Airport, which has a nonstop rail connection to The City. And next year B.A. plans to launch what can only be called a banker's transatlantic limousine. The 28-seat, business-class-only flight will link New York to tiny London City Airport, just minutes by taxi from Canary Wharf, London's satellite financial hub.

It's not just NyLon that will be hit by the ongoing financial meltdown, of course. Four of the six U.S. legacy carriers (American, United, Delta, and Continental) and two alternate airlines (JetBlue and Virgin America) fly between metropolitan New York and greater Los Angeles. The route is essentially a shuttle tying L.A.'s entertainment industry to New York's bankers. The same carriers run frequent service between New York and the San Francisco Bay to link the high-tech industry to Manhattan's money. And the front cabins of transpacific flights from Los Angeles and San Francisco are jammed with bankers heading to major Pacific Rim manufacturing and financial centers.

Bankers and brokers also dominate Amtrak's Acela and the New York-Washington Air Shuttle route. They pay a walk-up fare of $340 one way—an incredible $1.59 a mile—to fly the 214 miles between New York's LaGuardia Airport and Washington's Reagan National. That's about 13 times more on a per-mile basis than the average fare that airlines charge nationwide.

What's it all mean? After a decade that has seen 9/11, serial bankruptcies, and a quintupling in the price of oil, airlines may now have to survive years without tens of thousands of their best and most profitable customers too. Horny or not, those folks are going to be missed.

The Fine Print…
A follow-up on last week's column about this season's new airport terminals. Detroit Metro opened without notable incident last Wednesday. But the schedule for the new Indianapolis terminal has changed. The airport will now hold an "open house" on October 11 and 12, but the big move of paying passengers and commercial flights will begin on November 11.
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 © 2008 Condé Nast Inc. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2008 by Joe Brancatelli. All rights reserved.