BACK TO ALL-BUSINESS
By Joe Brancatelli
December 15, 2010 -- Life on the road has made me cynical, so my eyes roll when airlines or hotels announce money-back guarantees. But I have paid attention to the love-us-or-it's-on-us offer from OpenSkies Airlines because I couldn't imagine why any business traveler wouldn't love flying an all-business-class service.
A Paris-based subsidiary of British Airways, OpenSkies is the last survivor of a crop of startup carriers that revolutionized international business travel just a few years ago. Feisty newcomers like MaxJet, Eos, and Silverjet targeted old-line, full-service airlines on routes to London, Paris, Amsterdam, and Milan and offered a compelling proposition: dramatically lower fares for a premium-class product on jets that had been specially reconfigured to accommodate only business-class travelers.
Ironically, the only carriers still offering all-business-class service these days are the traditional airlines that the startups challenged. Besides OpenSkies, which flies to Paris' Orly Airport from Newark and Washington's Dulles Airport, British Airways runs all-business-class flights between New York's Kennedy International and London's City Airport. Singapore Airlines operates all-business-class jets on the ultra-long-haul nonstop routes to Singapore from Los Angeles and Newark. Lufthansa runs several all-business routes from Germany to Asia and Africa. And Lufthansa's Swiss International subsidiary flies an all-business-class service between Newark and Zurich.
If the results of OpenSkies' money-back guarantee proves anything, however, it's that business travelers love the concept of an all-business-class service. The disappearance of all-business-class newbies may reflect the brutal realities of airline and aircraft economics, but not the sentiments of business travelers.
"How can you not love flying on a [Boeing 757] that only has business-class seats and business-class beds and has a crew whose only job is to make the business traveler happy?" asks Dale Moss, the American who created OpenSkies for BA and has been chief executive since the launch in June 2008. "The issue isn't the economy or the competition. It's that we're still a small airline trying to get attention in a very crowded and confusing market."
The money-back guarantee was OpenSkies' latest attention-getting ploy and follows two years of constant price promotion. (Compared to as much as $10,000 for an unrestricted business-class roundtrip on Air France or the U.S. carriers plying the Paris route, OpenSkies fares generally run from $2,000 to $5,000.) The results surprised no one: Just 24 passengers asked for their money back during the guarantee's September-to-November run. The airline claims it sold "tens of thousands" of tickets during the same period. And back-of-the-envelope calculations indicate that OpenSkies flew around 35,000 seats between Paris, Newark, and Washington during the guarantee's 90-day life.
What did 24 customers not like about an airline that offers its "Biz Seat class" customers 52 inches of legroom and 2x2 seating and its "Biz Bed class" flyers a chair that converts to a fully flat, six-foot-long bed? What did those flyers dislike about an airline that serves far-better-than-standard in-flight meals, operates predeparture lounges, and offers an on-call concierge service?
According to Moss, a third of the refunds involved "tactical flight delays." Moss attributes another group of refunds to "people being people." The final category were OpenSkies customers unhappy with the airline's predeparture lounges in Newark and Orly. In Newark, OpenSkies uses a third-party lounge that is "landside," airline jargon for being located before security checkpoints. That will soon change since British Airways is building an "airside" (beyond security) lounge that will be available for OpenSkies customers. The OpenSkies lounge at Orly Airport is "not perfect," Moss admits, and says he's negotiating with Paris airport authorities for improvements.
"We put our money where our mouth was" with the money-back guarantee. "I think we offer the best value across the Atlantic and, as a chief executive, thirteen-hundredths of one percent breakage is a damned fine performance."
Moss learned something else from the guarantee program. A personal call from the CEO goes a long way to mollify an unhappy customer. "If a complaint or a criticism is addressed to me, I usually call or email the customer, and the first two words out of my mouth are 'I'm sorry.' That's all most customers want to hear. They are almost always thrilled to hear from the top man at an outfit who is willing to take responsibility."
Robb Fishman was. A very frequent flyer and director of a large multinational, Fishman didn't book OpenSkies because of the money-back guarantee. Like many first-timers, he followed the tip of a frequent flyer he trusted. In his case, my positive comments about OpenSkies.
When his experience wasn't perfect—he was delighted with the outbound flight from Newark, less impressed with the return service from Orly—he dropped me a note. I suggested he forward his well-thought-out observations directly to Moss. I didn't think about it again until Fishman contacted me and said Moss had first emailed him and then followed up with a phone call.
"I got the sense I was talking to a real person," Fishman told me the other day. "He was likable. At a bigger airline, I would never have gotten through to the CEO, let alone gotten a response from him."
Of course, the future of all-business-class service in general and OpenSkies in particular can't rest on the efforts of one chief executive selling one ticket at a time. Moss knows that. He hopes to revive the money-back guarantee in 2011 as a permanent part of OpenSkies' core service and expects to ramp up other promotions too. But the key to the boutique carrier's future might be its relationship with parent British Airways and BA's partners, American Airlines and Iberia of Spain.
In reservation computers, OpenSkies already carries BA's code as well as its own EC identifier. (It also participates in BA's Executive Club frequent-flyer plan.) Moss hopes to add the American code (AA) too, which would be a special boost to the Washington-Paris service he launched in May. And while his initial idea for the carrier has been scrapped—the 2008 launch plan called for at least a half-dozen routes by now—Moss believes OpenSkies has a future.
"We can be the tactical fighter brand for this organization," he says. "When you've got the power of BA, Iberia, and American behind you, you can do things as a small airline. We know business flyers love the idea of all-business-class service. And there's a lot of room to increase our yield as more travelers find us."
Which brings us back to the central irony: All-business-class service may have legs, but apparently not in the hands of startup airlines that must navigate the treacherous shoals of a worldwide market. Global reach, brand awareness, and frequency programs matter.
That's what has allowed BA to run its twice-a-day flights between Kennedy and London City with just 32 business-class seats per aircraft. The service is an adjunct to BA's phalanx of traditional four-class flights between New York and London's Heathrow Airport. The Airbus A319 flights to London City, an airport just a few miles from Canary Wharf and the Docklands, appeal to bankers and advertising types who are headquartered there.
Singapore Airlines learned about the niche-like nature of all-business-class with its audacious nonstops to Singapore from New York and Los Angeles, routes that require 18 or more hours of flying. When Singapore began the service in 2004 on specially configured ultralong-haul Airbus A345s, there were both business and coach classes and 181 seats. In 2008, however, Singapore switched both routes to all-business-class service with just 100 seats. The flights appeal to time-sensitive business executives willing to pay a premium over connecting itineraries. In fact, business class was outselling the coach cabin on the two routes before the flights went all-premium.
Unlike OpenSkies, which markets a product that’s less expensive than traditional premium classes, the BA and Singapore Airlines all-business-class products carry comparable price tags to their traditional products.
"All-business-class hasn't developed the way a lot of people, myself included, expected," Moss admits. "But passengers love it, and it can be profitable."
The Fine Print…
No carrier has been more tactically adroit with its all-business-class service than Lufthansa. It premiered the concept on new routes between the United States and Germany in 2003. As those routes matured, however, Lufthansa switched to traditional multiclass service with larger jets and moved the all-business-class planes to other markets. They currently operate on developing business routes such as Frankfurt-Pune, India, and Munich-Tashkent, Uzbekistan.
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 © 2010 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.