Premium class travel may not fully recover

Thursday, 16th July 2009

Martin Broughton, the chairman of British Airways, warned the aviation industry that it was facing the largest crisis in its history and that a “permanent structural change” in premium-class fares will create a “fundamental challenge” in the way in which BA operates. Major airlines have depended heavily on this typically profitably sector for their profitability.

Experts have responded that this gloomy forecast could threaten the long-haul routes of other carriers that depend on premium-class passengers for viability.

From Scotland, transatlantic services, which are particularly impacted by the decline in premium-class travel, include daily flights on Continental and Delta between Edinburgh and New York.

Broughton said at BA's annual meeting that premium-class fares were no longer viewed by business travellers as good value for money and noted that corporate travel budgets had been slashed when the economy began to slow. According to the chairman, the demand for premium-class air travel had fallen by 20 per cent, contributing to the -ever loss quarterly loss posted by the carrier, of £300 million between January and March of this year.

The British Airways chairman commented: “This is extremely grave news for major full-service airlines, which have a traditional reliance on the premium market to generate a high proportion of their total revenue. There is evidence that business customers no longer place the same value on the levels of flexibility offered in the highest-fare categories.”

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