The Big Business of Business Class Cabins

Aug 3, 2013

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I just read a pretty interesting article in the NYT about the fierce competition between airlines to build the perfect business class seat- one that maximizes both passenger comfort and airline revenue. The piece interviews a bunch of industry execs who offer unique insight to the behind the scenes “arms race” that is going on to woo premium passengers. If you enjoy flying up front, it offers a great snapshot of what airlines have been doing to research the passenger experience and also what’s to come.

New Lufthansa business class is lie-flat, but not private
New Lufthansa business class is lie-flat, but not private

Business Class Economics
Thanks to my miles and points hobby/addiction, I’ve become accustomed to flying in business and first class at affordable prices. Even as airlines pump out more miles and credit cards offer mega-bonuses, I still take for granted the ability to go pretty much anywhere in the world in comfort. This is especially important for me as a 6’7″ traveler– coach simply wasn’t made for “people of height”. I have to imagine that if miles/points didn’t exist I would travel much less.

However, I rarely think about the economics of the business and first class cabin since I rarely pay full price for those seats. I often check the prices of the flights I take and my eyes frequently attempt to leave their sockets when I see how much airlines charge for premium seats. Let’s say you live in Boston and needed to be in London for last minute meetings this week. Paid business class flights on British Airways are going for $8,154.46!
BA Paid BOS LONThat same exact flight can be “purchased” with 80,000 Avios and $1,153.46. Paying over a grand for taxes and fees on an award ticket is a hard pill to swallow for many in the miles/points world, but it is still amazing to see how each Avios saves you 8.7 cents, or $7,000 in total.
BA Business Award BOS LON
The value here could be multiplied as well if you have the British Airways Visa and the Travel Together award that comes along with $30,000 in spend- you could get two of these tickets for the same 80,000 Avios and double the taxes/fees ($2,306), so $16,308 in travel for 80,000 Avios and $2,306, each Avios saving over 17.5 cents!

Clearly the downside is that there needs to be award availability and that won’t always align with your trip, but still, business owners should get in on the points game because maximizing points for premium travel can save huge amounts on the bottom line. I know many small business owners with millions of points, but they don’t know how to use them to save on travel and often redeem for gift cards for employee incentives. I think a lot of people assume that there won’t be award inventory at the last minute, but that couldn’t be further from the truth as many airlines unload saver level awards in the weeks/days leading up until departure.

The bottom line is that premium cabins are focus areas for the airlines and we should expect to see improvements increase over the next couple years, even on US carriers who have historically lagged behind many international carriers. That being said, airlines want to see a return on this investment so I anticipate the cost to sit in these seats will increase, even for those redeeming miles and points. In the meantime, take advantage of amazing business class redemptions before they’re gone!

5 of My Favorite Rounds Trip Business Class Awards
1) 90,000 US Airways miles for North America to North Asia (China, Hong Kong, Japan, Kazakhstan, Kyrgyzstan, Macau, Mongolia, S. Korea, Taiwan, Tajikistan, Turkmenistan, and Uzbekistan.) Even though US Airways doesn’t fly to Asia you can redeem on any Star Alliance partner, including Taipei-based Eva Air which serves Dom Perignon in business class. You can buy 90,000 US miles for ~$1,700 through their current 100% Buy Miles promotion.
2) 62,500 mile Flying Blue Promo Awards US to Europe. Taxes are high, but the cent per mile can be a great value when comparing the cost of purchasing business class. Flying Blue also includes Israel as a part of Europe, making
3) 280,000 Delta SkyMiles for a Round the World award with up to 6 stopovers.
4) 110,000 US Airways miles  North America to Australia/South Pacific. Even though US Airways doesn’t fly to Asia you can redeem on any Star Alliance partner and include a stopover in Asia.
5) 50,000 British Airways Avios for Boston to Dublin on partner Aer Lingus roundtrip with only ~$40 in fees. British Airways charges ~$1,000 in fees for business class awards when you fly on their planes or most of their Oneworld partners, but not when you fly Aer Lingus or Air Berlin. Their awards are based on distances and Boston-Dublin comes in right under the threshold for 80,000 mile roundtrip awards so you can get the roundtrip for just 50,000 Avios.

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