gulf_slf
15th Jun 2001, 15:06
Airlines lay on perks for the privileged
(If I am worth 10 x in J than Y shame EK don't realise it !!!)
Business travellers are becoming more demanding
By BBC News Online's James Arnold
Spooked by an economic slowdown, and under
attack from cut-price competitors, major
airlines are turning to perks and gadgetry to
help boost revenues.
The latest trend is the introduction of in-flight internet access, a technology that was tentatively launched earlier this year, but which now looks likely to become ubiquitous.
On 13 June, US aircraft manufacturer Boeing,
together with airlines Delta, United and
American, unveiled Connexion, a project to roll out online services on 1,500 of their planes by the middle of next year.
One day later, Airbus, Boeing's European rival,announced a joint venture with Tenzing, an in-flight web access provider. Tenzing has
already signed up a handful of carriers,
including Virgin Atlantic and Singapore Airlines,to run trials of its service.
New revenue streams
Although Connexion and Tenzing use different
wireless techniques to get online data
onboard, both will offer passengers a pretty
full range of web access and e-mail services-for a price.
An hour's online time on Connexion, for example,will cost the passenger around $20 (£14),which will be shared between the airline and the service provider.
According to the most optimistic estimates,
the in-flight internet services market could be worth as much as $50bn over the next ten
years.
Margins under pressure
Airlines would love to get a piece of that
action: aviation statistics conflict hugely, but most point to a sharp slowdown in profits from traditional economy-class passengers, as
tourists increasingly opt for budget airlines
such as Ireland's Ryanair and Go, owned by
British Airways (BA).
Pierre Jeanniot, director general of the
International Air Transport Association (IATA),told an industry conference earlier this year that, despite a brisk 6.8% annual increase in passenger traffic in 2001, profits per passenger were on course to fall for the second year in succession.
The overall net profit of IATA members, which
include almost all major airlines, could be just$1.5bn this year, down from $2.4bn in 1999,Jeanniot said.
Adding perks like internet access will help airlines cash in on the more lucrative
business-travel and first-class market,analysts say.
"The average business-class passenger is worth ten times as much as one in economy class, so the airlines plainly need
to cater for them" says Morten Herholdt, an
analyst at Barclays Stockbrokers in London.
A host of airlines are getting in on the act:Virgin Atlantic is examining plans to
launch a business-class-only airline,
Jetset, to serve a number of transatlantic routes.
BA, which introduced the first flat beds
last year, is spending £200m to install
them throughout its network.
Concorde, which looked certain to be
scrapped after its crash in Paris last July,
is being reintroduced this year jointly by
BA and Air France.
Most major carriers are investing heavily
in business-class facilities, including
expanding passenger space, and bolting
on perks such as effortless check-in,
in-flight massage and chauffeur-driven
cars to and from the airport.
Time is money
However, many companies are reining in the
corporate expense accounts that pay for
almost every business-class and first-class
seat: a recent survey by the Association of
Corporate Travel Executives found that
budgets are being trimmed by around 6-10%
this year.
But some observers reckon that careful
business-class investments will pay off.
Busy executives may not care much about
chauffeurs and vintage champagne, says
Daniel Solon, of aviation consultancy Avmark,
but they are still willing to pay high fares in order to save time by working or sleeping on the move.
"The real luxury is getting there quickly on
something like Concorde," says Mr Solon. "And
what really counts is sleep."
And while the airline business is increasingly polarised between cheap-and-cheerful airlines on the one hand, and the luxury flat beds of BA Club Class on the other, the once-massive middle market is in danger of being squeezed out of
existence.
"Economy class passengers pay plenty of
money for their tickets, but are wedged in, fed bad food and herded around like cattle," says
Mr Solon. "They are the real victims."
(If I am worth 10 x in J than Y shame EK don't realise it !!!)
Business travellers are becoming more demanding
By BBC News Online's James Arnold
Spooked by an economic slowdown, and under
attack from cut-price competitors, major
airlines are turning to perks and gadgetry to
help boost revenues.
The latest trend is the introduction of in-flight internet access, a technology that was tentatively launched earlier this year, but which now looks likely to become ubiquitous.
On 13 June, US aircraft manufacturer Boeing,
together with airlines Delta, United and
American, unveiled Connexion, a project to roll out online services on 1,500 of their planes by the middle of next year.
One day later, Airbus, Boeing's European rival,announced a joint venture with Tenzing, an in-flight web access provider. Tenzing has
already signed up a handful of carriers,
including Virgin Atlantic and Singapore Airlines,to run trials of its service.
New revenue streams
Although Connexion and Tenzing use different
wireless techniques to get online data
onboard, both will offer passengers a pretty
full range of web access and e-mail services-for a price.
An hour's online time on Connexion, for example,will cost the passenger around $20 (£14),which will be shared between the airline and the service provider.
According to the most optimistic estimates,
the in-flight internet services market could be worth as much as $50bn over the next ten
years.
Margins under pressure
Airlines would love to get a piece of that
action: aviation statistics conflict hugely, but most point to a sharp slowdown in profits from traditional economy-class passengers, as
tourists increasingly opt for budget airlines
such as Ireland's Ryanair and Go, owned by
British Airways (BA).
Pierre Jeanniot, director general of the
International Air Transport Association (IATA),told an industry conference earlier this year that, despite a brisk 6.8% annual increase in passenger traffic in 2001, profits per passenger were on course to fall for the second year in succession.
The overall net profit of IATA members, which
include almost all major airlines, could be just$1.5bn this year, down from $2.4bn in 1999,Jeanniot said.
Adding perks like internet access will help airlines cash in on the more lucrative
business-travel and first-class market,analysts say.
"The average business-class passenger is worth ten times as much as one in economy class, so the airlines plainly need
to cater for them" says Morten Herholdt, an
analyst at Barclays Stockbrokers in London.
A host of airlines are getting in on the act:Virgin Atlantic is examining plans to
launch a business-class-only airline,
Jetset, to serve a number of transatlantic routes.
BA, which introduced the first flat beds
last year, is spending £200m to install
them throughout its network.
Concorde, which looked certain to be
scrapped after its crash in Paris last July,
is being reintroduced this year jointly by
BA and Air France.
Most major carriers are investing heavily
in business-class facilities, including
expanding passenger space, and bolting
on perks such as effortless check-in,
in-flight massage and chauffeur-driven
cars to and from the airport.
Time is money
However, many companies are reining in the
corporate expense accounts that pay for
almost every business-class and first-class
seat: a recent survey by the Association of
Corporate Travel Executives found that
budgets are being trimmed by around 6-10%
this year.
But some observers reckon that careful
business-class investments will pay off.
Busy executives may not care much about
chauffeurs and vintage champagne, says
Daniel Solon, of aviation consultancy Avmark,
but they are still willing to pay high fares in order to save time by working or sleeping on the move.
"The real luxury is getting there quickly on
something like Concorde," says Mr Solon. "And
what really counts is sleep."
And while the airline business is increasingly polarised between cheap-and-cheerful airlines on the one hand, and the luxury flat beds of BA Club Class on the other, the once-massive middle market is in danger of being squeezed out of
existence.
"Economy class passengers pay plenty of
money for their tickets, but are wedged in, fed bad food and herded around like cattle," says
Mr Solon. "They are the real victims."