Airlines Offer New Luxuries to Recapture First Class Fliers

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That would put pressure on carriers including Delta, because London-based British Airways already is the No. 1 operator of flights across the North Atlantic, the world's biggest market for corporate travel.

Qantas Airways Ltd., Australia's largest carrier, signaled its business-class strategy last week with a plan to drop first- class seats to some cities.

Business First

Qantas' revamping of 29 wide-body jets to expand business- class cabins is "a commercial decision that you can generate more revenue allocating that space to business rather than first class," said David Swierenga, president of aviation consultant AeroEcon in Round Rock, Texas.

The affected routes include the 14-hour flight between Sydney and Johannesburg, for which Qantas now charges A$13,812 ($12,370) for the costliest round-trip ticket in first class. That's almost twice as much as for business class.

"Business class has become so luxurious with seats that lie flat and unlimited drinks and terrific food," said Alan Bender, a professor of airline economics at Embry-Riddle Aeronautical University in Daytona Beach, Florida. "How can I justify another big sum of money for just a marginal increase in luxury for first class?"

Bender said the industry standard for first-class service is still being set by the Asian carriers flying the longest intercontinental trips, including Singapore Airlines Ltd.,Cathay Pacific Airways Ltd. and Japan Airlines Corp.

'Greatest Wealth'

"Most of their routes are international business cities where there is the greatest wealth in the world, so naturally you have more people who want the very best service when they fly," he said.

Singapore Airlines is the first carrier to fly the double- decker Airbus SAS A380, which features private suites with sliding doors and the widest available business-class seats. The airline also spends S$11 million ($8 million) a year on wine and Dom Perignon champagne for first-class passengers.

Delta and Continental are among the U.S. airlines that ditched their three-cabin configuration years ago in favor of plusher business seating along with coach, according to Bender.

On United, one of the U.S. carriers still using three cabins on some routes, the menu developed by celebrity chef Charlie Trotter includes sea bass with a three-onion ragout in first class, while business-class choices include grilled mahi- mahi with a sweet-and-sour vegetable stir-fry.

The trick for U.S. airlines is balancing that luxury service with the fare-cutting pressure on domestic routes from discounters such as Southwest Airlines Co.,JetBlue Airways Corp. and AirTran Holdings Inc., Bender said.

"It's very hard to do both well, so over time we've seen the U.S. carriers focus more on the middle ground of having a really nice business class," he said.

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

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