BA set to scale back business cabins
Business class cabins on British Airways flights look set to be scaled back as the airline admitted the market for premium travel may never recover.
Speaking to shareholders at the airline’s AGM yesterday, chairman Martin Broughton said: “There is evidence that business customers no longer place the same value on the levels of flexibility offered in the highest fare categories.
“Corporate travel budgets have been cut back severely and consumers are determined to reduce their debt.
“This represents permanent structural change in the market – and poses a fundamental challenge to our traditional business model.â€
Chief executive Willis Walsh pointed to IATA figures which show that premium traffic has fallen 19.9% in the first four months of this year.
“We’ve actually performed better than average, with a decline of approximately 16.1%,†he said.
“But the fall in volumes is only half the story, as our industry has also seen a big fall in premium yields. In April alone, IATA estimates that premium fares fell by 20%, which, when combined with the fall in volumes, led to a 44% fall in revenues.
“Again, we’ve performed significantly better than the industry but we can’t take too much comfort from this.â€
He said IATA estimates that, across the industry, premium traffic accounts for 7-8% of passengers and generates about 25% of revenues.
At British Airways, however, premium passengers make up about 13% of passenger numbers and generate about 45% of revenue.
“So we are right at the eye of the storm,†he said.
“Fewer business travellers will choose the premium cabins, and those who do will pay less.
“Providing an outstanding quality premium service will remain fundamental to our business but we must recognise changes in our markets and continue to provide a product that represents excellent value for money.
“Hanging on in there and just hoping for old high-roller times to return is the road to oblivion.â€
By Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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