Big airlines push premium travel option

March 3, 2010, 3:09pm

Delta Air Lines Inc. and AMR Corp.’s American Airlines, the world’s two largest carriers, are counting on lie-flat seats and Tahitian crab soup to help win back their most-profitable customers.

With the easing of an 18-month global slump in first- and business-class travel, Delta’s seats that recline 180 degrees into beds and American’s Asian-fusion appetizers are lures for the corporate passengers whose ranks dwindled when the global recession ravaged budgets for international flying.

Filling the premium seats at the front of airplane cabins is pivotal to US airlines’ efforts to return to profit in 2010 after weak demand forced them into discounting to woo vacationers. Business fliers are prized because they typically pay the highest prices and take to the air more often.

“If you’re flying to Japan or Seoul, it makes all the difference in the world to put your legs up and really sleep and arrive rested and ready to go,” said Chris McGinnis, editor of The BAT, a San Francisco-based newsletter and blog for frequent travelers. “You’re going to feel really taken care of.”

US airlines have been playing catch-up in recent years with overseas competitors such as Virgin Atlantic Airways Ltd. that moved more quickly to add amenities including seats that convert into beds.

The recession shrank the pool of first- and business-class fliers for airlines worldwide, with December’s 1.7 percent increase in premium bookings the first for the global industry since May 2008, the International Air Transport Association trade group said on Feb. 16.

While those passengers made up only 7.7 percent of 2009’s overseas total, they produced 26 percent of the revenue on those flights, IATA said. For example, Atlanta-based Delta charges $4,998 for a walk-up, business-class ticket between New York’s Kennedy airport and London Heathrow. A discounted coach seat is $1,175 next month.

International premium-ticket sales slid to $68 billion worldwide last year, down 20 percent from 2007.

That contributed to losses at Delta, AMR, United Airlines parent UAL Corp., Continental Airlines Inc. and US Airways Group Inc.

“We continue to see signs that business travel trends are starting to rebound,” Matthew Jacob, an analyst at Majestic Research LLC in New York, told clients Tuesday in a note.

Delta is spending $1 billion on fleet upgrades through 2013, including lie-flat seats and quilted duvet comforters on 90 planes that fly international routes. Delta and Houston-based Continental both sought fliers’ input in designing new seats. (Bloomberg)