This summer’s surge in travel to the U.S. and Europe, after the COVID-19 lockdowns and border restrictions, has created a whole new class of passengers on flights — those who skimp on air tickets as if someone else is footing the bill.
We see a strong new type of customer, what Air France CEO Ben Smith calls the “luxury leisure” customer. Chance and other journalists at a breakfast in Paris earlier this summer. The trend was impossible to miss: Business class cabins on Smith’s planes were almost as full as they were on most airlines. But there was hardly a business suit or bag in the most expensive seats. Those passengers, Smith said, “are not flying for business purposes.”
While some fliers in business class are paying for upgrades to corporate credit cards, many are cashing out tickets by redeeming reward points or spending their savings — both of which have piled up to unusual levels during the pandemic, with restaurants closed and far-flung. Vacation postponed.
“You have this huge pool of savings among the wealthy,” said Alexander Irving, a Bernstein European airline analyst. “If you can’t go on vacation for two years, you say, ‘I’m going to give myself the trip of a lifetime.’
The hottest ticket for travel
Summer “luxury leisure” travelers have complicated matters for real business trips. When cushion seats suddenly become the hottest tickets in travel, businesspeople are forced to reroute, reschedule meetings or—horror—fly economy.
“Like A hunger games If you need to make a last-minute trip, race,” says Henry Hartevelt, an industry analyst at Atmospheric Research Group in San Francisco. “You can’t get a last-minute ticket in business class, even if you’re a business person and don’t worry about the fare,” he said. “There were no seats.”
After two years of disruption due to the pandemic, the competition for premium seats has become a major development in the industry. Information on how many business and first class cabins have been added is scarce, as most airlines keep such details confidential. But in June, Delta said its recovery from the pandemic recession “outpaced the recovery in product revenue.” [the] Main cabin on all markets. Like other airlines, Delta redeems its mileage points, paying banks and credit card companies to pay the awarding carriers. The airline said in June that it earned $1.4 billion from American Express last quarter.
Most surprising to Harteveldt is the demand for business class seats intended for tourism rather than business. “You can always sell a business-class seat between New York and London or Frankfurt,” he says. But airlines were surprised by the interest in resort cities.
Stretching the air miles
Christopher Leung, a 36-year-old freelancer in Vancouver, was a regular in the business class this summer, even though his average income is $70,000 a year. He went around the world on seven different flights – all in fabulous business class, all with travel points. Covid in 2010 He held off on a grueling travel schedule in 2020 and 2021, so he spent that time perfecting his points-scoring ability.
In the year By early 2022, Leung had 2 million rewards points on 20 credit cards, and decided it was time to spend more. Carefully calculate this summer’s international trip. His flight itinerary, entirely in business class, was Vancouver-Mexico City-Istanbul-Singapore-Doha-Stockholm-Seattle-Vancouver. He used 260,000 miles for all seven flights, and another 200,000 or so staying at luxury hotels along the way.
The Covid-19 disruption was great news for people like Leung. “Retention bonuses and sign-up bonuses were huge during the pandemic,” said Gilbert Ott, 35, head of God Save the Points, a site dedicated to helping people earn and redeem airline miles, in 2012. Economy is great and planes are full, loyalty is terrible.
Winter sickness ahead
But once the summer season is over, airlines fear that the trend for leisure and luxury, like those dream vacations, may be fleeting. Travel data companies say many small business owners and government officials have recovered flight premiums, but estimate business travel is still 30% below pre-pandemic levels. That’s mostly because zoom meetings and virtual conferences and conventions are the norm for major companies.
“Essential business people don’t travel, and many are not allowed to travel in business class,” Hartevelt said. “This causes airlines to lose a very important source of revenue.”
The International Business Travel Association estimated last month that business travel spending could take until 2026 to return to 2019 levels of more than $1.4 trillion.
“Our biggest corporations are lagging, especially banking, consulting and technology,” Southwest Airlines chief commercial officer Andrew Watson told the AP this week.
As summer approaches, “the picture is not good,” Irving says. “You go in the summer, because that’s what you do. But would you go to Budapest for a long weekend just for a change of scenery? Given rising food and electricity costs and a looming recession in Europe, the answer is probably no. “The winter looks very challenging,” Irving said, adding that he expects some smaller European airlines to go out of business in the coming months.
Leung is perhaps an outlier among the luxury entertainment crowd. It will return to air this summer. Of the remaining 1.5 million or so points, Japan’s ANA Airlines has slashed 65,000 miles for tickets from Tokyo’s Narita Airport to New York’s JFK. “I saw this offer, and I knew I wanted it,” he said. First class will be flown on that flight.
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