British Airways' business class gamble

Hotel News - 28/09/2009

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Defying recent trends that show global business class travel plummeting, British Airways has announced a new business class-only route from London to New York City, starting this week.

For those who are willing to fork out the premium fares, the upmarket service will feature two specially designed A318 aircraft fitted with only 32 flat-bed seats and a range of other premium comforts.

As budget carriers like Ryanair and easyJet are eating into mainstream airlines' passenger shares along short-haul flights, British Airways is now looking to focus its services on long-haul connections. The airline is already the largest provider of links between Europe and the US, and this latest move is being seen as an experiment to determine if the UK airline can muster enough US-bound passengers from London alone, without needing feeder markets from its European network.

With budget airlines eating into much of British Airway's European market, the airline may consider doing away with its shorter connections to Europe, to concentrate solely on long-haul flights. British Airways is facing dwindling profits on routes where the airline has provided pioneering services in the past, like the London to Paris route. The airline has faced stiff competition from both low-cost carriers and the Eurostar rail service on this route. British Airways may see itself abandoning this, and other European links in the future, in what ma turn out to be a fundamental restructuring of the airline’s positioning.

British Airways has traditionally made most of its profits from the lucrative business and first class sections on their flights. The new strategy providing exclusively business class seats is being seen as a high-stakes gamble from the airline, and analysts have referred to it as the "holy grail" product.

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