Ahhh! Get the comforts of first class for cheap

By Barbara S. Peterson

updated 12:19 p.m. ET April 7, 2009

After spending millions to spruce up their first- and business-class cabins and add premium-economy seats to their planes, airlines are facing huge losses as recession-hit corporations around the world slash their travel budgets.

In fact, the International Air Transport Association reports that premium-class bookings have dipped as much as 18 percent on some long-distance routes — nearly double the slump in air travel bookings overall. In December, premium-class traffic fell 13 percent worldwide. But the airlines’ bad timing is a boon to leisure travelers looking to fly in comfort: Carriers are now offering their premium-class seats at bargain-basement prices rather than see them go empty.

I was able to enjoy this largesse not long ago on a flight from New York to Amsterdam, lazing in a capacious leather business-class-style seat and dining on smoked salmon and beef bourguignon washed down with a vintage Château Margaux.

After dinner, I drifted off to sleep, for once arriving in Europe without feeling I'd spent the prior eight hours on a rack. The fare for all of this cosseting was $1,100 round-trip, just $320 more than what I was quoted for a cramped seat in coach on another airline — and thousands less than a conventional business-class seat would have cost.

My flight from New York to Amsterdam was on OpenSkies, a new carrier launched by British Airways last June that may be the best airline you've never heard of. I was traveling in Prem Plus, a sort of amped-up premium-economy class that's more like business class than economy.

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Dale Moss, CEO of OpenSkies, describes the carrier as a "test kitchen" for the notion that a small start-up can offer upscale service at affordable fares. Of course, the company didn't know it would be testing its thesis during a global financial crisis, and plans to expand beyond the three cities it currently serves — New York, Amsterdam and Paris — have been put on hold.

Meanwhile, even the majors are doing all they can to lure passengers into the front of the plane. At press time, British Airways was offering New York-London round-trip business-class fares for $1,800 — a whopping 84 percent off the standard business-class fare. Experts say that we are not looking at a short-term fire sale: These bargains are here to stay as long as business travel remains soft.

"I've been in business 35 years, and I have never seen it so bad," says Al Thomas, a former airline executive who is now with Etravelbid.com, a Web site that sells discounted business-class travel. In February, United Airlines announced that it is reducing the size of its premium-class capacity by 20 percent, and other carriers have already cut flights significantly in response to decreased passenger demand.

According to Thomas, the airlines are loath to reduce many more flights for fear of losing their slots at major hub airports when business bounces back. The result: They will continue to discount their most expensive seats as long as cash-strapped companies rein in business-travel spending. "We expect this situation to continue well into this year, perhaps even into next," says Simon Talling-Smith, British Airways' chief for North America.

Premium properties
While the term "premium economy" may sound like an oxymoron, this class of upgraded service has been gaining momentum since it was introduced by Virgin Atlantic in the early 1990s recession to appeal to business fliers whose companies wouldn't let them buy business-class tickets.

Not surprisingly, premium economy is the new favorite class in the current economy. At least 15 airlines now offer it, including recent converts Qantas, Japan Airlines and Air France, which is phasing it in later this year.

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Sandwiched between coach and business, the service varies greatly from carrier to carrier and is priced accordingly — on airlines like Qantas, where the extra legroom can make a big difference on a transpacific trip, a seat can cost three times as much as one in coach, yet the airline reports that bookings are strong.

In 2007, Virgin Atlantic expanded its premium-economy class from 32 to 62 seats per plane, and tarted up the service with wider leather seats — in response to what it called "off-the-charts" demand.

Air France is adding a premium-economy cabin this fall on its entire long-haul fleet, with the exception of its 747s. The cabins will offer upgraded entertainment, food and other amenities, as well as a new seat that swivels on its base. At press time, Qantas was reconfiguring all its long-haul aircraft with its new premium-economy class, which will have a generous 42 inches between seats (versus 31 inches in coach).

The service is already offered on flights to the West Coast and will be available on flights to New York by summer's end. Japan Airlines has also made room for the new class on planes flying between North America and Asia and, unlike most of the other carriers in this league, gives premium-economy fliers access to its club lounges.

These seats can be more than twice the price of coach, but even some thrifty travelers find them worth the added expense, since flying in premium economy allows them to arrive rested and ready to begin their travels without the day or two of recovery time usually required after a long flight in coach. "For me, it's a health issue," says Biyana Lemise, an investment adviser in New York who frequently travels overseas. "I feel so much better that it's worth the extra money."

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