Pampering Passengers: The New Breed of Luxury Airlines

Airport hassles and flight delays have become a way of life to everyone who flies regularly on business.

But transatlantic road warriors are increasingly finding there is something they can do about it--for a price.

A new breed of airline will fly you between major U.S. and European cities in considerable comfort and privacy on an airliner filled only with fully reclining business-class seats or first-class mini-suites. There are no screaming kids.

Depending on the airline you choose, you?ll find your plane has only 40 to 100 seats.

These airlines charge relatively high fares, but their rates are often lower than the business-class or first-class fares charged by other airlines flying to the same places with packed 747s.

The concept of all-premium-class service ?is not entirely new,? said Doug Abbey, a partner in The Velocity Group, an aviation consulting firm. ?This is what the Concorde did.?

Concorde passenger seats weren?t very comfortable, because Concorde cabins were cramped. However, ?what drives this market is the value of one?s time,? said Abbey. ?People pay top dollar for time. Absent any incremental improvement, all airlines can do is make it more comfortable for you.?

All-premium airlines strive to do so by offering door-to-door limousine service; express lanes at airport security checkpoints; lounges where passengers can dine and receive spa treatments; and facilities at destination airports for passengers to sleep and shower before meetings.

The latest service revolution began in June 2002. After the September 11 terrorist attacks, Lufthansa realized that although economy-class traffic on its Dusseldorf-Newark flights had largely fallen off, business-class passengers were still flying.

Rather than drop the service completely, Lufthansa contracted Swiss charter company Privatair to replace it with an all-business-class flight, using a long-range model of the Boeing 737-700 called the Boeing Business Jet 1 (BBJ1). Privatair installed 44 seats in the aircraft.

?The service was very closely watched by the entire airline industry for the first year,? recalled Lufthansa spokeswoman Jennifer Urbaniak. ?It was highly successful.?

So successful was it that Lufthansa asked Privatair to operate all-business-class flights on the Munich-Newark and Dusseldorf-Chicago routes too.

Privatair operated the Munich service with a BBJ1 and the Chicago flights with an A319LR, a version of the Airbus Corporate Jet (ACJ), Airbus? response to the BBJ1.

Lufthansa is returning to three-class service on the Newark-Munich route, using its own A330 widebodies. However, the Privatair BBJ that the A330s replace will start operating all-business-class service in October between Newark and Frankfurt.

The success of the Privatair experiment has spawned a clutch of premium-class airlines on other major transatlantic routes. U.S. carriers MAXjet Airways and Eos Airlines serve London from New York, as does British airline Silverjet. MAXjet also flies to London from Los Angeles, Las Vegas and Washington, D.C.

French airline L?Avion serves New York from Paris.

These airlines are still tiny, but their single-minded pursuit of high-fare passengers has begun to concern even the biggest European and U.S. airlines.

Last week, American Airlines announced it would begin serving Stansted Airport from New York JFK. This appears to be a response to MAXjet?s and Eos? success at Stansted, said Abbey, whose firm numbers MAXjet among its clients.

Virgin Atlantic Airways and British Airways have announced plans to launch all-business-class flights. Under the new Open Skies agreement between the United States and the European Union, both plan to serve U.S. destinations from various European cities.

Swiss International Airlines--a Lufthansa subsidiary--and KLM have also contracted Privatair to operate all-business-class services to the U.S. Privatair flies a BBJ1 for Swiss between Zurich and Newark. It operates a BBJ2--a long-range version of the --between Amsterdam and Houston for KLM.

The premium-class trend is now moving to Asia. Japan?s All Nippon Airways has begun flights to India with 737-700ERs which have some economy-class seats but are mainly configured for business-class passengers.

Can the new breed of all-premium-class airlines stay the course? One problem is that their services only appear feasible on routes that generate substantial business traffic.

?We found these flights only work between particular cities,? said Urbaniak. ?There has to be a common industry tying both cities.?

Dusseldorf lies at the center of Germany?s Nordrhein-Westphalia region, which boasts 40 percent of the country?s industrial base, including its pharmaceutical and high-tech industries. Newark is at the heart of New Jersey?s pharmaceutical industry. Chicago is a high-tech center.

Small premium-class airlines can?t compete with the power of the big carriers? loyalty programs. When they have to cancel flights, they often don?t have later flights on which they can re-book passengers--but major carriers usually do. They operate frequent three-class widebody flights between most big U.S. and European cities.

But all-premium service might cause branding confusion for big airlines, said Abbey. ?Concorde was separately branded and that needs to happen here if they?re going to succeed with an all-business-class product.?

Ultimately, the routes on which the new breed of premium-class airlines are operating are so large that ?I think this is something that?s just starting,? said Abbey. ?I think Virgin?s primarily a threat to BA,? not Eos.