Business class for $28,000 means staff fly economy or not at all

SYDNEY – Flying business class has always been beyond the means of most mortals. Now even companies can’t afford fares that have soared as the world tries to reconnect in the wake of Covid-19.

A return business-class flight on the longest routes, between New York and Sydney for example, can cost more than US$20,000 (S$28,000), about double the price from pre-pandemic days.

“Demand is clearly outstripping supply,” said Nick Vournakis, executive vice president at corporate travel management firm CWT. “At some point, corporates are going to say enough is enough.”

Tight travel market

As Covid restrictions eased around the world, airlines struggled to reactivate their fleets and bring back staff fast enough to cope with the growing appetite for air travel. That’s limited capacity and seat availability. Higher fuel costs have also pushed up fares.

According to CWT and the Global Business Travel Association, business-class air fares will be up 45 per cent in 2022 and another 6.2 per cent next year. Business-class tickets for flights leaving the US jumped 52 per cent between January and August, a steeper increase than in economy and premium-economy, travel manager TripActions said.

With companies balking at the costs, corporate travel is back on shaky ground, having not yet recovered from virus-related lockdowns. That’s bad news for airlines. Business travelers represent 75 per cent of a carrier’s profit but only 12 per cent of passengers, according to travel software firm Trondent Development Corp.

“We are seeing a hyper-awareness around spend,” said Marcus Eklund, global managing director at corporate travel-management company FCM.

Has to be economy

Checking fares to fly colleagues to a team gathering in Bangkok, Sydney-based management consultant Dhruv Sharma found his budget couldn’t stretch to business class, the usual choice, without doubling to US$6,000 a person. “It has to be economy,” he said.

Mr Sharma is trying to soften the blow for those who go to Thailand by offering time off when they get back to Australia. Even so, he expects 20 per cent of colleagues to pull out because they’ll be flying coach.

Bill Gates, the billionaire Microsoft co-founder, predicted in late 2020 that more than 50 per cent of business travel would disappear after the coronavirus. Qantas Airways chief executive officer Alan Joyce put the possible decline nearer 15 per cent.

Whatever the final figure, travelers have been largely weaned off business trips because Zoom has shown what can be achieved without getting on a plane. The recent surge in fares is putting the benefits of video calls into even sharper relief.

Boston-based consulting firm Refine and Focus, which works on projects across the globe, was wary of paying for unnecessary trips even before the pandemic. Rising air fares and an inflationary spike in expenses have pretty much grounded the whole company.

“We have almost stopped traveling,” said Purnima Thakre, the firm’s co-head. “For any given project, I’d rather pay people better than spend that money on air tickets.”

Fares are fluid and some routes are more extravagantly priced than others. Delta Air Lines and IAG-owned British Airways are charging more than US$10,000 to fly London-New York return in business class next month, according to travel portal kayak.com.

Return London-Sydney business-class flights with Singapore Airlines are going for about US$12,000. Nearer the top of the market, Qantas and United Airlines Holdings want more than US$22,000 for premium return New York-Sydney seats.