BA Reaffirms Plans To Upgrade First-Class Service

British Airways has told EuroBTN it will press ahead with plans to relaunch its first-class service later this year despite weekend media reports claiming the future of its elite cabin is under review.

Speculation that the axe is imminent was prompted by the revelation that none of the four long-haul Boeing 777-200s BA is introducing in 2009 has been configured with a first-class cabin. A widely circulated story, broken initially by The Guardian newspaper, claimed this was in response to the recession, which saw BA's premium traffic fall by 13 percent in the six months ending March 31.

However, a spokesman for the airline told EuroBTN the configuration for these aircraft was specified as long ago as the beginning of 2007 to serve the small number of routes on which BA does not operate first class currently. These include Antigua, Orlando, Tampa, Denver, Osaka and Nairobi. A new route to Las Vegas, launching later this year, also will be without first class, but there are no plans to remove first class from any other existing routes or to strip it out of any aircraft in the existing fleet.

"British Airways remains committed to its first-class customers," said BA. "We are not removing first from our new aircraft and are working on a relaunch later this year. The new Boeing 777-200 aircraft we are taking delivery of later this year were never intended to have first class onboard."

BA is suffering from its unusually heavy reliance on premium traffic, which accounts for approximately 50 percent of its revenues. The International Air Transport Association reported last week that global premium traffic fell 19.2 percent in March compared with the same month in 2008. Also last week, BA reported a pre-tax loss of £401 million for the fiscal year ending March 31, 2009, against a previous year pre-tax profit of £922 million.

"Despite the fall in premium traffic, it's important to point out that we still have very healthy seat factors in our premium cabins," British Airways CEO Willie Walsh said this week during an investor lunch in New York. "We don't typically disclose this, but just to give you an idea, even in the current environment, we're seeing seat factors in the low 60s in our premium cabins on long-haul."

As British Airways plans a 2.5 percent capacity reduction for the summer season and a 4 percent reduction in the winter, Walsh said capacity cuts are "across the network" and not with a particular focus on premium cabin reductions.

"What we're not going to do is reconfigure any of our aircraft," Walsh said. "That clearly is an option, but we see no real sense in doing that, mainly because you have to spend cash to reconfigure."

BA has taken numerous promotional steps to fill its premium cabins in recent weeks. These include selling business class seats at a 40 percent discount and offering free taxi transfers to and from the new Terminal 5 at London Heathrow. The free transfers are available to first- and long-haul business-class passengers within a 100-mile radius of Heathrow if they are U.K. resident Executive Club members. BA also has introduced a 2-for-1 offer for its Club World cabin, "the first time we've ever done that," Walsh said.

Walsh this week noted the carrier also has been overselling economy cabins, in the hope of upgrading customers for a fee to the front of the plane.

"Where we've got permission to market to individual customers," Walsh said, "we will go out in advance of a flight where we know we have an oversold economy cabin, and we will contact the customers and offer them an upgrade, which is much better than upgrading them for free on the day of operation."

Regardless of its numerous efforts to stimulate demand and chase revenue for the front of plane, Walsh said he remains a believer in premium cabins.

"There are some who think the premium market is dead. I don't believe that," Walsh said this week. "In fact, I think it makes sense for us to continue to have a focus on the long-haul premium in particular. While the recovery will take some time, and we may not get back to volumes that we witnessed in 2007 and 2008, I do believe the market will recover."