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

SYDNEY – Flying business class has always been beyond the capabilities of most mortals. Now not even businesses can afford tariffs that have skyrocketed as the world tries to reconnect after Covid-19.

A round-trip business class flight on the longest routes, such as between New York and Sydney, can cost more than US$20,000 (S$28,000), about double the pre-pandemic price.

“Demand is clearly outstripping supply,” said Nick Vournakis, executive vice president of corporate travel management company CWT. “At some point companies will say enough is enough.”

Tight travel market

As Covid restrictions eased around the world, airlines have struggled to reactivate their fleets and bring employees back quickly enough to accommodate growing appetites for air travel. This is limited capacity and seat availability. Higher fuel costs have also pushed up fares.

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According to CWT and the Global Business Travel Association, business class fares will increase by 45 percent in 2022 and another 6.2 percent next year. Business class tickets for flights out of the US rose 52 percent between January and August, a steeper increase than economy and premium economy, travel manager TripActions said.

As businesses balk at the cost, business travel is back on shaky ground as it has yet to recover from virus-related lockdowns. This is bad news for airlines. Business travelers make up 75 percent of an airline’s profits, but only 12 percent of its passengers, according to travel software company Trondent Development Corp.

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“We’re seeing a high level of awareness of spending,” said Marcus Eklund, global managing director of corporate travel management company FCM.

Thrift is a must

Sydney-based management consultant Dhruv Sharma reviewed fares for flying colleagues to a team meeting in Bangkok and found his budget couldn’t stretch for business class, the usual choice, without doubling to $6,000 per person . “It has to be thrift,” he said.

Mr Sharma is trying to soften the blow for those going to Thailand by offering time off when they return to Australia. Nevertheless, he calculates that 20 percent of his colleagues will drop out because they work as flight trainers.

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Bill Gates, the billionaire and co-founder of Microsoft, predicted in late 2020 that more than 50 percent of business travel would disappear after the coronavirus. Qantas Airways Chief Executive Officer Alan Joyce put the potential drop at around 15 percent.

Regardless of the final number, travelers have largely been weaned from business travel because Zoom has shown what can be accomplished without boarding a plane. The recent rise in tariffs makes the benefits of video calling even clearer.

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