BA to Launch New Premium-Class, Transatlantic Airline

LONDON — British Airways has launched a new salvo in the fiercely contested battle for business travelers.

The airline announced plans Wednesday to roll out a new "mini airline" in June with daily service from either John F. Kennedy International Airport or Newark Liberty International Airport to Brussels and Paris with more aircraft and routes to follow.

The real rub for rivals: the airline will fly Boeing 757s configured mostly with premium-class seats.

The play by British Airways to lure more business-class customers will pose a challenge for major U.S. airlines such as Delta Air Lines with the same goal.

The name of the new airline — OpenSkies — is a nod to the treaty that will give airlines more flexibility in planning trans-Atlantic routes beginning March 28.

Robert Mann, an aviation consultant in Port Washington, N.Y., said there's no question U.S. carriers like Delta are getting jittery over the competition.

"They already are worried," he said. "They have enhanced their corporate deals, frequent flyer offers, and cut their prices to match."

Already there are three niche carriers offering discounted all-business-class routes between Europe and the United States — L'Avion, Eos, and Silverjet.

And all are looking to expand.

Mann said that rival operations emphasizing business-class services "siphon revenue and profitable passengers from current mixed-class flights, making them less economic."

But U.S. carriers aren't sitting still. Many are upgrading their business-class cabins as part of their own efforts to lure well-heeled fliers on international flights.

For example, Atlanta-based Delta plans to introduce fully horizontal personal sleeper suites in its BusinessElite cabins beginning this year.

"We are confident that we can compete effectively against any competitor on any route, especially given the advantage of the number of onward connections Delta offers via its hubs in Atlanta and New York," said Delta spokeswoman Olivia Cullis.

Delta recently invested $50 million to renovate two 40-year-old terminals at JFK, including a new lobby strictly for premium passengers.

Dallas-based American Airlines also is sprucing up its top-tier offerings.

In April the carrier plans to add a second daily service — the first launched in October — between London's Stansted Airport and American's new terminal at JFK.

Flights are equipped with new lie-flat business-class seats and on-demand entertainment.

"We can offer our customers an even more comprehensive schedule between New York and two of London's major airports, bringing the total number of daily American Airlines flights to JFK to seven a day," said American spokeswoman Anneliese Morris.

American also has been refitting its fleet of Boeing 777s that fly from London's Heathrow Airport to U.S. destinations including New York and Miami with plans to have the complete fleet upgraded by summer.

At the same time, Delta rival United Airlines, based in Chicago, also has starting introducing seats that convert into fully flat beds in its business cabin.

But with British Airways offering flat beds in business class since 2000 — and Britain's Virgin Atlantic offering business-class perks such as 10-minute check-in times — U.S. carriers are still only playing catch-up after years of cutting costs.

"U.S. carriers have lagged in service-hardware categories for years," Mann said.

Analysts say it's easy to see why U.S. carriers are finally investing in upgrades to entice business travelers.

With business-class overseas tickets costing upwards of $10,000 each, premium-class passengers generally represent about 10 percent of customers but 30 percent of revenue, said Henry Harteveldt, a travel analyst at Forrester Research in San Francisco.

"This is a lucrative market and that's why the competition for business-class travelers will be especially intense," he said.

Premium air travel from the United States to Europe climbed by 20 percent in the last four years, according to the International Air Transport Association.

And it's only expected to surge even more once the much-anticipated Open Skies treaty takes effect March 28.

The agreement will allow European Union airlines to fly from any city in the 27-nation bloc to the United States and vice versa, replacing limiting bilateral agreements that date back 60 years.

U.S. airlines will be allowed to continue flights within the EU after arriving from the United States.

U.S. airlines also will be given access to Heathrow Airport — the world's busiest international airport — just west of London.

Currently Heathrow grants exclusive rights only to British Airways, Virgin Atlantic, United Airlines and American Airlines.

With the liberalization of overseas travel, airlines increasingly see international, long-haul flights as their key to success, said Kevin Maguire, president and CEO of the National Business Travel Association.

"The offering of all-premium seats on trans-Atlantic flights is a fairly new, highly competitive market segment," he said. "Airlines in this space are tapping into a need in the market."

All airlines "will have to find the right service at the right price in order to beat out the competition and turn a profit," he said.

Maguire pointed out that one new upstart offering all premium-class seats, MAXjet, was forced into bankruptcy in late December.

But Britain's Silverjet, which has been flying all-business-class flights for a year, has seen increases in passenger numbers and is considering new routes to dozens of new U.S. destinations from London.

"Already Silverjet is unmatched in that we offer the lowest-priced business class ticket of any airline servicing the New York-to-London route, while still providing a civilized, premium travel experience," said CEO Lawrence Hunt.

Silverjet charges just over $2,000 for London-New York flights, or thousands of dollars less than the cost of business-class tickets on similar flights on Delta or British Airways.