This summer’s huge travel surge in the U.S. And Europe, after two years of COVID-19 lockdowns and border restrictions, spawned an entirely new class of passengers on flights—those splurging on air tickets as though someone else was footing the bill.
“We see a strong new type of customer, which we call a ‘luxury leisure’ customer,” Air France CEO Ben Smith told Coins2Day and other journalists over breakfast in Paris earlier this summer. The trend was impossible to miss: Business class cabins in Smith’s planes were chocked full, as they were on most airlines. Yet there was hardly a business suit or briefcase in sight in the high-priced seats. Those passengers, Smith said, “are not flying for business purposes.”
While some fliers in business class cabins are surely charging the upgrade to corporate credit cards, many are snagging tickets by redeeming rewards points or spending their savings—both of which piled up to an unusual degree during the pandemic, as restaurants shut and far-flung vacations were postponed.
“You have this huge pool of savings among richer people, who will splash out on business class, or even first class,” says Alexander Irving, European airline analyst for Bernstein. “If you couldn’t go on holiday for two years, you say, ‘I’ll give myself a trip of a lifetime.’”
Travel’s hottest ticket
The summer’s “luxury leisure” travelers complicated matters for those on genuine business trips. With the cushier seats suddenly the hottest tickets in travel, businesspeople were forced to reroute, reschedule meetings, or—horrors—fly economy.
“It was like a Hunger Games scramble if you needed to make a last-minute trip,” says Henry Harteveldt, industry analyst for global travel market research firm Atmosphere Research Group in San Francisco. “You could not get a last-minute ticket in business class, even if you were a businessperson and weren’t concerned about the fare,” he says. “There were just no seats available.”
The race for the top-priced seats has been a huge boost across the industry, after being pummeled by the two-year pandemic. Data on how much business and first class cabin bookings have increased is scarce, since most airlines keep such specifics confidential. But in June, Delta said that coming out of the pandemic slump, “premium product revenue recovery outpaced [the] main cabin across all markets.” Like other airlines, Delta benefits from fliers redeeming their mileage points, with banks and credit card companies issuing payments to the carriers that dole out the rewards. The airline said in June it had earned $1.4 billion from American Express in the previous quarter.
Harteveldt says most surprising of all was the demand for business class seats on destinations geared more to tourism than business. “You can always sell a business class seat between New York and London or Frankfurt,” he says. “But airlines were surprised to see the demand to leisure cities.”
Racking up airline miles
Christopher Leung, a 36-year-old freelancer who lives in Vancouver, was a business class regular this summer, despite his average earnings of just $70,000 a year. He circled the globe on seven different flights—all in sumptuous business class cabins, all booked with travel points. COVID halted his hectic travel schedule in 2020 and 2021, so he spent that time perfecting his points-gathering skills.
By early 2022, Leung had 2 million rewards points across 20 credit cards, and decided it was time to spend big. He carefully plotted this summer’s global travel. His flight itinerary, wholly on business class, was: Vancouver-Mexico City-Istanbul-Singapore-Doha-Stockholm-Seattle-Vancouver. He used about 260,000 mileage points for all seven flights, and another 200,000 or so staying at luxury hotels along the way.
The COVID-19 disruption was great news for points people like Leung. “During the pandemic the retention bonuses and sign-up bonuses were huge,” says Gilbert Ott, 35, head of God Save the Points, a site dedicated to helping people earn and spend airline miles, which he launched in 2012. “When the economy is great and planes are full, loyalties are terrible.”
Winter pain ahead
But with summer now over, airlines fear the leisure-luxury trend could prove to be as fleeting as those dream vacations. Many small-business owners and government officials are back flying premium, according to travel data firms, but they estimate business travel is still nearly 30% below pre-pandemic levels. That’s largely because Zoom meetings and virtual conferences and conventions have become the norm for major companies.
“A critical mass of businesspeople are not traveling, and a lot of them are not authorized to travel in business class,” Harteveldt says. “That leaves airlines short of a very critical source of revenue.”
The Global Business Travel Association estimated last month it could take until 2026 for business travel spending to fully return to its 2019 level of more than $1.4 trillion.
“Our largest corporates are the ones that are lagging, particularly banking, consulting, and technology,” Andrew Watterson, chief commercial officer of Southwest Airlines, told the AP this week.
With winter approaching, “the picture is not great,” Irving says. “You go away in summer, because that’s what you do. But will you go to Budapest for a long weekend in November, just for a change of scenery?” The answer is probably no, given rising costs of food and electricity, and a looming recession in Europe. “The winter looks quite challenging,” says Irving, adding that he expects some smaller European airlines to go out of business during the months ahead.
Leung is perhaps an outlier among the luxury leisure set. He will be back in the air this winter. Of his remaining 1.5 million or so points, he has already committed 65,000 mileage points for a ticket on Japan’s ANA airline next January, from Tokyo’s Narita Airport to New York’s JFK. “I saw that offer, and knew I wanted it,” he says. On that flight, he’ll be flying first class.
