Airlines Fight for First- and Business-Class Passengers

When Hal Biagas travels cross-country on business, you won’t find him wedged in a middle seat back in row 28. It’s not fancy meals or free bags that make premium-class travel a must for Biagas, general counsel at Excel Sports Management, which represents A-listers such as Tiger Woods and the Yankees’ Derek Jeter. “What I do tends to draw interest,” Biagas says, “and I can’t have someone looking over my shoulder and seeing a name on a presentation or contract.”

Just as Asian and Middle Eastern airlines have built lucrative businesses serving executives and the wealthy, U.S. carriers have intensified competition for full-fare passengers who frequently travel between New York and Los Angeles. The contest for first- and business-class fliers on the heavily traveled route is pitting American Airlines (with 32 percent of the market), Virgin America (21 percent), Delta Air Lines (19 percent), United Airlines (16 percent), and JetBlue Airways (11 percent) against each other in a battle for investment bankers, celebrities, and others who can afford tickets topping $6,500. Although coach fliers are a majority on almost all trips, Michael Boyd, chairman of consultant Boyd Group International, estimates premium-class passengers account for 75 percent of the revenue on cross-country flights. “Pandering to business traffic is a lot more important than getting volume,” Boyd says.