[WSJ] Spot supply shortages of First Class fares!

Rohit Khare (rohit@uci.edu)
Fri, 16 Apr 1999 12:00:05 -0700

["My clients won't fly in business class," says Bill Fischer, an
upscale New York travel agent. "They don't want to sit with that many
people." -- hey, Greg, haven't you met Mark? -- API Travel
Consultants is a *fun* outfit: "Whether by chance or by foresight,
you've discovered API Travel Consultants, the nation's premier travel
professionals. " -- private jet tours, luxury suites ("Hong Kong for
high achievers " at the Regent :-) -- I suppose Travcoa (of Newport
Beach, 45 years of global tours by private jet) is a member... go
have a look over a coffee break; it's back to Phase II thesis reading
for me... RK]

April 9, 1999
The Rich Get Frozen Out Of Favored First Class

Mark Rapparport is one of those rare travelers who can fly in first
class -- and actually pay for it. Problem is, the airlines can't help

A half dozen times in the past 12 months, this chief executive of an
Irvine, Calif., high-tech company hasn't been able to book a
first-class seat on airlines from United to Northwest. Stuck in
coach, he is starting to get frustrated. "Earth to airlines," says
Mr. Rapparport. "Take my money, please."

Here's a first in the airline business: People willing to pay
thousands of dollars to fly in style are being told to forget it, at
least on some flights. The nation's unrelenting economic boom has
created a surge in top-dollar travelers, and the legions of ultrarich
fliers are only growing with the stock market. But most airlines
didn't see this coming. The result: crunch time for the richest -- if
not most vocal -- airline customer.
"It's crazy," says Ivan Michael Schaeffer, president of travel-agency
consortium Woodside Travel Trust in Bethesda, Md. "You're talking
about the most elite group of travelers. They're not used to hearing
the word 'No.' "

No indeed. Travel agents say the most rattled high-class fliers are
already trying to find some, any, way to snag a first-class seat,
even if it means taking a stopover or begging an airline official.
Recently, Glenn Kalnasy and some partners in his Seattle
leveraged-buyout firm discovered that Delta Air Lines had no
first-class seats left for a morning trip from Louisville, Ky., to
Seattle. So the company's three top executives spent six hours
cooling their heels in the Louisville airport -- waiting for a flight
that had the seats. "No one can work in coach," says Mr. Kalnasy,
noting his tall frame. "It's too tight."

A Right to Travel in Style

To be sure, none of this is going to make most fliers weep too much.
Those in coach have to live with stale meals and 33 inches of
legroom. (First-class offers 6 1/2 feet of leg room; comparing the
food and service only gets more depressing.) But travel agents who
cater to the rich and even richer say their customers have a right to
travel in the style to which they're accustomed. And no, business
class (with 4 feet of legroom and plenty of open seats on most
routes) isn't good enough.

"My clients won't fly in business class," says Bill Fischer, an
upscale New York travel agent. "They don't want to sit with that many

As a group, people who actually pay the going rate for first class --
$3,942 New York-Los Angeles round trip; $10,461 Dallas-Tokyo -- are
the rarest of traveling breeds, accounting for only about 1% of all
U.S. fliers. But their numbers are definitely growing, now that the
antigreed years of the early '90s are a distant memory. According to
API Travel Consultants, an association of 224 luxury-travel agencies,
first-class seats are up 20% from just a year ago. A spokesman for
TWA says demand for first class has increased "exponentially."

But instead of adding first-class seats, most airlines have spent the
past few years ripping them out. Some were making room for new and
more spacious business-class cabins -- the hot trend of the '90s --
or for fancy recliner seats. British Airways, for example, now has 14
instead of 18 first-class seats on many of its jumbo jets.
Continental and Delta went a step further, essentially eliminating
the service with combined first and business-class cabins on
international routes. "We just didn't have a lot of customers paying
full first-class fares," says a Continental spokesman. "Demand for
business class was much bigger."

Frequent-flier rewards may be pushing some paying customers out of
the plane, too. Airlines used to carefully control these awards, but
lately they have become more generous, allowing fliers to book free
upgrades to first class further in advance. It's a move that pays
dividends with the growing ranks of ultrafrequent fliers, who, while
not paying to fly first class, may fly dozens of times with one
carrier in one year. Upgrades to first class have a "huge value," as
a marketing lure, says a Northwest Airlines spokeswoman. "We use them
pretty liberally."

"The upgrade situation is getting out of hand," says Mary Kenny, a
travel agent with Worldwide Travel Specialists Group in New York.
"The airlines can say what they want about availability. The space in
first class just isn't there anymore."

Tacit Acknowledgment

A few airlines have tacitly acknowledged the space problem by taking
steps to correct it -- namely, adding more first-class seats. TWA
increased domestic first-class capacity 60% last year, says a
spokesman, after noticing demand had "increased exponentially." This
year, American is meeting higher demand by increasing the size of
first class to 20 seats from 14 on 106 planes that fly in key
business markets, says a spokesman.

But change can't come soon enough for people like Mr. Rapparport, the
high-tech executive from Irvine. Recently, he couldn't get a
first-class seat on any nonstop flight from Orange County Airport to
Cleveland. Since he didn't want to fly coach, he was forced to take a
connecting flight.

He's still fuming. "I had to pay $2,000 to fly through Detroit," he
says. "That's almost criminal."