British Airways Bets Against Business Class With Retirement 747

“End of an era” is the common saying of passengers, staff and fans as British Airways announces the immediate recall of its 747s with its prominent hump and decades of history. Sudden withdrawal may more quietly signal the end of a different period: high-volume business travel.

Airlines are preparing for a lasting decrease in the frequency with which companies travel in a premium cabin. There are health problems, battered finances, and a willingness to use video conferencing. That will determine how airlines assign seats through cabins, what sizes of aircraft to buy, and where to fly.

“One of the things we will have to see is the business mix between premium and non-premium,” Willie Walsh, CEO of British Airways parent owner IAG, told investors this spring. “My crystal ball tells me that the mix will be different after this and from what we’ve seen before.”

Particularly affected is the 747, which British Airways has converted in recent years into an almost commercial aircraft. It cut economy class rows to make way for more business seats, which generate more revenue from cabin floor space. A 747 variant of British Airways had only an economy section, on the back.

The peak of business class also captured United Airlines, which made a 767 sub-fleet with 46 commercial seats instead of the usual 30. Those lying sleepers were mainly deployed on London flights. Like British Airways, United wanted to increase revenue against Heathrow’s space constraints. Others also see post-Covid demand permanently weakened, as it did after the global financial crisis.

“I don’t think we’re going to go completely back to where we were in 2019 in commercial traffic volume,” Delta Air Lines CEO Ed Bastian told investors this week. “The international trips we’ve all been on where we flew to Europe for a two-hour meeting and returned with nothing to do but beat him up can certainly be accommodated much better in a video call.”

It is easier for airlines to rebuild the demand for leisure, which can be stimulated by cheap fares. But British Airways can’t fill a 747 with visitors only. A 747 version has 175 premium economy and economy seats, about the same as its 787-8 with 179 seats. More difficult to sell are the 35 premium seats in the 787. The 747 is a bigger challenge with 100 business and first-class seats.

“We have a lot of flexibility to adjust, if necessary, our premium, non-premium mix,” Walsh said this spring. “It will definitely influence issues such as fleet selection and fleet configuration for new aircraft, as well as decisions about the possible withdrawal of existing aircraft.”

It may seem logical for airlines to phase out high-capacity aircraft as the industry faces lower demand in the wake of the coronavirus slowdown. However, the 747 on British Airways was not a giant. It could accommodate up to 275 passengers, while the 777 and A350 could accommodate more, up to 331 travelers.

Symbolically the queen of heaven, the 747 was definitely the king of revenue with over 100 premium seats. Most other British Airways wide bodies have 50-70 business and first-class seats. Even the much larger A380 did not significantly outperform the 747 with the 111-seat double-decker Airbus premium.

The 747 offers the worst of both worlds after Covid. It requires too many business travelers to fill, and it has a smaller cargo hold than the newer 777s and A350s.

Freight, which was once an afterthought for most airlines, will play a bigger role in deciding when and where airlines will resume flights. While peak freight demand has decreased since April, a capacity shortage is expected to continue, increasing freight rates.

“The fact that we are seeing good and strong demand for cargo has allowed us to operate passenger flights that without cargo would be cash negative,” Walsh said in May.

Boeing’s iconic double decker ushered in the jet age, but the 747 on British Airways has not been a globetrotter in recent years. It was withdrawn from Sydney, Tokyo and Hong Kong and concentrated on routes in North America, where the fuel efficiency of the old four-engine 747 was not as pronounced a problem as on longer flights.

Low fuel prices expected in the coming years reduce the urgency for replacement, but retirement is easier as British Airways’ 747 fleet is largely canceled, avoiding impairment charges of hundreds of millions of dollars or euros that competitors are taking over in their old fleets.

British Airways has quietly withdrawn its 747-400s, decreasing from 57 in 2008 to 32 at the end of last year. Originally he hoped to fly just 12 in 2022 and withdraw the type in 2024, now unveiled.

With weak long-distance demand in the next 18 months, and then just a schematic 747 fleet initially projected for 2022, British Airways is accelerating the dethronement of the 747.

Another type to consider for faster removal: the 777-200. British Airways is 46, but before Covid expected only nine by the end of 2029.