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Why low-cost airlines are investing in business travelers

They’re spacious, have extra recline and often come with a glass of champagne — airplane seats in business class. Life’s good in the front of the plane, but it comes at a price — tickets for these spots can be up to five times more expensive than economy.

But let's be honest, unless you run Axe Capital or work for it - if anyone out there is watching Billions 💰, most of us, business travelers, are encouraged to favor the cheapest options and are no strangers to low cost carriers. $684 being the average spent per flight by business travelers in 2017, confirms that even more.

The Budget Business Traveler

The market for budget travelers is large, but it’s also extremely competitive, with lots of price fighters trying to sell their seats. This race is now driving some of these companies to experiment with a new kind of strategy — making their flights attractive to business customers.

While they can’t match the luxurious inflight experience of an expensive business class ticket, low-cost airlines can compete on most other fronts. Instead of offering a single product, some carriers are now introducing new pricing structures that include the possibility to include business-minded extras.

These often include more flexibility in changing or cancelling flights, one or multiple checked bags for free, and priority boarding of the plane. Some airlines even include a prepaid voucher for buying something from the inflight bistro, adding up to an all-inclusive experience. You can check Easyjet's fancy brochure for Business here.

The value for business travelers

Does it sound like a contradiction?

Obviously, the cash. The difference between business class on a regular airline and a high-end ticket on a low-cost can be in the thousands of euros, making it an attractive option for the financially-minded.

In 2017, a Business traveler was able to save his company $11,090 by flying coach and staying with a friend on a 5 night stay from Chicago to Sidney!

Money savers go to heaven !

Low-cost airlines are going after business travelers en masse and for a good reason. — they are some of the most lucrative customers. As they need to travel often, they can spend a lot of money on tickets per year — and if they can book most of them with the same company, it makes things a lot easier. Also, most companies with traveling employees like to work with a single carrier, as it makes booking easier, they can negotiate good deals and employees have the benefit of saving miles with the airline’s loyalty program.

Companies like Ryanair and EasyJet have even introduced loyalty benefits to be more attractive to these new budget travelers. By giving their returning customers the opportunity to save for free flights that they can use for their family holidays, they are sure to make them loyal There’s also an added benefit for the carriers — they’re now able to accurately track the booking data of their passengers, which can provide valuable insights into their services.

Less expensive, better flights?

In Europe, budget airlines often have the best options for flying somewhere directly. Larger, internationally operating carriers often have to usher their customers through central airport hubs like Amsterdam’s Schiphol or Paris’ Charles de Gaulle in order to get them to their destination. Alternatively, low-costs like EasyJet and Transavia have sprawling networks of secondary airports within the continent that can often get you a direct flight between places.

On the other hand, low-costs aren’t just changing the soft product — they’re changing their actual flights, too. While they traditionally only offered short-haul travel, more and more budget airlines have started experimenting with low cost long-haul flights as well. This gives business travelers a lot more flexibility — if they’re willing to fly in relative discomfort for a long period of time, of course.

New York -- Madrid $314
London -- LA $475
Dublin -- Toronto $440
Courtesy of Norwegian Air

Cheap seats eating the industry?

Now that low-costs are changing their strategy, do other airlines have to fear for their existence? Probably not. There will always be a market for high-budget business travel, as the CEOs and top managers of wealthy companies won’t be rushing to fly Ryanair anytime soon. The price difference between the low-cost ‘business’ product and actual business class is simply too big, making for two wildly different products that aren’t competing with each other. Most people who travel in business class wouldn’t even consider traveling low-cost, as the experience simply isn’t comparable.

A larger variety of travel products means that the market is diversifying, which is great news. With 11.3 million business travelers in 2016 and a projected of growth of 5.2% - it means that more people will be able to find a ticket to match their budget. Yes, the fight over market share between airlines will go on, but it doesn’t matter — consumers have already won.

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