Luxury travel the ‘new normal’ as passengers pay high prices for premium

It’s the hottest property in international travel and there’s not nearly enough to meet demand being led by younger travellers despite five-figure airfares.

Emirates’ flights to Melbourne now offer the option of premium economy seats in a move welcomed by travel agents seeing massive demand for luxury cabins.

A lie flat bed is now the hottest property in international travel as demand for premium airline seats remains sky high even in the face of eye-watering airfares.

Travel Associates general manager Rachel Kingswell said fares in premium cabins were about 80 per cent higher than in 2019, but travellers were barely blinking at the cost.

As a result the total value of first class fares sold by Travel Associates was up 408 per cent on 2019 figures, business class fare sales had climbed 319 per cent and premium economy was up 487 per cent.

Ms Kingswell said since borders reopened a lot of new travellers were booking premium cabins for the first time, increasing pressure on already limited seats.

“Our leisure customers in the business class space used to be the retiree but they’re not our only market anymore,” said Ms Kingswell.

“The luxury customer has definitely shifted to a younger demographic because people are not necessarily buying homes anymore – they’re taking that trip they’ve always wanted to take.”

There was also a distinct move up by travellers, with those who typically booked economy now paying the extra for premium economy; people who used to fly premium treating themselves to business class, and well-heeled retirees now seeking to sit in first class.

Singapore Airlines' first class product on its A380 aircraft. Picture: Singapore Airlines

“The new customers to business are looking for a flat bed, great service and the reputation of the carrier, whereas first class passengers want the bells and whistles in regards to being chauffeur driven to and from the airport, and perhaps a massage during a stopover,” Ms Kingswell said.

It was not unusual for clients to present with budgets of $100,000 or more, she said, although the average trip spend was $20,000 to $25,000.

“Money’s not really any object. It doesn’t seem to be an issue, to be honest capacity is the biggest issue at the moment,” Ms Kingswell said.

“There’s definitely not enough premium seats and it can be hard to get the travel dates of choice because premium cabins are at capacity. We hope that will change as airlines start bringing their bigger aircraft to Australia and increase their services.”

In response to the capacity squeeze and high prices, more passengers were “mixing up” cabins in an effort to stretch their premium fares further.

That meant a traveller might do the 12 to 14-hour trip to the Middle East in business class, and then downgrade to economy on the shorter daytime leg to Europe.

“The other combination is premium economy up to Europe because the pricing is higher out of Australia, and then business class on the return leg,” said Ms Kingswell.

“Both options are becoming very popular.”

Travel Associates general manager Rachel Kingswell is seeing a shift in the typical "luxury traveller". Picture: Andrea Francolini.

Anyone hoping to score a lower fare to Europe was advised to look at the low season, with even the shoulder season of May and September now priced at the same level as peak.

Within Europe, Italy, Greece and France were the most in-demand destinations for a luxury holiday while Japan, Canada and the US continued to be popular.

The other trend Ms Kingswell was seeing was “holiday stacking” with travellers booking two, three or four trips in one go, to be taken over 12 to 18-months.

“We’ve got bookings as far out as 2025. The luxury market is definitely on fire,” she said.

Webjet data showed fares to Europe in business class next month started at around $12,000 return with Qantas, Qatar and Emirates, rising to $15,000 on Etihad and Singapore Airlines.

Premium economy was available from just over $6000 return, and first class travellers could expect to pay $15,500 with British Airways, $17,700 with Emirates and Qantas and $30,000 with Singapore Airlines.

Economy fares ranged from $2400 up to $3100 for one-stop return flights.