AIRLINE UPGRADES ERODING THEIR PRIME PROFIT SOURCE

       Price cuts aimed at filling empty airline seats mean flying business class is not longer a luxury affordable only when teh company is paying.
       Swiss International Air Lines is selling upgrades to flat-bed beths for US$460 (Bt15,700), while Singapore Airlines has halved thhe price of business tickets bought with air miles and British Airways has offered two premium seats for the price of one.
       First-and business-class travel fell 21 per cent worldwide in June compared with a year earlier, or three times the decline in economy class, accordiing to industry data.
       That has eroded the prime source of profit at carriers such as British Airways, which last year got 45 per cent of revenue from premium travel tha taccounted for only 13 cent of seats sold.
       "There are more promotions than ever, fare wars left and right, and you can use your air milers in ways we've never seen before, " said Matt Bennett, founder of First Class Flyer.com, a Monterey, California-based online newsletter.
       "What's bad for airlines is great for travellers. Their pricing structure is under siege."
       Filling seats through discounts is risky, said Stephen Furlong, a Dublin-based analyst with Davy Stockbrokers. Cheaper deals may erode the exclusivity of premiumclass travel and business flyers may switch en masse to teh cheaper fares, hurting overall revenue.
       While June's fall in premium traffic eased from a 24-per-cent drop in May, the improvement came at the expense of a steeper decline in revenue, which fell 41 per cent in the second quarter as fares shrank.
       Singapore Airlines, where the exclusivity of premium class-travel "used to be sacred" according to Beneett, has offered its 76 centimetre business seats, among the widest in the industry, at a 50-per-cent discount when paid for in airr miles. The deal has featured 25 destinations this year with about half a dozen qualifyingin any given month.
       The discounting is a response to the economic slump and the company's strategy is to remmain a premium, fulol-service carrier, spokesman Nick Ionides said.
       British Airways introduced its first ever two-for-one flights offer in May for selected departures between June and October. The deal is still available to people booking from the US using a BA Visa credit card.
       While cheap upgrades, heavy discounting and no-frills business seats may help airlines fill the front of their planes, carriers face a delicate balancing act in order to avoid permanently damaging demand for premium tickets.