Singapore Airlines cut Chief Executive Officer Chew Choon Seng’s salary by 20% and parked planes in response to a global travel slump. It didn’t touch the $11 million it spends annually on wine and Dom Perignon champagne for first-class passengers.

Luring travellers back into premium seats is key for Chew to end a run of two consecutive quarterly losses, the airline’s worst streak in at least seven years. First-class and business class passengers account for about 40%, or $6.4 billion, of the carrier’s sales.

“Coach-class business just doesn’t produce the kind of income that will make the likes of Singapore Air profitable,” said Jim Eckes, the Hong Kong-based managing director of industry consultant Indoswiss Aviation. “High-yield traffic is ego-driven.”

Worldwide, the number of people flying in first and business class on international flights declined for 16 straight months through September, according to the International Air Transportation Association, as companies cut spending due to the recession. With the economy picking up, business is returning.

“We are starting to see bankers in suits back in first class and business class,” said Chew. The airline filled an average of 81.1% of its seats, including business and first class, in October, the best occupancy rate in almost two years.

“Brownie Points”
SIA won the best first-class cabin award this year in a survey by London-based research company Skytrax. The private suites in its double-decker Airbus SAS A380 aircraft feature sliding doors, hand-stitched Italian leather seats and 23-inch LCD screen televisions.

“Singapore Air scores major brownie points,” said Philip Lee, Southeast Asia head of investment banking at JPMorgan Chase & Co., who flies on the carrier for business. “It is still one of the pre-eminent air carriers.”

For a $19,000 return ticket on the A380 to London from Singapore, first-class passengers get Dom Perignon, Krug Grande Cuvee, a selection of wines from Bordeaux along with Petrossian Inc. white sturgeon caviar. The choice of meal includes lobster Thermidor with buttered asparagus, slow-roasted tomato and saffron rice; and roast breast of guinea fowl stuffed with stilton cheese in port wine sauce and potato-turnip mash.

First-class passengers also receive LVMH Moet Hennessy Louis Vuitton SA’s Givenchy pajamas and amenities kits from Salvatore Ferragamo SpA.

SIA, which has said it may post its first annual loss since listing in 1985, has reduced staff work-days and is cutting 11% of overall capacity because of the slump. The carrier reduced management salaries by 10% and CEO Chew’s by 20%.

The carrier is “wise” to maintain premium services as cuts may costs sales when demand picks up, said Kelvin Lau, a Hong Kong-based analyst at Daiwa Institute of Research.

“Politicians and pop stars still like their privacy,” he said.