Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ News / World/  Airlines mull first-class future after business beds success
BackBack

Airlines mull first-class future after business beds success

Carriers pondering the future of first-class travel are following Virgin Atlantic Airways, which abandoned three-class long-haul seating plan in 1980s

With fully reclining business berths introduced this year by Air France-KLM Group, the corporate cabins of top operators in Europe, Asia and the Middle East now offer an experience comparable to that available in first for almost two decades. Photo: AFPPremium
With fully reclining business berths introduced this year by Air France-KLM Group, the corporate cabins of top operators in Europe, Asia and the Middle East now offer an experience comparable to that available in first for almost two decades. Photo: AFP

London/Dubai/Frankfurt: The world’s top airlines are questioning the need for first-class cabins as flat-bed seats cradle corporate customers in once-unimaginable comfort, making the premium on front-row seats harder to justify.

With fully reclining business berths introduced this year by Air France-KLM Group, the corporate cabins of top operators in Europe, Asia and the Middle East now all offer an experience comparable to that available in first for almost two decades.

Among carriers that see limited demand for luxury seats are American Airlines, which is removing them from close to 50 jets, Deutsche Lufthansa AG, where €1 billion ($1.3 billion) is being spent upgrading business class as capacity in first is cut 30%, and even top-end Gulf carrier Qatar Airways Ltd. Others are being bolder, with Abu Dhabi’s Etihad Airways PJSC adding private suites styled as The Residence with a double bed, living area and shower for $20,000 one-way to London.

“The post-recession economy is keenly aware of the cost of travel and airlines will only put first on aircraft where it’s economically justified," said Henry Harteveldt, founder of Atmosphere Research Group, a travel advisory firm.

Those carriers pondering the future of first-class travel are following in the footsteps of UK billionaire Richard Branson’s Virgin Atlantic Airways Ltd, which abandoned the traditional three-class long-haul seating plan in the 1980s.

Following Branson

Virgin was seeking to carve out an identity that would differentiate it from British Airways, the dominant carrier at London’s Heathrow hub. The company’s Upper Class swapped luxury for a technology-led, business-friendly approach. It includes in-seat power as well as pre-flight innovations such as a Club House lounge with free haircuts and a putting green.

“If we can address the passenger’s core needs in an imaginative way the tag becomes less important," Virgin brand and customer engagement director Reuben Arnold said. “It’s business class with many of the benefits of first."

Australia’s Qantas Airways Ltd. led the way in paring its first-class offering in 2010 following the credit crunch and global recession, with CEO Alan Joyce saying at the time that the product was in long-term decline. The luxury berths were retained only on 12 Airbus Group NV A380 superjumbos and three Boeing Co. 747s operating premium routes such as Sydney-London.

Turkish Airlines has decided against adding first, while Latam Airlines Group SA, the South American number 1, is dropping the class in the wake of its formation via the $3.9 billion purchase of Brazil’s TAM SA by Lan Airlines SA of Chile.

American air switch

Following a 20 August announcement, Fort Worth, Texas-based American Airlines Group Inc. will also drop first from 47 Boeing 777-200s, limiting the top-end offering to its biggest 777-300ER jets, of which there are only 14 in the fleet, plus a handful of Airbus A321T narrow-bodies used on California-New York routes.

While first-class berths offer a more exclusive travel experience, the perks that come with a fare double the business tariff can be marginal, often including finer dining, high-end toiletries, a fancier limousine to the airport and free pyjamas.

In Europe, where first class has traditionally been a mainstay of long-haul services, Lufthansa is removing the product from 31 planes. An upgrade of those jets keeping the seats will be completed in 2015, with the retention of an open-plan layout favoured over a switch to individual booths.

Ad fodder

Ticket sales have gained more 10% on the move, which focuses on trips such as Frankfurt-Los Angeles to lift occupancy by paying clients rather than those using air miles to upgrade. After the refit, first will still be available in about 70% of wide-bodies, versus more than 90% previously.

Air France, by contrast, offers luxury berths in only 40% of its 100 or so wide-body planes, complemented by an onward private-jet service from the carrier’s Paris-Charles de Gaulle hub to other airports across the continent.

“There’s not a market for first class on every route, it only works for certain destinations," Air France-KLM chief executive officer (CEO) Alexandre de Juniac said in an interview, while adding that first remains important in projecting the brand and that you don’t see airlines featuring the last row of seats in their ads.

The European carrier with the biggest proportion of first-class seats is British Airways, which offers about 1,200 spread across 80% of its long-haul planes. The International Consolidated Airlines Group SA unit reinvented the luxury cabin by pioneering flat-beds in 1996, only to sow the seeds of its possible demise by adding them in business four years later.

Egyptian cotton

BA most recently spent £100 million ($171 million) revamping first with wider seats, leather desks and linen made from Egyptian cotton starting from 2010 and is absolutely committed to the product, spokesman Euan Fordyce said.

The UK carrier has boosted the number of top-end seats for sale between London Heathrow and New York’s John F. Kennedy airport by more than 25% over five years, while dropping first from the Gatwick-Kennedy route, according to OAG data.

“For Singapore Airlines Ltd, one of six Asian carriers with the highest five-star rating from airline-review firm Skytrax, providing the right number of first-class seats requires careful monitoring of demand on specific routes," said Tan Pee Teck, senior vice president for product and services.

“Demand isn’t huge," he said after collecting the 2014 Skytrax award for best first-class product at the Farnborough Air Show. “It’s a select group of people who are willing to pay for the luxury, the ultimate attention, for the total privacy."

Flying bedroom

In the Middle East, Qatar Airways, the region’s top carrier according to Skytrax, will offer only eight first-class seats in its A380s, though they’ll be the widest around. Other jets will lose the berths amid a focus on business cabins.

Like Etihad, other leading Gulf carriers are more convinced about the future of first, with Dubai-based Emirates, the world number one on international routes, offering about 1,500 seats on which it has spent $750 million, or $500,000 apiece.

“Demand for the 14 first-class seats on each of the company’s A380s outstripped all other cabins last year," chief commercial officer Thierry Antinori said in May. Emirates is also developing a new bedroom concept for its superjumbos and 777s featuring enclosed rooms that CEO Tim Clark said in an e-mail will take premium flying to the next level.

For Gulf carriers, the opulence of first may be as much about projecting an image of their home state as selling seats.

“You’re almost branding a nation," said Nigel Goode, a director at Priestmangoode in London, which has designed plane interiors for clients including Lufthansa, Malaysia Airline System Bhd and Qatar Air. “It’s a gateway that helps visitors form an impression about the country before they land." Bloomberg

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 28 Aug 2014, 02:05 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App