First-class and business seats may be shown the door
With the economic downturn and a flurry of airline mergers, are first-and-business-class seats an endangered species?
Some indications:
—Southwest Airlines recently announced that after its planned merger with AirTran Airways, it will not continue premium service on AirTran routes now offering it. “I believe first class international is generally on its way out,” said Jay Sorensen, president of IdeaWorks Company, a consulting firm for the airline industry.
—Rahsaan Johnson, a spokesman for United Airlines, said the company has not decided whether it will keep first class on international fights, which United now has. Continental Airlines currently offers a combined business/first class.
But what will happen when the two carriers merge? Both currently offer first class on domestic flights.
“It is a very important differentiator,” Johnson said. Upgrades “drive significant loyalty,” he told MSNBC.
Giving up such seats would be a major move in the industry.
“It’s the key to profitability for many airlines,” said Steve Lott, a spokesman for the International Air Transport Association, a trade group.
In the first half of this year, passengers traveling on premium seats represented less than 8 percent of the total traffic but contributed up to 27 percent of passenger ticket revenues, according to the association’s most recent monthly report that tracks international traffic in first and business class.
Scott D. Nason, a former American Airlines executive, now an aviation consultant, said many carriers are improving business class but have eliminated first. “Business class sells and first class by and large does not,” he said.
Some airlines are eliminating first class, but others “are upping the ante by investing a lot of money so they can improve products and luxuries for premium passengers,” said George Hobica, founder of airfarewatchdog.com.
Some carriers like United and British Airways have not only kept first class but also introduced a fourth class of service, premium economy, a kind of hybrid between coach and business that offers more cabin space, larger seats, extra leg room and more services than standard coach.
“What you see is the addition of premium economy because that’s profitable,” said Henry H. Harteveldt, travel analyst for Forrester Research. “I think what’s going to happen is the airlines are going to raise economy fares, offer more aggressive opportunities to upgrade via e-mail and at kiosks, increase the size of coach cabins, shrink business-class cabins and reduce or eliminate first class, “ he said.
But he said he worries about reaching the “tipping point.”
“If US carriers continue to cut back in just about every way possible, they risk losing their competitive edge, and as a result, high-end customers,” he said.
By David Wilkening
David
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