Features

First Class: Room at the top

1 Sep 2009 by Alex McWhirter

More and more premium passengers may be swapping first for business, but predictions of the top cabin’s demise are premature, says Alex McWhirter.

Has first class had its day? You would think so, judging by the number of times media commentators have predicted its demise. Only recently, comments made by British Airways chief executive Willie Walsh were taken to mean by some publications that none of BA’s new planes would have first class. But in truth, BA is only withdrawing its prestigious cabin from a small group of B777-300ERs joining its fleet this year. It is a foregone conclusion that BA will be installing a first cabin on its A380 superjumbos, which are intended to serve its most important routes and are set to arrive in 2012. The truth is that whether or not an airline retains its top-level product will depend on a complex mix of business, cultural and operational issues, and these will vary across its network. Drop it and any carrier risks losing access to wealthy individuals and top corporate accounts. “There is a market for first class and we will continue to invest in it,” says a BA spokesman, who confirmed the airline would be relaunching its product later this year. Meanwhile, Gulf-based carrier Etihad is spending US$70 million on revamping its first class offering. Clive Wratten, country manager for the UK, says that in Britain “there remain high-worth individuals whom we are keen to attract. We believe in first class and we will retain it for markets where there is a demand.” First class acts as a business tool for some carriers, and could mean the difference between winning or losing a corporate account. A spokesman for American Airlines in London says: “Our first class cabin is an incentive to reward frequent flyers and to attract new business.” It is also important to consider the operational advantages of first class. It can be a lifesaver for hard-pressed airport staff when the business section is overbooked, as it allows them to upgrade passengers. That solution is not available to carriers without the top class – the comfort and service gap between business and economy is so vast that asking a premium passenger to go to the back of the plane is akin to handing the owner of a Jaguar XF the keys to a Ford Ka. Readers continually ask: “Why fly first when business class has improved beyond recognition?” Frequent corporate traveller Andrew Solum points out: “The new business classes are good, but they have so many seats [compared with first] that you don’t get the same individual attention. First class provides a personalised service so I get the flexibility I need. I can work and rest to my schedule, not the airline’s.” As for cultural factors, take the example of the Far East. Steve Gadd, business travel manager for UK and Ireland at Trailfinders, says: “As a retail offering, first class is declining slowly. But whether you book it or not can be a cultural issue. In Asian countries such as Japan, Hong Kong and Singapore, where there is a culture of hierarchy, the status is more important than the cabin. So where first class is available, it’s a given that the company president will travel in that cabin.” In the Middle East, first class remains popular because, says Gadd, “it’s used by the wealthiest individuals where cost isn’t an issue”. The seat plans for Jeddah-based Saudi Arabian Airlines reflect this. (See seatplans.com.) At a time when the likes of BA and Singapore Airlines are typically fitting anything between eight and 12 seats in their first class cabins, a Saudi B747 will accommodate from 18 to 36 top-end passengers. Saudi Airlines must also cater to the demands of the several thousand-strong Saudi royal family. So its B777 has 30 first seats – only one less than in business. It’s a similar story at Kuwait Airways, which is fitting its B777s with 24 seats in first as well as business. The picture in Europe is mixed. Led by Scandinavia’s SAS 20 years ago, most carriers have either dropped first class in favour of two- or three-class layouts, or have never bothered to configure their planes for such a cabin. Bmi is one of the latter. “First class has a small share of the overall market and this will then be only on certain routes, so it’s a waste to dedicate that space to a flight every day,” says Katherine Gershon, the carrier’s sales and marketing director. “Bmi doesn’t play at the top of the pyramid, but in business class we make sure we offer a really good product.” That means only four European carriers – BA, Air France, Lufthansa and Swiss – survive as serious players in the premium market. All serve global markets so they must invest huge sums on facilities both in the air and on the ground. In particular, Lufthansa’s first class terminals and lounges at Frankfurt and Munich have received rave reviews. Nevertheless, the days when a carrier would offer first class network-wide are gone. Much depends on the route. The product is seldom viable on non-business services or those covering secondary cities, where travellers may not be so flush with cash. The financial crisis is also forcing airlines to re-examine their business plans because fewer seats are being sold in first and business. In May, trade body the International Air Transport Association revealed that revenue from premium traffic slumped by 40 to 45 per cent compared with the same month last year. Speaking at British Airways’ recent annual general meeting, BA chairman Martin Broughton told investors: “Corporate travel budgets have been severely cut. Fewer business travellers will choose the premium cabins and those that do will pay less. Providing an outstanding premium service will remain fundamental to our business, but we must recognise changes in our markets.” Even the Japanese market is not what it was. In a statement issued to Business Traveller, Japan Airlines said: “Like all airlines, we have noticed a decline in demand for premium cabins. Japanese firms are reviewing their travel policies and are either reducing the frequency or duration of business trips, or reassessing the class in which their staff travel.” Surprisingly, it would seem that having a first class cabin is no longer sacrosanct for airlines in the Middle East. Qatar Airways is setting itself apart from regional rivals such as Emirates and Etihad by beginning to drop first class from some ultra-long and prestigious routes. The Doha-based carrier is taking delivery of a 20-strong fleet of B777s and all will be configured two-class. These will eventually be among the most important planes in its fleet. Initially, they are being used to fly to London, New York, Washington DC and Houston. Melbourne and other cities will follow as more B777s enter the fleet. Qatar denies the move signals an intention to phase out first class. A spokesman says: “First class is still very important to us. There is always first class on short- to mid-haul flights. Qatar decided that a two-class aircraft would be the most suitable across a range of destinations, and that our award-winning business class met the needs of the customer looking for additional levels of service and comfort.” So while first class will survive, economic realities mean it will become more difficult to find.
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