Air France, Lufthansa German Airlines and Qantas Airways in recent weeks each detailed their new first or business class products and joined Northwest Airlines and Virgin Atlantic Airways in an intensifying battle for higher-yielding travelers on transoceanic routes. The new products, which center on more comfortable services and amenities, are the latest offerings to blur the line between traditional first and business class
(BTN, Aug. 11).The investment in premium products comes amid depressed business travel demand and indicators that appetite for such products will wane further next year. These airlines, however, are eyeing a gradual recovery in overall corporate travel and are positioning their refreshed premium cabins as a means to keep or steal as many accounts as possible.
Such pampering certainly gets the traveler's attention, but many travel managers are not likely to loosen corporate travel policies that restrict first and business class bookings.
"It is going to be really hard for airlines to fill their new premium products," said Yasuo Sonoda, travel manager at Macromedia in San Francisco. The company's international business class bookings fell 80 percent in the past two years following a policy change that elevated pre-trip approval from the senior vice president level to the executive vice president level.
Although Black & Decker's travel policy permits business class on international flights in excess of six hours, many of the company's travelers still choose to go coach. "Our travelers like the upgraded economy seating on some airlines that have power outlets and bigger seats without exorbitant fares," said Pete Buchheit, Black & Decker director of travel and meetings services. "So many people are flying economy voluntarily that there is no need to change our policy. With pressure on budgets, behavior has changed." Many B&D travelers, like their peers at other companies, fly premium class in one direction across the ocean and economy in the other.
Meanwhile, the American Express 2003 International Business Travel Survey found 64 percent of those polled do not plan to book more premium class tickets in 2004. Correspondingly, 60 percent expect to book more tickets in the economy cabin. The survey, conducted in August, included responses from 100 business travelers each from Australia, mainland China, France, Germany, Hong Kong, Mexico the United Kingdom and the United States.
"Airlines are increasingly looking toward attracting business travelers with more offers and better products, such as sleeper beds and Internet access. However, this product innovation is leading to higher fares in most markets," said Matthew Davis, director of Amex Global Consulting Services in the group's Global Business Travel Trends and Forecast for 2003-2004 (see chart, above). "The question is: Will business travelers pay those fares? Booked fare trends so far this year indicate that is unlikely."
Nevertheless, carriers are hoping to secure the business of those who still will pay premium class fares. For example, Lufthansa's new business class, which will cost the carrier roughly e300 million, will include nearly horizontal lie-flat seats—each more than six feet long and featuring a massage function—and an on-demand audiovisual entertainment system with 10.4-inch screens. Business class also will include the FlyNet portal, which provides e-mail, Internet and corporate intranet accessibility. Lufthansa said the new business class adds 25 percent more personal space compared with the previous product. It will be installed on the carrier's new two-class Airbus A340-600 and A330-300 aircraft, set for initial delivery next month. The rest of the 80-strong, long-haul fleet—a mix of two- and three-class configurations
(BTN, March 24)—also will be outfitted with the new business class.
Air France also opted not to move completely toward a hybrid first/business class product en vogue at many competitors. Instead, the airline beginning next month will install both a new first class and a new business class in 40 percent of its long-haul markets.
First class will offer passengers "a real bed with a proper mattress" and 50 percent more space—which requires a seating reduction on affected aircraft from 12 to eight. The new business class will resemble "the classic first class environment" with a 180-degree reclining seat providing passengers with an extra 27 percent of personal space. It will be the sole premium product available to 60 percent of Air France's long-haul destinations. Both cabins will include new audiovisual entertainment systems. Air France did not specify which routes will have the three-class configuration, but a spokesperson indicated those markets with "high-contribution traffic" such as New York are the likely candidates.
Air France also spent e300 million on the premium product project, "despite the particularly difficult economic climate," to develop what it termed "a new concept in air travel." In addition to the new cabins, the package will include 290 new self-service kiosks, bar-coded boarding passes, telephone checkin, improved remote display screens in terminals and redesigned first and business class airport lounges featuring free Internet access with Wi-Fi service. The entire suite of Air France products and services will be phased in starting this fall, with completion scheduled for June 2005.
Both Air France and Lufthansa join British Airways in offering lie-flat seats in business class on long-haul routes. BA was the first transatlantic carrier to offer such a product
(BTN, Sept. 4, 2000)Down under, Qantas also is working to install nearly lie-flat sleeper seats in a new international business class. The seats provide customers additional privacy, comfort controls and entertainment options. They also have power outlets for laptops that do not require adaptor cables, unlike most other aircraft. Qantas also claims to be offering the world's first two-way short messaging service. The SMS system, channeled through seat-back phones, will be available in all classes.
The new business class, which cost Qantas A$385 million (US$261 million) to develop, includes a new self-service bar and a revamped menu. The refurbishments began last month on the carrier's long-haul fleet and will be available on U.S. routes by next spring.
In other premium travel news, Singapore Airlines in February will introduce a new executive economy class aboard its new Airbus A340-500, which will serve the carrier's newest and longest route. The daily Los Angeles-Singapore nonstop service will take 16 hours from Los Angeles and 18.5 hours from Singapore. Executive economy seating will provide 37 inches of pitch, head, foot and leg rests, power outlets and an entertainment system with nine-inch screens. The carrier in August 2004 will add nonstop New York-Singapore flights, which will be about 18 hours in both directions. Executive economy and business class will be the only two classes offered on the routes.
Meanwhile, the first era of supersonic commercial transport last week came to an official close when British Airways retired its ultra-premium Concorde fleet. The last transatlantic revenue service, a flight from New York JFK to London Heathrow, was scheduled for last Friday. Air France, the only other Concorde operator, ceased supersonic services in May.
In place of Concorde, British Airways has been testing a new sleeper service on certain transatlantic routes, including London-New York. The idea is to offer pre-flight dining for business class passengers to allow for uninterrupted sleep time during the flight.