Asian All-Business-Class Debuts On ANA Nagoya-Guangzhou Service

All Nippon Airways last month began Asia's first all-business-class service, flying twice daily between Japan's Nagoya Airport and China's Guangzhou Baiyun International Airport, with plans to add an all-business-class Tokyo-Mumbai flight later this year. Though ANA's move may have raised hopes among North American business travelers about the eventual possibility of transpacific all-business-class service, especially in light of the spate of new carriers providing it across the Atlantic, neither ANA nor its Asian competitors have disclosed any such plans.

ANA in January announced the launch of BusinessJet service on the Nagoya-Guangzhou route, using the first-ever Boeing 737-700ER. The 48-seat aircraft is fitted with 24 business class and 24 "premium economy class" seats, all of which will be in a two-two configuration. The business-class seats retail for about $2,000 round-trip, have 61-inch pitches and are 20.6 inches wide—similar to ANA's current international business seats—while the Boeing 737's premium economy seats have a 38-inch pitch and are 20.5 inches wide.

On Sept. 1, ANA will begin Tokyo-Mumbai service with a Boeing 737-700ER configured with only 36 all-business-class seats. ANA has purchased 45 Boeing 737-700s, which the carrier feels offer the most flexibility to experiment with different configurations.

ANA officials said the BusinessJet plan was prompted in part because it had experienced significant interest in premium seats on existing Guangzhou service.

"The target is business travelers in markets where there is sufficient business demand to warrant a service such as our BusinessJet, but not a larger aircraft with a mix of classes of travel," said ANA spokesman Damion Martin. "The 737-700ER allows us to explore such possibilities—and the possibility of opening new routes in burgeoning markets—while minimizing the risk to ourselves and differentiating ourselves by how we meet the demands of business travelers."

A growing number of transatlantic all-business flights have garnered attention and growing popularity in recent years. Maxjet Airways launched in late 2005 and now serves London's Stansted Airport from New York's John F. Kennedy International Airport, Dulles International Airport in Washington, D.C., and Las Vegas' McCarran International Airport. Silverjet flies between Newark Liberty International Airport and London Luton Airport, while L'Avion runs direct service between Newark and Paris-Orly Airport. Eos Airlines operates JFK-Stansted service, and on April 15 announced it expanded its schedule to 32 flights weekly, and reported an average capacity of 67 percent.

These new all-business-class models fly Boeing 757s or 767s outfitted with between 48 and 100 premium seats and offer mixed-cabin aircraft, private terminals and access to luxury airport lounges.

ANA, though, said it does have plans to expand its current all-business service plans, and did not give a projection on when the service might prove profitable. Martin said ANA chose the Mumbai and Guangzhou routes because of the growth potential in each location.

ANA already operated Nagoya-Guangzhou service, as does competitors Japan Airlines and China Southern Airlines, and Martin said the route benefits from automakers with facilities in each city. ANA's BusinessJet fares are similar to the traditional business class fares offered by the other airlines. "We are hoping to attract business travelers and expect that most of them will be Japanese, working for Japanese companies," Martin said.

While he admitted some risk in the market, Martin said ANA is returning to Mumbai—a route it canceled six years ago—because of the region's rapid growth and promise of improved trade relations between the nations.

"In the wake of 2001, ANA withdrew some of its international operations—including service to the Indian market," he said. "We have been planning our return for a few years now, and feel that with the successful bilateral talks between Japan and India last December, the BusinessJet is a wonderful opportunity to return."

Buyers, meanwhile, are keeping a skeptical eye on the trend. "We understand that BusinessJet service is one of ANA's challenges to operate efficiently by small plane for the short-haul destination with smaller market volume," said Masahiro Harada, manager of corporate planning for Tokyo-based corporate travel management firm JTB-CWT Business Travel Solutions. "At this point, the load factor of Chubu-Guangzhou is not high. We don't know whether they will expand to other destinations."

Harada said he has not yet seen the new service impact corporate travel in that region.

Japan Airlines, ANA's biggest competitor, said it is watching All Nippon closely to see if the BusinessJet model is feasible in that region. "As it has already been demonstrated in other regions of the world, we believe there areseveral markets within Asia where an all-business-class model may be profitable," said Kiyoto Morioka, Japan Airlines vice president of marketing. "We will be eagerly watching to see if ANA's implementation of this model between Tokyo and Mumbai is successful."

Meanwhile, others are considering the potential for all-business-class service between Asia and Europe. Brian Pearce, chief economist for the International Air Transport Association, said that despite the small portion of flights that serve Europe-Asia routes, growth in premium traffic on those flights is strong.

"The North Atlantic is the second-biggest international market with 16 percent of premium traffic," Pearce said. "The Europe-to-Asia market is about half that size. That said, it's growing very strongly. It depends on how successfully these all-business airlines are going to make their businesses work, and the jury's still out."

In January 2007, premium seats sold on Europe-Asia flights were up 13.4 percent compared with January 2006 levels. Meanwhile, North Atlantic routes were up 6.9 percent and overall premium international traffic increased 4.5 percent, according to IATA.