Down & Out?
…Down & Out
Is that the new catchphrase for the clientele formerly accustomed to flying in first class?
IATA has said for months that it doesn’t expect to see any meaningful industry-wide recovery anytime soon and the inherent collapse of first/business class travel means that moves to cut back on this once much sought after product could catch on very quickly.
As mentioned before, the only major full-service airline to have done away with first class altogether was Air New Zealand, who like other carriers is struggling with falling traffic, but is now much less reliant on these premium-paying passengers for its bottom line.
Qantas‘ decision to scrap first class on a handful of routes for a few months is hardly a surprise given Alan Joyce’s admission that first/business class traffic had dipped around 30% - like its oneworld partner British Airways (BA), Qantas has been hit hard with traffic falls in the Asia-Pacific Rim region.
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The murmurs from within BA already point to a questioning of the wisdom behind the 2007 “purchase” of Airbus A380’s, whose very essence was a key focus for premium seating as well as deployment to hubs such as Singapore and Hong Kong.
Given Airbus’ decision to finally cave in and enact a production cut to the A380, it would not be at all surprising to see BA defer its order by around twelve months - in part to better cope with traffic fluctuations and also because BA still quite hasn’t figured out what it will do to address the loss of high yield cargo on flights the A380 will operate on because of its dismal space gobbled up by baggage.
(Although if you’d been unfortunate to waste your life reading some other ”me too” wasted media machine - you’ll have been informed that BA had “dropped” its first class product altogether- which is so hopelessly incorrect, it makes me want to go out and buy a BA first class ticket to anywhere just to prove how wrong this assertion actually is…)
While BA aims to stand down sixteen airplanes, including 8 747-400’s; capacity cuts on their own do not address the fundamental shift in recent consumer spending habits - namely that premium economy and a feel-good factor dished out by low cost airlines have become the defacto “new first class”.
Of course, the biggest question in this traffic-falling conundrum resonates simply as “who’s next” to halt sales of first class tickets.
We mentioned before that airlines will have little choice from here on in other than to shift focus to route-centric demand - Qantas’ move here is indicative of that and others will follow suit should the latter half this year be just as dire as the former.
Air New Zealand on the other hand may be pleased it has edged out its neighbouring rival in this field and rightfully so - but in an industry aligned with a “follow the leader” mentality, this is ultimately one path that few carriers can ignore or avoid - particularly those for whom the A380 was touted as the big bird for business travellers.
But with yields falling and no sign of a bottoming out, the plethora of A380 deferrals has shown its business case is under very close scrutiny. Quite simply, if traffic models continue to shift emphasis away from high price customers to lower ones, then customers for the A380 will be queuing up for a long walk off a short pier.
Should we expect then a new premium economy from Emirates too?
I wouldn’t wager against it.
Things will get worse if they haven’t already - before they get better - for customers, discerning between who has the better premium economy/economy class could be the real marketplace battle that many consumers for years have been wanting to see.
Maybe they’ll get that contest after all?
84 comments May 26th, 2009
