THE FUTURE OF FIRST CLASS

With the quality of business class improving and the private jet market becoming more competitive, are the days numbered for first class seating?

The aviation industry appears to be reassessing the value of first class. Some still think of it as integral to their service offering, but many are struggling to fill seats and a few have decided to eliminate the cabin class from their aircraft altogether.

United is one such airline. In a 2015 interview with Buying Business Travel, the carrier's then president, Jeff Smisek, called international first class a losing business, which has prompted the airline to reconfigure its existing B767-300ERs from a three-class to a two-class cabin set-up without first.

United’s current order book of 14 B777-300ERs, seven B787-9s and 14 B787-10s will not feature a first class cabin at all, further illustrating the airline’s move to distance itself from the product. “[First class is] a money loser, and we will be eliminating it over time,” said Smisek. “The problem is that it takes a lot of real estate, and people are not willing to pay for that. I suspect the other carriers, apart from the subsidised Gulf airlines, would say the same thing.”

PUTTING THE SQUEEZE ON

A key driver behind the declining appeal of first class is the highly competitive business class offerings that have been developed in recent years. Flat-bed seats in long-haul business class are no longer a rarity but are expected as the norm. Combined with multi-course meals served on fine china, state-of-the-art in-flight entertainment systems and personalised service, today’s business class is encroaching into the first class territory of yesteryear.

China Airlines (CAL) is a casualty of this trend. The Taiwanese carrier did offer first class on its B747-400 flights to the US, but retreated from the North American market last year. While it still operates the B747s on a number of short-haul, intra-Asia flights, its first class seats are currently marketed and sold as business class fares.

Meanwhile, CAL’s B747 replacement – the B777-300ER – has been configured to feature only a three-class layout: business, premium economy and economy. Last year, the airline’s chief executive Sun Huang-Hsiang revealed that, “the new Premium Business class is currently adequate for the company’s foreseeable future, and I believe that our customers will be very satisfied with it”.

Impressive business class standards have certainly made an impression on travellers, with several Business Traveller Asia-Pacific forum posters noting that flying with Qatar Airways on business class rivalled the first class experience found on other airlines. “I flew with Cathay Pacific (CX) in first recently, and felt that my experience [on Qatar Airways’ business class] was on par and in some areas even better – and that says a lot as CX is world class,” said ExecPlatAA.

THE SUITE LIFE

While CAL may be eliminating first class soon, its CEO noted that it was cautiously looking into the possibility of introducing a new suites class standard. “Many airlines [have eliminated] first class, and changed to business, premium economy and economy class,” said Sun. “The talk that we’re having now is whether we should [launch] a suites class with much more luxurious amenities and service. But we do not anticipate very high demand for such an offering.”

Singapore Airlines (SIA) was the pioneer of the suites class, which it introduced on the A380 in 2007. However, the airline’s CEO Goh Choon Phong recently revealed that demand for the luxury class has been lukewarm, and SIA will be reducing capacity accordingly once the next batch of superjumbos is delivered.

“Going forward, you can expect we will be reducing the number of suites on the A380s,” said Goh. “What that number is, we’ll announce [in due course]. But the idea is to always better match demand and supply.”

One area on the map that appears immune to the quandary of first class is the Middle East. Etihad Airways’ A380, which it received in 2014, features The Residence. A super-luxury three-room suite, it consists of a living room, bedroom and bathroom and is accompanied by a dedicated Savoy-trained butler service. Despite a hefty US$32,000 price tag for a one-way flight between Abu Dhabi and New York, the product has been a hit.

“We have experienced an overwhelmingly positive response to The Residence within the US – beyond our expectations, in fact,” Etihad’s chief executive James Hogan said last year. “We are seeing healthy forward bookings.”

The reasons for the continuing success of first and suites class in the Middle East include the large numbers of super-wealthy businessmen, politicians and royalty who regularly connect through the region, and the fact that the big three Gulf carriers – Emirates, Etihad and Qatar – have built their reputations and brands largely around their luxury in-flight products, as was recently highlighted by the Emirates advertising campaign featuring Jennifer Aniston.

CHANGING CORPORATE BEHAVIOUR

In an age where information is shared and disseminated easily via the web, publicly listed companies have been forced to change their travel policies in order to appease shareholders.

This was the case last year when DBS Bank found itself in hot water. According to Singapore’s The

Business Times, the company’s directors flew their spouses and themselves to London in first class for an annual board meeting. Not surprisingly, the news drew ire from many locals, with some calling it a “blatant abuse of power”.