Business class travel
Airlines are maintaining their focus on business class, with the cabin offering better profit potential than seats further forward, writes Gary Noakes
If you listen to Wizz Air, flying business class should go the way of plastic straws and diesel cars. The budget airline has called for an end to ‘old school’ premium flying, which it says has twice the carbon footprint of economy class due to the increased space per passenger it offers.
No-frills carriers might argue there’s no environmental case for business class for a short hop around Europe, but try telling that to an executive flying London-new York every week. They need their bed, and don’t you try to deny them.
Fortunately, business class travellers have more choice than ever, although it’s still a lottery whether fliers get the latest mini cabins, some complete with sliding doors, the sort of product previously only the privilege of first class passengers.
Last summer, British Airways debuted its new Club Suite with fully enclosing sliding door on its first Airbus A350s serving some frequencies to Bengaluru, Toronto and Tel Aviv. The suite is a major update to the once revolutionary but now tired Club World cabin and will also be on BA’S Boeing 78710s, the first of which will serve Atlanta from the start of February.
However, it will be some time before passengers can look forward to the new product across BA’S fleet. One B777 on the Heathrow-jfk route currently offers the
Club Suite and more will appear on this route in the coming months. A spokesperson for the airline could not be specific, but said: “The B777s with the new Club
Suite will be primarily operating on New York routes.”
The spokesperson also said all the Heathrow fleet would be refitted by 2025 “although it will be on over 90% of our longhaul aircraft by 2023”, with the Airbus A380 fleet being refurbished last.
Virgin Atlantic also debuted its new partially enclosed cabin on the A350. It will have 12 A350s by 2021 and four are already flying New York frequencies. The A350 will also serve Johannesburg from March and Los Angeles from April.
Lee Haslett, Vice President, UK and Ireland Sales, says the new aircraft has stronger wifi, while The Loft, a seating area that replaces the bar, is more suited to corporate travellers.
There are no plans to retrofit Virgin’s B787s with the new cabin, but Virgin receives the first of 14 A330neo aircraft from September 2021. “By 2024, our average fleet age will have halved to 5.3 years,” he says.
Virgin’s Manchester business passengers will see big improvements this summer, with the opening of a new Clubhouse complete with a la carte dining, while Manchester-jfk capacity has increased 75%.
Virgin is sticking to widebody aircraft, but as we enter the 2020s, business class passengers will more often be flying some routes on narrow body aircraft. New longhaul versions of the Airbus A321 will offer a compact 2-2 layout business cabin and United Airlines has joined the small band of full-service carriers putting their faith in them for transatlantic flights.
Flights of fancy
United has ordered 50 Airbus A321XLRS, with a range of 5,400 miles – about the same as the Boeing 757s they will replace. United has 53 B757s and uses them on “thin” routes including Edinburgh-newark. The airline says the new aircraft will allow it to explore more European destinations from East Coast hubs at Newark and Dulles, which may mean former routes to New York from Birmingham and Bristol become viable again. Just as on the B757, United will offer the full Polaris business product, although because of the narrow cabin, this will likely be a 2-2 layout.
SAS brings the first A321LR into its fleet in September. This aircraft has a slightly shorter range than the XLR, but SAS says it can reach the Middle East and India from Scandinavia. It will first serve Copenhagenboston, with new routes to be revealed this year. SAS has also been using the first of eight widebody A350s from January 28 from Copenhagen to Beijing, Tokyo, Shanghai and Hong Kong. Both aircraft will feature the latest business cabin.
Further afield, Cathay Pacific, which has challenges at Hong Kong, is enticing travellers back with upgraded bedding in its business cabin. Meanwhile, ANA has made a major upgrade to its business cabin, with an enclosed seat known as The Room. The seat itself is a mini sofa, double the width of the old one, with 64 on the Boeing 777.
It is already on the Heathrow-tokyo Haneda route and has just appeared on some New York-haneda and Narita services, with Frankfurt added from March.
Fellow Star Alliance member TAP Air Portugal has finished a long-haul fleet renewal, with 17 A330-900neos now in operation complete with new business cabin. The transformation means TAP’S fleet has gone from an average age of 15 years to under four years in just 12 months.
The A330s have 34 fully flat conventional business seats, mostly in a 1-2-1 layout and the airline is now an attractive option for flights to South America.
All-out business
New generation business cabins are now so good there is probably no potential for any return to the all-business class airline gold rush seen a decade ago. The Noughties saw the collapses of Eos, Maxjet and Silverjet, and since then scheduled all-business class flights have become a rarity.
The UK’S sole exception is British Airways’ London CITY-JFK fight, although this is now a single frequency, with BA having disposed of one of the pair of custom-built A318s serving the route. BA also closed its Parisbased Open Skies all-business airline in 2018, but its place has been taken by France’s La Compagnie, which flies Parisnewark and Nice-newark.
La Compagnie now has two new A321s in an all-business class configuration, with 76 fully flat seats in a 2-2 layout. The carrier has obtained more slots at Orly, so will likely expand and in January it operated a limited flight series to Las Vegas for the
The Noughties saw the collapses of Eos, Maxjet and Silverjet, and since then scheduled all-business class flights have become a rarity”
Consumer Electronic Show, with fares priced from $2,100 return.
Before its closure, Open Skies switched from being all-business to a multi-class cabin and this is the approach Qantas has to its non-stop 17-hour Heathrow-perth service and the planned London-sydney non-stop flights.
All-business class services are a niche and one that only BA has managed to work in a small way on its most profitable route. After BA and La Compagnie, Singapore Airlines, whose non-stop service to Newark is around 19 hours, comes nearest to an allpremium cabin. Its aircraft has no economy section, but together with the 67 business class suites, the Airbus A350 has 94 premium economy seats – proof that regular all-business class flights are too much of a commercial risk and perhaps a thing of the past.
Room to manoeuvre
Premium economy, rather than business class, is the big growth area, but the business cabin is holding its own as some carriers dispense with first class altogether. The gap between business and first is now so small, with new generation business seats offering an enclosed personal space, that many carriers now feel it makes first class redundant.
Few carriers will now consider upgrading their business cabins without a seat plan that offers aisle access to all passengers. As this layout takes up more floor space, in some cases this can mean bigger business cabins than before.
An example is Qantas, which is fitting new Business Suites to its A380 fleet. Capacity is increased by six seats to 70 and there is a larger lounge area accommodating ten people. This extra room comes at the expense of 30 fewer economy seats at the rear of the upper deck, which also permits an enlarged premium economy section.
Just how far you can take overall business class capacity on a given aircraft is illustrated by British Airways. On Heathrownew York, the world’s most profitable route, estimated to be worth $27,000 an hour to BA, first and business class seats make up around 30%-plus of its seats, so the scope for any carrier to go beyond this seems limited. There is a small exception in Singapore Airlines’ ultra long-range A350, with its business class making up 42% of the aircraft’s capacity, but generally speaking, it’s seen as foolhardy to go much beyond BA’S measure.
The price is right
Looking at the year ahead, IATA predicts a combination of factors will contribute to a broadly stable 2020 and small airfare price increases. It says the year will see “a moderate pick up in global growth and world trade” and a modest reduction in fuel costs – great for airlines, but not necessarily good for business travel managers. However, IATA also expects an increase in capacity growth, which should dampen fare increases.
Examining the predictions more closely, IATA estimates global passenger numbers will reach 4.72billion in 2020, compared with 4.54billion in 2019, with global airline profits increasing from $25.9billion to $29.3billion. It expects world trade to grow 3.3% in 2020, compared to only 0.9% in 2019 as commercial relations with the US and the rest of the world improve during an election year – a forecast it made before the Us-iran spat. IATA added then that “oil supplies are plentiful” and predicted kerosene prices would fall to an average $75.6 a barrel, compared to $77 in 2019.
Whereas passenger capacity rose 3.5% in 2019, it is forecast to grow 4.7% in 2020 as aircraft deliveries rise “significantly”, causing load factors to marginally decrease to 82% from 82.4% in 2019.
Taking all this into account, IATA expects average long-haul business class ticket prices globally to rise only 1% and for regional business class fares to increase 2%.
Globally, BCD Travel says continued capacity expansion will offset the collapse of carriers like Jet Airways and Air Berlin, limiting fare increases. However, this is not the picture across the board, with IAG, for example, reining back expansion until 2023 from the previous 6% estimate to 3-4% until 2022.
BCD warns the drop in profitability of Middle East airlines will also have an
IATA expects average long-haul business class ticket prices globally to rise only 1% and for regional business class fares to increase 2% in 2020”
effect: “Even Middle Eastern carriers, once seen as a low-cost, one-stop option for flights to Africa and Asia, are increasing fares to repair their finances.”
Winners and losers
Conversely, BCD predicts keener transatlantic pricing in 2020, with the British Airways and American Airlines joint venture responding to the strengthened Virgin Atlantic and Delta partnership.
Thomas Stoeckel, BCD’S Senior Vice President, Supplier Relations, EMEA, says: “Transatlantic is going in one direction and the Middle East and Far East in the other. I was on transatlantic flights a lot in 2019 and aircraft were full. Airlines are managing inventories quite well. In the Far East we already have over-capacity, mostly due to the Middle East carriers.”
He predicts future pressure on the Middle East airlines as more non-stop flights on new A350s and B787s overpass the region.
“We are also now seeing flights to secondary Chinese cities from Europe, so there’s often no reason to change in the Middle East or elsewhere,” he adds.
Transatlantic is set for another shake-up in addition to the battle of the joint ventures, Stoeckel predicts: “We will see the Airbus A321 XLR have an effect. TAP and SAS are using them and Jetblue is coming in 2021. As a result, we’ll see secondary airports on both sides get connections.”
The new aircraft mean some travellers need to revise their ideas about what they can expect from business class: “People need to get used to this; the product is probably not the same as on a wide body, but I think it’s a perception thing; after a few minutes, you forget.”
Pulling the levers
When it comes to fares, Jo Lloyd, a partner at consultants Nina & Pinta believes there is one overriding consideration this year: “I think we’re likely to see some landmark shifts around the whole NDC landscape,” she says. “My suspicion is this will be the year that parity will not be as clear as in previous years. Historically, we have always had an element of fare parity, but that’s going to shift this year and we will see different agents able to negotiate different types of fares through NDC.
“There are certain markets where we will start to see more traction in this than others. I predict Europe will be one to go first and Australia will be another. Then we will see how it works elsewhere.”
Lloyd has one wish for the year ahead: “Fares are generally driven by revenue management looking at market share and adjusting. I’d like to see them take a look at commercial relationships so that it’s less focused on routes and more on mutual benefits and commercial gain. I think we’ll see that with airlines that are making more traction with NDC.”
Lloyd’s final prediction is simple: “The market is going to be more complicated,” she warns. Prepare for some tough negotiations in 2020.
Historically, we have always had an element of fare parity, but that’s going to shift this year and we will see different agents able to negotiate different types of fares through NDC”