Long-haul first class air travel dwindling despite Etihad and Emirates
First Class seats take up a larger proportion of a plane than economy class seats, and ever more so when the level of luxury involves a flat bed, a bathroom, lounge space etc. Data from CAPA shows that flights using Heathrow have the largest number of First Class seats of any airport in the world. Of the top 10 routes based on the number of First Class seats, Heathrow has 9. Of the top 25 global routes by number of First Class seats, Heathrow has 15. Of the 25 largest first class routes, 10 are trans-Atlantic – only one of these is Frankfurt-Chicago. However, though the levels of luxury being offered by Middle Eastern airlines, for customers to whom money is no object, is rising – overall there is a decline in the number of luxury seats. Some airlines are reducing the number, while a few are increasing. The top 4 routes for luxury travel are Heathrow-New York (by far the largest); 2nd is Heathrow- Dubai; 3rd Heathrow- Chicago; 4th Heathrow-Mumbai. CAPA says growth constraints at Heathrow have seen British Airways strategically grow through a larger share of high-yielding passengers (across premium passengers and premium economy).
Long-haul first class air travel dwindling despite Etihad and Emirates innovation
That is despite a growing battle between Arabian Gulf carriers to innovate new concepts in luxury air travel, introducing flying bedrooms similar to those found in a yacht or a hotel.
Only weeks after Etihad Airways announced its premium travel experience – which features private suites, apartments and business studios on its aircraft – Emirates Airline last week said it would match that by introducing a “bedroom concept”.
However, Capa points out in data released on its website last week that while London Heathrow to New York JFK is still the world’s most popular long-haul first class route with 1,116 weekly first class seats and an average of 159 seats a day between May 12 and 18, the removal of first class cabins from American Airlines’ 777-200s fleet means that these numbers are down “considerably”.
“American in May 2012 offered 560 first class seats across 35 weekly New York JFK-London Heathrow flights while in May 2014 offers 168 across 21 weekly flights,” Capa said.
Iata data last week showed that premium traffic volumes have declined in recent months as China demand fell, with only the Middle East performing solidly. Growth in premium travel slowed in March, up 1.9 per cent year on year compared to 4.1 per cent in February.
“The Gulf in particular is enjoying an acceleration in economic growth and tourism … it shows once again that this region is one of the strongest aviation markets in the world,” said Hussein Dabbas, the International Air Transport Association’s regional vice president for Africa-Middle East.
However, airlines around the world are reviewing their premium offerings, with only a handful able to sustain a first class cabin.
Airlines continue to “cannibalise their first class with business class seats that become lie flat”, Capa said.
At the same time the pool of first class passengers is shrinking.
Germany’s Lufthansa is soon expected to cut first class from many of its long-haul aircraft. Qatar Airways has already indicated its focus away from first class and Tam is the latest airline to remove first class.
However, Emirates’ tie-up with Qantas has helped to shift demand towards Dubai, with the Heathrow to Dubai route the second busiest first class route in the period with 850 seats weekly and 121 on average daily, Capa data showed.
Overall Dubai is home to more long-haul first class routes than Heathrow, and Emirates flies more long-haul first class seats than British Airways or Lufthansa, Capa said.
“The shift in the world’s top first class routes and number of seats is a story of changing partners and alliances, with Qantas boosting Dubai but detracting from Singapore. This helps accentuate the continued focus of the two major UAE airlines in the premium cabins, retaining their focus on first class travellers,” said Capa.
Long CAPA article on the rise, and decline, of First Class luxury seats and cabins, at http://centreforaviation.com/analysis/etihad-residence-highlights-the-uae-airline-ascension-in-first-class-travel-while-others-cut-back-167636
“The new cabins from Etihad Airways may bring unprecedented levels of luxury to first class, but elsewhere the trend of long-haul first class is unequivocally one of decline. TAM is the latest airline to remove first class, while American’s removal of the cabin from its 777-200s will have an impact on some of the world’s largest first class routes ranked on available seats.
London Heathrow-New York JFK is the route with the most first class seats with 1,116 a week, but this figure is down considerably, following aircraft changes from American. Nine of the world’s 10 largest first class routes are to/from London Heathrow, while 15 of the top 25 are to/from London Heathrow. British Airways has the largest amount of first class capacity on nine of those 15 routes. 10 of the 25 routes are trans-Atlantic while Dubai is home to four; Singapore and Los Angeles three each; and Frankfurt, Hong Kong and Seoul home to just one each.
But meanwhile the Gulf is going from strength to strength. Overall Dubai is home to more long-haul first class routes than London Heathrow, and Emirates flies more long-haul first class seats than British Airways or Lufthansa.”
The article ends:
Outlook: Further shrinkage of first class is inevitable – for most airlines
“While Lufthansa headquarters may be engulfed in worry over internal labour disputes and the march of Gulf carriers, as far as first class is concerned, there is a sense of groundhog day: Lufthansa is removing first class from a number of long-haul aircraft, the exact same thing it did some years ago – only to re-install first class after a change in executive leadership that saw it as strategically important.
This time around, Lufthansa’s removal will probably be final. Airlines have cannibalised their first class with business class seats that become lie-flat. At the same time, first class is increasingly off limits for all but the top echelons of executives (or the wealthy leisure travellers, although they look more for discounts, and frequent flyer redemptions, which give a low yield).
This was stated clearly by Qatar Airways CEO Akbar Al Baker to Bloomberg: “Executive travel returning to first class will never happen, I don’t think so… We decided that as load factors on first class were only 40%, that we better not have first class but give a very good business class product.” Those adding first class, like Garuda Indonesia, are few and without a clear business plan for the cabin.
The shift in the world’s top first class routes and number of seats is a story of changing partners and alliances, with Qantas boosting Dubai but detracting from Singapore. This helps accentuate the continued focus of the two major UAE airlines in the premium cabins, retaining their focus on first class travellers. It is also a story of pragmatism as American’s over-due retrofit of its 777-200s impacts a number of the world’s largest first class routes while Cathay Pacific arguably is more prudent than Singapore Airlines in deploying first class, which perhaps sees this as more about branding than profits.
“Only a handful of today’s first class operators can sustain the cabin, a feature that is accentuated as the UAE carriers attract increasingly large proportions of high end travellers on long-haul services..”
Airlines have been rationalising, ending “strategic” routes thought to give glamour despite poor returns. But airlines are being slower at weaning themselves off prestige cabins. Only a handful of today’s first class operators can sustain the cabin, a feature that is accentuated as the UAE carriers attract increasingly large proportions of high end travellers on long-haul services. Etihad‘s new Residence product inevitably has a combination of strategic and commercial planning, but it goes a long way to emphasing where they and Emirates are positioning globally.
In modern history the front may be as extravagant as ever, but it is also becoming less common than ever on the traditional airlines. The vocal frequent flyers may rue this fact, but for airlines it is another healthy step towards a sustainable industry.”
Busiest first class air travel routes in the world
May 25, 2014 (The National)
While the likes of Etihad and Emirates are going from strength-to-strength with their first class offerings, the trend of long-haul first class travel elsewhere is one of decline, according to Capa. Find out how many of the routes involve the UAE.
(CAPA data between 12th and 18th May)
London Heathrow to New York JFK is still the world’s most popular long-haul first class route with 1,116 weekly first class seats and an average of 159 seats a day Between May 12 and 18
Heathrow to Dubai 850 first class seats, 121 average daily first class seats.
Heathrow to Chicago O’Hare. 658 first class seats, 94 average daily first class seats.
London Heathrow to Chhatrapati Shivaji International Airport. (Mumbai). 504 first class seats, 72 average daily first class seats.
Miami International Airport to Sao Paulo-Guarulhos International Airport. 504 first class seats, 72 average daily first class seats.
London Heathrow to Singapore Changri. 460 first class seats, 66 average daily first class seats
London Heathrow to Boston Logan. 384 first class seats, 55 average daily first class seats
Heathrow to Dallas Fort Worth. 378 first class seats, 54 average daily first class seats.
Heathrow to Indira Gandhi International Airport, New Delhi, India. 372 first class seats, 53 average daily first class seats.
London Heathrow to Miami International. 364 first class seats, 52 average daily first class seats.
Etihad Airways goes beyond first class with $20,000 luxury flying hotel suite
Etihad Airways has raised the stakes to win the loyalty of luxury travellers with a US$20,000 flying hotel suite complete with a Savoy-trained butler.
The premium travel experience is being offered on its Airbus A380 and Boeing787 Dreamliner aircraft as rival Gulf carriers compete to win high-spending business and first class passengers.
“I think we have set the new standard in premium travel,” said James Hogan, the president and chief executive of Etihad Airways.
“The Residence by Etihad” will be a forward upper-deck cabin configuration on the A380. Accommodating single or double occupancy, it includes a living room, separate double bedroom and en suite shower room. Guests in The Residence will also have a personal butler – trained by the Savoy Butler Academy in London.
Ticket prices start at about $20,000 for either one or two people. The service is being initially offered on London routes starting from this December.
In addition, the upper deck will have a number of fully private suites, branded First Apartments, with a separate reclining lounge seat and full-length bed, as well as a chilled mini-bar, personal vanity unit and wardrobe.
“Etihad’s new product is above premium. What they are trying to do with the A380 residence is like a hotel in the air. If you look at Qatar Airways, they are starting a business class only flight from London to Doha, so Etihad’s product puts them head-to-head for competition to snare high fare, high yield customers” said Saj Ahmad, chief analyst at StrategicAero Research.
“Etihad is significantly more expensive than Qatar and Emirates, but this is for the exclusivity of their product. It trendsetting and I wonder how long it will take until an airline comes with a similar product if Etihad’s cabin offerings deliver significant revenues.”
While Etihad does not operate a fleet of private jets like rival Qatar Airways, which has Qatar Executive business, it believes it can charter the premium part of its A380 to accommodate families or government delegations in the region.
“We are a scheduled carrier, so we don’t compete with private jets. All we have taken is the concept of private jets of service into the A380 cabin and the 787 cabin,” said Mr Hogan.
“We certainly believe in the strong market for the residence and the apartments. We can charter that premium part of the aircraft. And frankly we believe we are better than the private jets.”
In 2008, Etihad set up Etihad Design Consortium to conduct consumer research and workshops in Abu Dhabi, Sydney, London, and New York. The research focused on consumers’ demands and needs in a flight.
Etihad did not disclose its investment in the new product.
“There are such exciting changes coming up in Abu Dhabi with the Louvre coming, the Guggenheim, the hospital groups. This city is vibrant and dynamic. We are fortunate to grow alongside of that,” said Mr Hogan.
Etihad has 10 Airbus A380s on firm order. The first A380 will arrive in December and will fly to London. Next year, four A380s will be delivered. They will fly to Sydney, Melbourne, New York and Paris. In 2016, another three A380 aircraft will be delivered to be followed by the last two in 2017.
For the 787 Dreamliners, Etihad has a total of 71 aircraft to be delivered between 2014 and 2023 – making it the largest operator of 787 in the world.
Unlike some European carriers that may struggle to find enough demand for their first class, Mr Hogan said the demand coming from this region is significant.
“There is a market there for this kind of product. We wouldn’t introduce this product unless we felt there’s a return,” said Mr Hogan.
“If you consider we are based here in Abu Dhabi, with the GCC, we are in the middle of this. There’s a huge market … here in the Emirates in peak season, you can’t get a seat in the business class,” Mr Hogan added.
Emirates taking ‘bedroom concept’ on Airbus A380 and Boeing 777 fleet
Arabian Gulf carriers are competing fiercely over creating new concepts of luxury travel, which includes flying bedrooms similar to those found in a yacht or a hotel.
Only weeks after Etihad Airwaysannounced its premium travel experience – which features private suites, apartments and business studios on its aircraft – Emirates Airlinesaid it would match that by introducing a “bedroom concept”.
“It’s all about privacy. That’s very much in our current first class private suites product, and our new bedroom concept will take it to the next level,” said Tim Clark, the president of Emirates.
“We’re talking fully enclosed rooms, with all the touches and amenities that you’d expect in hotel or a private bedroom on a luxury yacht, room service and so on. It will be on our A380s, and on our new 777s.”
Emirates said that it is in “advanced stages” of developing its bedroom concept. While it did not disclose the cost of a bedroom, it said that its current first class suite costs US$500,000 apiece, and with the 1,500 seats in its current fleet, that is a total investment of $750 million.
Emirates, the world’s biggest customer of the Airbus A380 superjumbo, made headlines at the Dubai Airshow in November when it ordered $99 billion worth of aircraft – including 150 Boeing777X and 50 A380s fromAirbus.
The International Air Transport Association (Iata) said in a note yesterday that premium travel in the Middle East has outperformed other markets globally.
In March, global premium travel rose 1.9 per cent year-on-year, slower than the 4.1 per cent in February.
“Middle East premium travel performed solidly in March, particularly routes to Africa, from Europe, and to the Far East,” said Hussein Dabbas, Iata’s regional vice president for Africa-Middle East.
“The Gulf in particular is enjoying an acceleration in economic growth and tourism. It shows once again that this region is one of the strongest aviation markets in the world.”
Analysts said that a key to the success of Emirates new product will be the pricing. Etihad Residence Suite on the upper deck of its A380 costs $20,000 one way on its Abu Dhabi-London route.
“If its high like Etihad’s Residence Suite, then perhaps it may stifle demand leading to discounting. And with high prices, Emirates will not want to discount so early on with a new cabin product,” said Saj Ahmad, the chief analyst at StrategicAero Research.
Other analysts think that airlines need to revisit their business case of having premium travel products, which may not sell as well as business class seats.
“Premium travel is still in important segment in the Gulf market but more so business class than first class. First class is only supported on certain routes and many airlines globally have withdrawn it or offer it selectively,” said John Strickland, the director of London-based JLS Consulting.
“Airlines have to evaluate the cost of investment versus the likelihood of regularly selling the seats and the opportunity cost of having more seats in business class, which on many routes are more saleable.”