Singapore's new Business Class will be tough to beat.

Not every airline, nor every customer, is wanting to try to go bigger and better, like Singapore’s new Business Class.

I recently ranted about how people get what they pay for  when it comes to air travel, but I feel that I have a few more things to say. I have come realize that there is downgrading trend going on in the industry that needs to change. Let me explain.

What if you get to a situation where increasing volumetric efficiency becomes done for reasons other than combating cost? After all, a business is in business in order to make a profit. It’d be irresponsible to not seek greater margins, right? Especially when passengers are already prepared to accept pain in economy class.

What’s sparked my continued rant is that I am starting to worry that European-style business class may be getting a foothold in North America.

premium Rouge (aka business class) on a Boeing 767 - Photo: Rouge

Air Canada Premium rouge (aka business class) on a Boeing 767 – Photo: rouge

For those of you who do not know, European-style business class is giving passengers about 35″ seat pitch in a standard economy seat, and then blocking the middle seat for additional room.

When Air Canada rouge started with the publicized intent of being only used on leisure routes, I don’t think anyone thought that was the truth. Air Canada rouge, if you were not clear, does not use dedicated business class seats in “Premium rouge” on their A319s. It is standard Euro-fare: 35″ pitch with the middle seat blocked. No thanks.

If this only was showing up on leisure routes I’d just shake my head at the market segmentation, but with rouge replacing legacy Air Canada on flights to some of California’s highest yielding (and highest O&D) cities, I am going to press on with my latest point.

In the eyes of some of the airline revenue management operators, what is the point of business class? Simple; it’s better than economy. How much better than economy? That’s the question — “better” is a nebulous term.

There are some revenue managers out there who do not like lie-flat beds in business class for that very reason. People were paying similar fares for a recliner, then the competition went and ruined it for everyone and trashed the yields on their faux-fur backed outdated products. Airlines had to spend money on product to compete!

Being an insider, I can tell you that many airlines dislike the idea of moving to lie-flat business seats. Even in business class, standardization is king. Tick the boxes and don’t stray too far from the pack.

I fear we are at the start of a wave of downgrading, at least domestically within North America.

Ryanair is known for packing in as many seats in economy as possible - Photo: David Precious | Flickr CC

Ryanair is known for packing in as many seats in economy as possible – Photo: David Precious | Flickr CC

When economy class has become like riding in a Greyhound bus, what’s the point of offering even a simple 2-2 domestic business class product? People with the ability to pay are going to pay anything for “not economy.” It’s in your best interest, as a company, to offer the least product for the most people are willing to pay.

Whether they admit to it or not, every airline in North America is probably watching Air Canada’s Premium rouge experiment. If they can keep their yields up in the front cabin, expect other airlines to start “enhancing” their business class on certain routes until we’re left with Euro-business on everything but select transcon services originating in LAX, SFO, and JFK.

The good thing is, I am almost dead certain that they cannot beat down premium travelers enough to get this experiment to succeed. Regardless, Euro-business only works because many European airlines have a domestic network with routes that are usually no more than two hours. Two hours and a hot meal, not unbearable at 35″ or less seat pitch, but it is key that everyone else offers the same thing.

I feel that the Euro-business model will get crushed in North America. If there is any logic in the world, Premium rogue will die quickly.

United's Business First offers a fold flat bed.

United’s Business First offers a fold-flat bed

Where does that leave us internationally? In a very confusing place, actually.

Here’s a term I never thought I’d hear when I was just a student studying the airline business: “high-density business class.”

I understand, everyone wants lie-flat, direct-aisle-access, and a modicum of privacy. These are things I look for in business class. Here are things I don’t look for, but are inevitable parts of high density arrangements: crowded overhead bins, limited shoulder room, tiny foot wells, etc.

When you are paying for business class, you don’t want these negative features. That is, if you are paying for more than “well, at least it’s flat.”

This is usually where I sit down and say “Hey… it’s the consumer’s fault!” This is the one time when it’s not, not entirely at least.

Industry consolidation has been good for one party: the industry. Even then, I debate that point as creating monolithic entities tends to make those entities extremely inert – but it looks great on paper.

The GAO (Government Accountability Office) released the results of a seven-year study proving what we all thought: Capacity is declining, frequency is declining, but yields are increasing.

Remember how during my last rant I was explaining that the easiest two levers to control in airline pricing are capacity and price? Reduce capacity system-wide, and price will go up. Well, price will go up if the competition also sees that they can get away with reducing capacity. I don’t want to call this collusion, because it’s not. It’s game-theory.

The problem with this game, from the consumer perspective (or worse, the “professional passenger experience nerd perspective”)  is that it has created an even more bizarre reason to race to the bottom.

From the L1011 Sales Brochure, this shows a more cramped 2-4-3 layout for economy. Image from Chris Sloan / Airchive.com.

From the Lockheed L1011 sales brochure, this shows a spacious 2-4-3 layout for economy                        Image: Chris Sloan | Airchive.com

I’ve discussed, at length, how customers started this, but customers can’t take the ball and run!

Since we now have a situation where economy is more unbearable and more expensive than seven years ago, why stop? Who are you going to fly, hapless product-choosing consumer? Haha, we let you put things in the overhead bins for free! There’s your product differentiation now. It’s not seat or service – it’s avoiding “ancillary revenue generation!”

Oh, you want to fly business class? That’s great. Our seat ticks all the boxes, but feels like a coffin! Don’t expect to pay any less, though. Oh, and too bad we got rid of “real” first class.

Premium economy is the fastest growing market segment because it’s the only one most people can afford that isn’t torturous. It’s not popular because it’s good, it’s popular because it’s better than the alternative.

I’ve long held the theory that current “business class” will become the new “first” and premium economy will become “business class”. Relatively high-density recliner seats and all. The funny part is, the price on “premium economy” will skyrocket and we will be right back to the early 1990s.

While consolidation is the name of the game right now, it will not be forever. The airline industry loves fads. However, the fads that never go away are the ones that utterly hose the passengers.

Enjoy getting less for more.

CONTRIBUTOR - SEATTLE, WA. Bernie has traveled around the world to learn about, experience, and photograph different types of planes. He will go anywhere to fly on anything. He spent four years in Australia learning about how to run an airline, while putting his learning into practice by mileage running around the world. You can usually find Bernie in his natural habitat: an airport. Email: [email protected].

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7 Comments
Roy Z. Lehrer

Another excellent tirade by B Leighton. West Jet will happily sell you a narrow seat with infinitesimally more leg room and a free stale sandwich and call it ‘Plus’. Don’t expect any additional service, but because you can board first there’s a chance to score some overhead space.

FrankV

One quick way to put an end to this crap is to pass a law that requires all airline employees to fly coach 100% of the time — even if it is for leisure.

And, to make sure they get the point, require all management employees to fly their airline’s longest single leg, once a month, in coach.

‘gunner

@FrankV

I would say that putting management/executives in coach would have an impact more than putting regular airline employees in coach. The reason: airline management doesn’t care about it’s employees lives or comfort, and actually prefers them to fly in coach every single flight. They fight hard, actually, to make sure that happens as much as possible.

Erik N

I want Iceland Air “economy comfort” seats available on U.S.-based airlines. It sounds similar to the Air Canada premium product, but the arm rests move in and block the middle seat. You get extra seat width in the two remaining usable seats along with a little drink table in what used to be the middle seat.

I usually pay for first on Alaska Airlines, but sometimes it’s twice or 3x the cost of a restricted coach ticket. I’d love a middle-road option when the demand and price for first class is high vs the price for coach. Extra leg room seats are ok, but what I really want is extra width, so there’s a lower chance of having to rub elbows with a stranger.

I bet it would be popular as long as there’s a still a couple of rows of traditional domestic first class. It’s easier to justify an upgrade if it’s not the most expensive option.

Peter C

While United is installing lie flat seats in “Business First” they have eliminated storage for travel necessities, and the shoulder room is terrible!

It is the consumer who is entirely responsible for the decline are air travel comfort and quality. 99% of the people I know can quote you how cheap they just booked a flight for, yet don’t have a clue about the seat pitch or meal service, often they don’t even bother to check the flight times. I have known many people whom have booked overseas vacations without having a clue what airline is getting them there. It’s all about the price folks. The airline that offers the cheapest seat gets the passengers.
I think this declining business class fear is unfounded. Business class customers are paying a huge premium and we expect to get something for that. On long haul flights such as North America to Asia, I am pretty sure all the majors offer fully flat beds now, they all have recently spent big money on upgraded flat seats. It is expected. I don’t see any trend to cut the quality in business class. What Bernie is saying is going to happen already has – we now have 4 classes of service on long haul flights. Coach for those whom want to get there as cheap as possible (complaining of course, yet booking the same again next time), premium economy which is what economy was 15 years ago, business which is now like 15 year old first class, and the new first class for the wealthy sometimes with private rooms.
Of course, North American domestic first class is terrible now. Like Erik I used to spring for first class on Alaskan quite often, but I stopped when they did away with the white table cloths, lowered the food quality, and the overall service experience went down hill. The value for money was no longer there for me.
I don’t follow the logic of mentioning fully flat beds and domestic travel in the breath. How many people want to go to bed on a short flight anyway?
I am sure the future will hold the same things as the past – we will continue to get what we pay for. It is highly unlikely the airline industry will leave money on the table and turn away those with deeper pockets whom are willing to pay to be comfortable.
I question Bernie’s assumption that airlines hate fold flat seat – airlines are business, they like money, seats are just one of the tools they use to get money. I doubt they care what the seats look like, it’s all built into the cost, and it’s all about getting the sale. If lots of consumers suddenly decided that they are willing to pay big money for pink velour 40″ wide seats with 100″ pitch they would put them in.
The number of people on this planet who can afford to spend extra on creature comforts is growing faster today than any other time in history. I am not worried.

You’ll be pleased to know that Rouge rep’aced their “Premium” A319 product with 2×2 seating… the same seats as the mainline carrier.

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