First Class Is More Lavish, Less Viable Than Ever
(Bloomberg View) -- At the beginning of November, Singapore Airlines Ltd. announced the world's most luxurious, fully-enclosed first-class seat. Passengers can expect the best: bedding (for two, if desired) embroidered by Lalique, dinner served on Wedgewood, a 32-inch HD screen, two bathrooms and a full-sized wardrobe. Just ten days later, Dubai-based Emirates Airline Ltd. sought to outdo the Southeast Asian giant with its own first-class suite featuring hardwood floors, mood lighting, kelp-infused moisturizing pajamas and design details inspired by the Mercedes-Benz S-Class.
The high-end one-upmanship would appear to herald a new golden age of luxury air travel, at least for those able to afford tickets that cost in excess of $10,000 per passenger. In fact, first-class cabins have been shrinking for two decades at least, under pressure from an increasingly competitive, price-focused global airline industry and the changing demographics of flying. Those trends are only set to accelerate. The latest luxury suites may look futuristic, but it's not clear that first class has a future at all.
The very idea of first-class harkens back more than half a century to the so-called Golden Age of Air Travel, when passenger seating overall was less cramped, food was (allegedly) better, sleeper berths were common and sweatpants weren't acceptable attire for travel. Multi-class cabins, first introduced in the 1950s, put a price on that "golden" experience. The launch of the Boeing 747 in 1969 introduced an even more lavish world for high flyers that included bars and lounges, world-class cuisine and fat sleeper seats.
Airline deregulation in the late 1970s and early 1980s began changing the financial equation. By the mid-1980s, caught up in brutal price wars, U.S. carriers were struggling to keep offering first-class levels of service at reduced prices. One solution: Leave first-class seats empty or give them away for free as upgrades to valued customers. As recently as 2011, only 14 percent of Delta Air Lines Inc.'s first-class seats were paid for; the rest flew empty or with upgraded passengers. From a business standpoint, that's not a terribly good use of a plane's valuable real estate.
The solution, devised in the mid-1970s, was business class. As first deployed, it offered full-fare-paying customers a slightly higher level of service than those who were on discounted tickets. Eventually, as business class grew more luxurious, it began to cannibalize first class.
That's only going to continue. For lower but still expensive fares, business travelers can now enjoy amenities that would've been considered first-class a few years ago, including lie-flat beds, better food and -- increasingly -- a door and privacy. More important, it's possible to stuff more business class seats than first-class seats into the same amount of space, making business class a winner for the airlines, too.
Despite the hype around its new first-class suite, even Singapore Airlines is reducing the number of suites in its fleet by 50 percent, while boosting the number of business-class seats by 10 percent and -- on 11 planes -- by 30 percent. Likewise, even as Emirates touts its own hyper-luxury suites, it only plans to offer six of them on barely nine planes by the end of 2019 -- less than 4 percent of its fleet. For a better idea of how Emirates sees its future, look no further than the record-setting 615-seat plane it started flying in 2015. Those planes won't offer first class at all.
Among the big three U.S. carriers, Delta has phased out international first class altogether, United is ending it in 2018 and American offers it on only a small handful of flights. Elsewhere in the world, airlines including Cathay Pacific, Lufthansa, Air India, and Qantas are reducing the number of first-class seats and the routes on which they're available.
As global aviation becomes more competitive, and greater numbers of passengers in developing regions take their first flights, the pressure to keep prices down will only increase. Celebrities and recluses willing to fork out thousands of dollars for a private suite will probably always have a first-class option on flights between global financial centers. But most people will likely be content with business class -- or have the money for a private jet. Airlines will use those few first-class suites largely as marketing opportunities to buff their brand, even as they pack more and more seats into their planes. For most of the world, the only class will matter in the future is cattle class.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Adam Minter is a Bloomberg View columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”
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