Airlines up ante in premium class battle

THE latest buzz in the aviation industry is Emirates’ luxury first-class suites based on the Mercedes-Benz S-Class and Singapore Airlines’ (SIA) mini hotel rooms in the skies.

All this goes to show that airlines are upping their ante in the premium class segment, which accounted for 26% of international airline revenues in the first eight months of 2017. By passengers, it accounted for only 5.2% of total flying passengers during the period.

Competition in that segment is stiff and constant upgrades to meet demand is necessary. These days, it has gone beyond good food and in-flight entertainment. Airlines now offer personal space in the skies in the form of personal butlers, binoculars and even moisturising pyjamas made from sea kelp to keep passengers’ skin hydrated on the flight.

It’s akin to flying on a private jet but on a commercial airliner.

Emirates showcased its first-class suites at the Dubai Air Show recently offering 40 square feet of space in the air, floor-to-ceiling sliding doors, seats that turn into flat beds, a mini-bar within reach, showers, binoculars and over 2,500 movies for in-flight entertainment. More space in the skies for the passenger means it can fit fewer suites on its 777 jets, from 12 to six.

The new offering is available from Dec 1 on its Dubai-to-Brussels route, with the suite setting us back by about US$6,000.

SIA, on the other hand, offers double beds on its A380 jets. The beds sit perpendicular to the windows so couples have the option of a double bed. This is also available in December on its Singapore-Sydney flights and is priced at about US$6,600.

Emirates is spending millions of dollars on upgrades and SIA about US$850mil. Similar offerings are available on other airlines, including Etihad Airways, Qatar Airways, Air France and British Airways.

The trend in the past was to either shrink the first class or phase it out because companies were cutting back on their employees who qualify to sit in the front end of the cabin. That is slowly changing.

The best barometers for the health of premium travel is the economy, individual industries and sectors and with oil prices inching upwards, the bet is on increased demand for premium classes from the oil and gas sector.

Morgan Stanley’s recent 2018 Global Corporate Travel Outlook Survey points to a growing demand for premium travel. It said “more than two-thirds of corporate travel buyers expect air travel volumes to increase in 2018 with an average growth rate of 4.8%”.

The Travel Market Report, a survey of over 650 travel agents who sell luxury travel, say “agents are booking a significant amount of first, business and premium economy tickets”. Interestingly, demand for the premium economy is also up from frequent travellers who fly to luxury vacations.

That explains why Emirates is eager to win in the premium class race. Airlines are also these days not keen on giving free upgrades for they are investing so much to up their ante. And the high-value passenger expects luxury for the price he pays, and privacy too.

I wonder how Malaysia Airlines will upgrade its premium class, as there will be travellers willing to take the 45-minute flight to catch SIA’s mini hotel room in the skies.


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