Like the top suite at a Four Seasons hotel, first class cabins look fabulous, but the seats remain out of reach for most travelers. The cabins are largely the preserve of Hollywood types who can’t afford to fly private and high-end frequent flyers burning points. With such a small customer base, are the days of the first class cabin numbered?
Expensive aircraft real estate few people can pay for
China and the United States are two of the largest domestic airline markets still offering first class seats across multiple carriers. But most passengers regard the cabin products as domestic business class grade at best.
American Airlines remains the sole big US carrier to maintain a long-haul first class cabin product – and even then only on selected aircraft. But the American Airlines’ long-haul first class product is also widely regarded as uncompetitive.
“American Airlines first class doesn’t stand a chance relative to the world’s best airlines,” said Zach Griff from The Points Guy recently. “My recommendation? As long as you’re not spending any real money on it, you’ll enjoy AA first. But I wouldn’t pay a mileage premium for it. Nor would I ever pay cash for the ticket.”
And that’s the rub for most airlines. First class takes up a lot of aircraft real estate, and while everyone wants to fly first class, very few are willing to pay anywhere near the full retail rate for a ticket. That brings the economics of offering a first class cabin into question.
Is first class simply about a better grade of peanut?
Speaking at a recent CAPA Live event, IAG’s Group CEO, Luis Gallego, says that the number of premium cabin seats across the group will fall as they retire older planes. But he argues that’s not necessarily a bad thing.
“The profitability that we have in the premium economy class, sometimes it’s higher than the profitability that we can have in the more premium classes,” he said.
“First class in most markets, unless you are in the US or China, where you get a superior quality of peanut in the UK and a slightly denser noodle in China, first class has gotten worse, it’s history,” says Midas Aviation’s John Grant.
Or, you could say, business class has improved so much that it renders the average first class product redundant. Multiple airlines offer a superb long-haul business class seat – Polaris on United Airlines, Delta One Suites, the new Club Suite seats on British Airways, Qatar’s Q Suites, and ANA’s “The Room” business class seat are good examples.
Most people would thank their lucky stars if they could park their backside in such seats. Very few airlines can or do offer a better product (Singapore Airlines’ first class suites and Etihad’s first class long-haul products are notable exceptions). Even fewer prospective passengers are prepared to pay the premium to upgrade to this better product.
The high standard of many long-haul business class cabins potentially puts the future of first class cabins at risk. But first class cabins are often about more than economics. First class cabins are important to an airline’s brand and image.
Brand value in a first class product for many airlines
That Four Seasons suite is unaffordable for most people, but the tasty brand imagery might induce average punters to pony up for a run of house room. While most Emirates passengers don’t fly in the premium cabins, most Emirates advertising does feature premium cabin products. Marketers call it the halo effect, and it’s worth a lot of money to long-haul airlines.
Whether first class is history, as John Grant argues, is debatable. But first class is definitely less common than it once was. A likely future outcome is that some airlines will retain first class as a marque product on a small subsection of their fleet.
The first class cabins may not make much money via ticket revenue considering the space they take up, but they are important to the brand, and good branding is worth a premium in the airline industry. That alone could ensure the survival of first class in the airline industry for a while yet.