New York (AFP) – Airlines are installing deluxe seats, enlisting Michelin-star chefs for luxury menu offerings and designing elite airport lounges as the industry bets its future on growing demand for premium travel. The strategy is expected to accelerate the shrinking share of coach class on many flights, with airlines envisioning as much as 70 percent of passengers paying for enhanced options, if not first- or business class. Airlines face significantly higher jet fuel costs due to the Iran war, but view such upselling as a profitable long-term bet.
Business class seats can each take up floor space equivalent to four basic-level seats, but can be priced five or six times higher, said Volodymyr Bilotka, a professor at Purdue University and a specialist in aviation economics. “Airlines have traditionally been investing quite a lot into the premium offerings because the profit margins are significantly higher,” Bilotka told AFP. In the most recent quarter, American Airlines said premium revenue increased 18.5 percent year-over-year, four points better than the main cabin. The boost has been a bright spot in a travel market complicated by the jet fuel spike, American executives said.
“Premium products generate roughly half of the company’s ticket revenue on approximately 30 percent of seats today,” American said. Besides the traditional differentiation between the main cabin and business class, customers may now pay as much as $200 for more legroom or the ability to sit at the front of the plane and disembark first. United Airlines announced in July that it would offer a new Economy Plus option that allows customers to forgo having a passenger in the dreaded middle seat. United plans to begin this option on some flights at the end of 2026.
In September, JetBlue announced the launch of BlueFirst, a new first-class service on domestic flights. “Customers are increasingly looking for more premium experiences,” said JetBlue CEO Joanna Geraghty.
– Premium’s steady growth –
Since 2020, the number of premium seats on US flights has risen 33 percent, more than double the growth of mainline seats, according to travel news site Skift. United Airlines more than doubled its premium-seat capacity between 2015 and 2026, the airline told AFP, adding that it plans additional options, like seats with extra elbow room. Delta has invested in DeltaOne, a revamped luxury option, with premium wine, “top-of-the-line” food like the Wagyu burger and larger screens for entertainment. To assist with the menu, Delta partnered with Simon Hulstone, chef of a Michelin-star restaurant in Britain, and Andrea Robinson, an award-winning sommelier.
The company plans the service for new Airbus A350 planes, with about 150 premium seats and 161 seats in economy. “Twenty years ago, 90 percent of the seats were main cabin,” said Ekrem Dimbiloglu, Delta’s managing director for onboard strategy and experience, adding that the share of premium seats could soon represent as much as 70 percent on some Delta flights. No major carrier has so far launched service without any economy seats.
In October, British Airways announced that the top level of the two-tier A380 would be entirely composed of premium seats. Consultancy Cirium estimates that premium seats among the 42 carriers in the three major airline alliances (SkyTeam, Oneworld and Star Alliance) and Middle East carriers now represent 19 percent of total volume compared with 17.1 percent in 2019. Other new options include giving customers choice among meal options prior to boarding and free wifi.
There have also been a slew of announcements of new and beautified airport lounges, including by Southwest Airlines, which was once known as a discount carrier. But the increasing tendency of airlines to market to customers who can afford premium amenities could open the door to a discount carrier, although higher fuel costs have added to the challenges facing all airlines.
© 2024 AFP
