IT’S NOT OFTEN YOU HEAR AIRLINE BOSSES saying they feel good about the coming year, but with plummeting oil prices and many of the world’s major carriers recording excellent 2015 profits, the outlook is as positive as many can remember.
As the year began, Delta revealed a healthy US$5.9 billion pre-tax profit for 2015 and was bullish about this year, forecasting savings of US$3 billion in 2016, mainly from falling fuel prices. The business traveller has reasons to be cheerful as well, because 2016 will see more of the big carriers guarantee flatbeds in business class after concluding refits lasting several years, while others will introduce premium economy cabins and new aircraft types. There are hints, too, that airlines are more prepared to be flexible in how they sell in the future, with at least one carrier testing a modular approach in premium economy.
Jake Cefolia is United Airlines’ vice-president of sales for the Americas. He sums up the mood among major carriers, at least in the US, by the fact that the airline is launching a range of ambitious routes this year, including San Francisco-Singapore and its 13th to China (San Francisco-Xi’an). “That has to be an indication that we are optimistic,” he says. United also enters 2016 with its fleet completely retrofitted with new business class cabins, plus it is trialling a buy-what-you-want approach to premium economy with the soft launch last December of its Essentials and Enhanced packages. These are options for passengers buying its Economy Plus product – which until now has offered little apart from a few more inches of legroom. Essentials adds just a checked bag, while Enhanced, aimed at the corporate flyer, adds lounge access, mileage points, early boarding and priority treatment at some airports.
United will evaluate how these two concepts go in the next few months before a full roll-out. Cefolia says the airline doesn’t yet know if this will be a precursor to offering a full premium economy product. “It’s something we have been evaluating for a long time,” says Cefolia. “There’s a fair amount of revenue risk in the gaps between premium economy and business. You open yourself to people who were historically business customers buying the lower fare. You can offset that by people buying up, but that is the maths you have to do – in the past, we have run the maths and said that we liked the course we are on.”
One carrier that disagrees is United’s rival American Airlines, which debuts a proper international premium economy cabin in late 2016. This is a major step up from Main Cabin Extra, the basic extra legroom section in economy, which will remain an option. Passengers in the new cabin get leather seats with a 38-inch pitch, larger TVs and noise-reducing headsets plus upgraded meals and wifi. The seats will first appear on new Boeing 787-9s and will be fitted on most of the airline’s long-haul fleet within three years.
AIRBUSES COMING ONLINE
The 787 is now more of a regular sight at the world’s airports, but Airbus’s answer, the A350, is still a rarity. Several carriers will put the aircraft into service in 2016, but Finnair, which introduced it on Helsinki-Shanghai in November, followed by Beijing in January, became the first European carrier to put it into regular service. Finnair features the latest business class cabin on the aircraft, which has the 1-2-1 layout that is becoming standard due to passengers’ dislike of stepping over others to exit their seat.
Singapore Airlines puts its first A350 on the Amsterdam run in April; again, this is complete with a new design business cabin and its already renowned premium economy section, which it introduced last autumn. Ten of these aircraft will join the fleet this year, part of a total order of 63.
Other A350 debuts include TAM, which will use the aircraft on Madrid-Sao Paulo from April and Cathay Pacific, which will use it to launch Gatwick-Hong Kong from September 2. Cathay’s A350 will feature a tweaked business class seat design and wifi, but the major change is likely to be premium economy, which gets padded legrests and more legroom.
Meanwhile, Air France will finish the refit of its cabins this summer – a few of its Boeing 777-200s need to be completed, plus its Airbus A380s (the airline’s flagship). The A380s were the most recent entries to the fleet and consequently have cabins that are up-to-date, but not now uniform with the rest of the fleet Its partner KLM is similarly close to fitting its new World Business Class throughout. All KLM’s Boeing 747s and 777-200s are finished and the remainder of the fleet will be done by summer, so both carriers will offer flatbeds for the first time.
Business class on these two airlines has become much the same, but premium economy is a world apart. KLM’s premium economy product is far more basic, offering only the same seat as economy but with more legroom, unlike Air France, which has a dedicated cabin and upgraded product.
“That will not change,” says Warner Rootliep, general manager Air France/KLM UK and Ireland. Not, perhaps in the immediate future, but surely there has to be a time when the two brands come closer together? Meanwhile, Rootliep adds that there has been a “huge improvement” in customer satisfaction with KLM’s new business seat, while another innovation from KLM for 2016 is a dedicated phone concierge service for platinum cardholders that Rootliep says is “unique in the UK”.
One carrier still playing catch-up is Emirates, which has yet to standardise its business class cabin. The airline is expected to continue refurbishing its Boeing 777-300ERs in 2016, some of which still have inclined flatbeds. The carrier’s other key development this year will be the unveiling of its Airbus A380 first class product. Etihad’s world-beating A380 first class private rooms, called ‘Apartments’, are the inspiration, but Emirates’ will be a scaled down – and more affordable – option, likened to a private railway carriage. Not to be outdone, Qatar Airways has promised to unveil “a business class bedroom” in 2016.
Inclined flatbeds are becoming a rarity, so it’s no surprise to see the competitive emphasis switch to other cabins. Airline chiefs are scratching their heads to see what USP they can come up with now that business class cabins have become much of a muchness, albeit a very comfortable one.
STREAMING AHEAD
Another trend becoming apparent is the change to in-flight entertainment. United continues to offer free entertainment via seatback TVs, but on international flights, its new portal offers streamed content that is different to the TV library. The weight and cost saving for airlines of replacing personal TVs with streaming in the future is considerable and United admits it is “a possibility”, but Cefolia adds that fitting in-seat power throughout to power all those laptops and tablets will take some time.
More enhancements by other carriers will be visible throughout the year. For example, the Boeing 747 is no longer British Airways’ flagship, but it still has 40 in service and 18 of these are being refitted with a refreshed interior. Five are now in service on some flights to New York JFK, Chicago, Lagos, Dubai, Boston, Riyadhand Kuwait, with further routes to be added this summer.
These 747s are known as the High J type, as they have a large proportion of premium seats. The new Panasonic EX3 entertainment system includes more than 130 movies and 400 TV programmes on larger, hi-resolution screens, while World Traveller Plus now offers a universal power socket at every seat, as well as USB socket to power phones and tablets.
Towards the end of 2016, Qantas will finish refitting its Airbus A330s, which are used mainly on routes to Asia and China plus longer domestic routes. These will have the new Business Suite seat design, and new entertainment systems throughout. Swiss has received the first of its new Boeing 777-300ERs with the latest business cabin, one that is to be standardised among Austrian and, from 2020, Lufthansa, albeit with different soft furnishings. The Swiss 777s will also boast a new first class cabin in a 1-2-1 layout that will feature 32-inch TVs and wardrobes incorporated into dividing screens.
Malaysia Airlines will start a major upgrade in April, when the first Airbus A330 is fitted with flat business seats and 16-inch TVs. The refurbishment is, however, unlikely to be extended to the A380s used to London.
ATTRACTING BUSINESS
One wildcard for 2016 is Norwegian Air Shuttle, which introduces new routes to Boston and San Francisco’s secondary Oakland airport in May. The latter route will start days after BA’s new San Jose service. Norwegian hopes to be a budget option to Silicon Valley. “Oakland has the potential to be a business route due to the tech companies based there,” says a Norwegian spokesman. “Gatwick’s traffic, as a whole, is 20 per cent business – that is a goal for us, but we have to have the frequency.” The airline, which is now daily on the Gatwick-JFK route, says it has “not quantified” how many business travellers it is attracting, but admits it is still “overwhelmingly leisure”.
That could change this year, however. Norwegian introduced the first of its Boeing 787-9s to Gatwick in February, where it now has three long-haul aircraft. Last October, the airline agreed to purchase 19 of these stretched Dreamliners, which will mean it will have 38 long-haul aircraft by 2020 – roughly the same number as Virgin Atlantic.
Norwegian has no business cabin, but its premium economy section, which has a 46-inch pitch, is a match for many, particularly as it includes lounge use. The airline has just appointed a UK manager for its Norwegian Reward frequent flyer scheme, which gives cash discounts on ticket purchases. “That’s an indication that we are serious,” says the spokesman.
To underline this, Norwegian recently took a delegation of ten small- to medium-sized enterprises [SMEs] to New York on a trade mission to pitch to contacts there. The spokesman adds: “If you don’t have a corporate account, being able to fly to the west coast for less than £300 opens a lot of doors”.