With $ 4,000-a-night hotels opening with great fanfare in Manhattan and Mayfair restaurants serving steak wrapped in gold leaf making record profits, it’s safe to say that the super-rich are weathering the current economic storm well.
When it comes to flying, however, it might be time to start playing your little violin. This is because the mega-rich may soon have to start slamming into business class with the simply very wealthy. American Airlines just announced it is moving away from first class on international routes and is not the only carrier phasing out its more expensive cabins.
At a time when the gap between haves and haves is only widening, the move may surprise some. But after a major pandemic, airlines are making radical moves to bolster their profits.
Explaining the decision, American Airlines chief commercial officer Vasu Raju said, “First class will not exist on the 777, or indeed on American Airlines, for the simple reason that our customers are not buying it. Replacing first class with additional commercial offerings will allow the carrier to deliver what our customers most want or are willing to pay for. “
The question then becomes: why don’t the very rich book first class seats? And given the incredibly high prices, why don’t seats make money even when the cabin isn’t full?
A high-risk cabin
“First class is a complicated product to offer nowadays, with huge expectations and huge costs if it empties,” says Gilbert Ott, aviation expert and founder of God Save The Points.
Certainly the costs involved are high. World-class food is, on average, 20 times more expensive than budget meals according to Mike Arnot’s 2019 book Chefs at 35,000 Feet: The Secrets Behind Airline Menus. So even if you start with a skyrocketing rate, your profitability soon drops. First class flights to New York in February next year, for example, start at around £ 4,100, while the economy comes in at around £ 375. The more than 10-fold increase may seem significant at first glance, but if you considering those expensive meals, plus fine wines, beauty services, and lounge facilities, it’s not hard to see how they might not turn out to be a guaranteed round of money.
Discerning customers who have been exposed to ever more luxurious travel experiences expect a truly extravagant product, as evidenced by the double beds offered by Etihad and Singapore Airlines, which describe their first class seats as “residences” and “suites”. The latter also has a separate bed and swivel chair for its senior ticket holders. Emirates, meanwhile, offers draft caviar, vintage Dom Pérignon, and the opportunity to shower at 35,000 feet. All of this comes at a huge outlay, and other airlines may not feel it is worth the investment, particularly if the cabin is not full on every flight.
Ott also points out that many business travel policies no longer allow first-class travel, due to economic pressures and the significant improvement in business-class cabins. Given that one of American Airlines’ most popular routes is the classic transatlantic business hop from New York to London, it follows that first class cabins could regularly remain empty and that opting for more business class seats instead would increase revenue.
Ben Mutzabaugh, senior aviation editor at The Points Guy UK, agrees, but says the change could be purely a matter of labeling. “Premium cabins on long international flights are most frequently purchased by corporate travelers flying at their airline’s expense. Of the large companies that allow employees to fly in premium cabin, many have policies that allow them to book in business, but not before. Thus, by moving the title of their offering from “first” to “business”, this allows airlines to keep their premium cabins in the corporate customer policy. “
In fact, some airlines, such as Virgin Atlantic, already don’t distinguish between first and business, with its flagship product simply called “Upper Class”.
The irresistible rise of business class suites
One of the main reasons first class is on the decline is the luxurious evolution of the business class, or more specifically, the arrival of doors. Qatar Airways changed the game when it launched its Q-Suites in 2017, essentially small pods with sliding screens for maximum privacy. White Company pajamas, imaginative skincare products, and meals on demand are other perks of the product, which eclipse the first-class offerings of many airlines.
To remain competitive, other airlines have been forced to raise the bar. Delta, Etihad, All Nippon Airways and China Eastern are among those who have introduced “mini-suites” with business class doors, with more airlines planning to introduce the product in the coming years. American Airlines will install mini-suites by 2024, while British Airways has muddled doors into business but not first class, perhaps indicating where its priorities lie.
And it’s not just privacy that’s improved in business class. Emirates has its own bar on board, where smiling staff will make you a martini for breakfast whether you have a seat in first or business class, and fine wines are served as standard across the board. Inevitably, these updates have somehow cannibalized the first class. What is the need to spend thousands of extra dollars for a few more inches of space or a spoonful of caviar when business is so high?
Jenny Southan, founder and CEO of travel trend forecasting company Globetrender, sums up this point well. “The business class keeps getting better and better. The question is, why pay for first class when business class offers everything you need? For many airlines it makes no sense to have a first-class cabin that isn’t always booked when they could install more business-class seats instead, so they’re demolishing it. “
A low-cost offer for the pandemic
The weakening of the first class could also be blamed on pandemic protocols. The Covid measures have taken away the unbridled luxury of the first class: think of meals with plastic covers to avoid contamination, masks to wear all the time and less personal service. During the height of the crisis, Virgin Atlantic refused to serve alcohol in its upper class cabin, while others, including Qantas, Singapore Airlines and Lufthansa, stopped selling front cabin tickets altogether. The memory of this less-than-premium experience may have remained in the minds of ultra-wealthy travelers, and indeed some airlines still require masks to be worn on flights. Others may have become more used to traveling by private jet in the past couple of years and may not be in a rush to return to commercial flight.
A disjointed global picture
The collapse of the first class is not total, in fact the product is still flourishing in some markets: in particular Asia and the Middle East.
“Singapore Airlines still has its most ambitious first-class seats and Emirates continues to set new standards,” says Ott. “In Europe too, Air France and Swiss have done an extraordinary job creating exclusivity with these cabins. I’d say first class isn’t dying, it’s just shrinking, but even then, not everywhere. There may be fewer seats, but the seats they are launching are more beautiful than ever. Airlines are getting smarter about waste. No airline wants a single seat to go out bottomless ”.
For Southan, the first class will continue to thrive in some regions of the world due to entrenched class divisions. “There will always be a need for first class on some airlines for certain markets such as the Middle East and Asia, where there is a stronger sense of corporate hierarchy and privilege of society. The first class is not necessary: it simply works as a way to show others that you are richer and more powerful than them. “
And that may be what ultimately saves the first class: the enduring human quality of wanting to feel superior, or more special, than others. Through travel and hospitality we have always found ways to order ourselves, whether by booking bombastic hotel suites, ordering those gold-drenched wagyu steaks, or paying for lounge or club access. All-inclusive hotels have more and more delimited special sections reserved for high rollers, where the only difference might be extra fancy canapes at 5pm. But it’s not about those tasty canapes or the first-rate caviar, it’s about knowing that the others behind you aren’t getting in