Signs of the Economic Times
Qantas and Cathay Pacific latest carriers to adapt premium cabins to ‘the new normal’
19 November 2009 | The economic downturn and the resulting sharp decline in premium business travel is forcing network carriers to re-think the seating configurations in their long-haul aircraft. As recovery seems not to be coming soon, airlines one by one are taking steps to rightsize their premium seating. For example airlines with a relatively large exposure to business travel, such as Lufthansa, BA, and Qatar Airways, have already reduced their premium seat capacity, while Air France says it is accelerating the roll-out of its new premium economy class to appeal to cost-conscious business travelers.
Qantas is the latest airline to announce a reconfiguration of its long-haul fleet, saying it will replace a number of first and business class seats due to the drop in premium demand. About 15% percent of premium seats are expected to be cut. According to Qantas CEO Alan Joyce “it is very clear the productivity is not right – we have too many premium class seats on many aircraft.” Joyce admits the reconfiguration of aircrafts may cost the company “a lot of money”, but says the plan will provide “a better revenue-generating alternative.” Earlier this year, Qantas already suspended its First Class cabin on several routes, upgrading some business class passengers to First Class instead (with business class catering) at no extra cost. Read full article »
Air France restructures its short-haul product to counter loss of passenger to low-cost carriers
12 November 2009 | Air France has anounced it will restructure its European service to counter the loss of passengers to low-cost carriers and to make its short and medium-haul business (which account for 40 percent of its revenue) profitable again. Air France says the new European product will increase its market share by lowering its cheapest fares with 5 to 20 percent (depending on the route) and its most expensive tickets with 19 to 29 percent. Customers will also be allowed a greater flexibility to change bookings. The restructuring also means lower operating costs for Air France, for example by serving simpler meals and increasing the number of internet bookings. Air France’s new Europe product will come into affect from April 2010, with tickets on sale in January.
According to Air France, its customers (passengers, travel managers and travel agents) all indicated they want two clearly differentiated products for short-haul air travel. At the one hand, they want a simple and inexpensive economy product, and on the other hand a more affordable premium product, for those that require additional flexibility, more comfort and a more efficient journey. According to Air France CEO Pierre-Henri Gourgeon “regarding short-haul travel, customer requirements have changed. They now want reliable, efficient air transport, with an appropriate service, at the lowest possible price, while retaining the Air France touch”.
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ANA to monetize business class perks with ‘MyChoice’ program
4 November 2009 | All Nippon Airways (ANA) has introduced a new ancillary revenue program, called ‘MyChoice’. The idea behind ‘ANA My Choice’ is to offer Economy passengers paid access to services that were previously only available to business class passengers. The program starts on December 1 with a limited number of paid-for services and ANA says it will introduce more services during 2010.
On the ground, ANA Economy passengers can purchase access to ANA’s airport lounge at Haneda for JP¥5,000 (USD55/EUR40).The introductory fee until the end of January 2010 is 4,000 yen. On board, light Business Class meals, such as a rice ball and miso soup set, are available for sale to Economy passengers for JP¥500 (USD5.50/EUR4) until the end of January, then the regular fee is 700 yen. Also, business classs wines and shochu (a strong liquor) will be sold for the introductory price of JP¥800 (USD9/EUR6) per glass (regular fee is 1,000 yen).
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Iberia to set up new ‘lower-cost’ feeder airline to serve Madrid hub
Picture courtesy of Matt Hintsa
28 October 2009 | The economic crisis and fierce competition from low-cost carriers and high-speed rail are forcing European network carriers to think about structural changes in their short-haul operations. One of the hardest hit airlines is Spanish flag carrier Iberia which has lost some of its most lucrative domestic routes to Spain’s expanding high-speed train network, while low-cost carriers (Ryanair, Easyjet) have hit its European services. In what Iberia calls nothing less than a ‘paradigm shift’, the airline has announced plans to replace its domestic and European operations with a new lower-cost feeder airline and focus the main Iberia operations on profitable long-haul sectors, mainly to Latin America.
Iberia said previous measure taken, including cuts in staff and capacity and the grounding of aircraft, had proved insufficient and that the current situation is unsustainable, saying: “We have a structural problem in our domestic and European operations. Thus we are proposing a total different model, with markedly lower operating costs and no ‘legacy’ work practices, which will allow us to compete with other carriers and the high-speed train.” As part of its restructuring plan Iberia will also lay off all flight attendants above the age of 55, and wages are frozen for two years for all employees.
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