Dan Reed writes in Forbes that the decline in international 3-cabin first class amongst US airlines is the result of low price competition from the big Gulf airlines.
The Gulf carriers are not dramatic low price/low frills discount carriers along the lines of U.S. low price carriers like Spirit, Allegiant or even Southwest. In fact all three get extremely high marks for the quality of their inflight services. But they consciously are keeping downward pressure on the price of premium class international fares.
…The new United now offers upgraded “United Global First” service on some really long, high-demand international flights but only “United BusinessFirst,” on other international flights. Similarly Delta has introduced what it calls DeltaOne as a new-and-improved version of its former hybrid premium product called “BusinessElite.” But neither carriers offers what can rightly be called a conventional first class seating product.
In fact, among the big U.S. carriers, only American retains a conventional first class section on its international flights. And in light of the growing price competition for international premium class travelers one has to wonder how long it can afford to retain that expensive form of differentiation? The question takes on even more weight in light of the fact that American now is being run by the top managers of US Airways, who engineered the deal that merged the two carriers in late 2013. US Airways never had much in the way of international service, but the few international flights they offered only a hybrid premium section called “Envoy Class.”
US airlines do not offer a true competitive international first class because
- Very few US markets support it, the way that some European and Asian hubs do. US businesses don’t pay for it. Hollywood studio contracts now allow for business class. There’s simply a changed landscape in the US.
- US airlines aren’t capable of delivering the kind of quality international first class that foreign competitors do. Even with comparable hard product (which neither United nor American has had in 15 years), they cannot deliver the same level of service their competitors do. And they haven’t offered comparable food and amenities in 20 years.
United Global First Seat
United first class
Remember that Delta killed their international first class decades ago. Contra the suggestion in Reed’s piece, US Airways eliminated their 3-cabin international first class service prior to being acquired by America West.
United has a first class seat on legacy United 777s and 747s. But it’s a 10-year old seat that wasn’t state of the art when it was installed, with food/service/amenities that are closer to business class. That’s been the case since before the ME3 started growing rapidly to the US.
He writes that “among the big U.S. carriers, only American retains a conventional first class section on its international flights” but United has just as much a first class as American does, albeit one they’ve planned to eliminate.
Indeed, American’s plan for the past several years has been to eliminate first class on all but their 777-300ER aircraft. They only have so many first class seats left because the 777-200 reconfiguration project has been so slow (Zodiac seat delays).
American says they do sell their international first class seats on Dallas – Hong Kong. One problem over the past year was they were running aircraft with a first class cabin to Sao Paulo … something they’ve rectified with the economy cratering in Brazil.
The US-Hong Kong market is high revenue
It’s the high quality first class of Emirates and Etihad that creates a halo effect over the rest of the product and makes us think they’re fantastic. Remember that Emirates offers angled business class seats (!) on all but their A380s, and 10-abreast seating coach on their 777s (like American’s new product but unlike United so far or Delta).
Emirates A380 First Class Shower
American, Delta, and United are nearly fully flat in business on international routes (sans those still-unreconfigured planes at American….). Their Middle East competitors are not. At American it’s lie flat, all aisle access.
Indeed, while passengers used to avoid flying American in favor of BA to London, American now offers the far better business class product.
Discounting by Delta in business class hardly signals the end of international first class. That’s been a changing market segment for a long time. Lufthansa has downsized the portion of their fleet with first. BA has slightly. Cathay Pacific runs long haul flights without first, and has only 6 first class seats on the planes that offer it. It’s a niche product throughout the world, though still a profitable one in some places, airlines have just gotten better at making money by deploying the right products and right-sized products in the right markets.
Cathay Pacific First Class
There’s nothing nefarious there. US airlines shouldn’t be trying to deliver a product that their customers don’t buy in most markets and that they aren’t capable of delivering. They’re making money hand over fist, but competition is heating up as a result of low fuel prices and a tough revenue environment.
Like Maslow said, let’s not try to fit every aviation development into the US3 vs ME3 box. (“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”)
A well balanced perspective on 3 cabin First.
If only the UA forum on FT would read and understand it. They’re all living in 1995.
I’ve worked for UA, DL, and EK in the past. At DL in the late 90’s, I was involved with the decision to go from a 3 cabin airline to 2 cabin. Analysis at the time showed DL was getting roughly (if memory serves) only around 13% of paying customers in international F. The balance was largely operational upgrades from business, frequent flyer upgrade and mileage awards, and employees. Thus the decision to move to a larger business class cabin, at the expense of first, was an easy one, though not without controversy.
A similar analysis was done at UA, and the numbers were higher for paid F, though not dramatically so. I think it was still less than 20% on a system basis, but obviously certain routes e.g. JFK-LHR were much better. Nevertheless, management at the time didn’t want to touch it. the prestige of being a 3 cabin international airline was deemed more important.
At EK, the numbers are dramatically higher on a percentage paying basis. Although, when you do the same analysis on average fare paid, I’m not sure the evidence is as clear. Bottom line: there are different ways that airlines approach decisions, and what seems right for one is not necessarily the best for another. However, blaming the Gulf 3 for removing true first from US carriers is ridiculous and has little basis in fact.
It seems to me that it’s more a matter of ‘class creep’ – e.g. business class in 1985 was more akin to a present day EconomyPlus or Main Cabin Extra seat with better catering and what was then First Class equates roughly to a present day business class experience. High end on-board suites have no real analog in the past and are experienced by very few travelers (especially if they’re traveling on their own dime).
Great read, thanks for sharing Gary.
I think in a lot of ways even though AA does have a first class product, it doesn’t seem to take as big of a jump from its business class seat. However, Emirates’ first class suites are quite a step up from its business class, and the same goes for Cathay Pacific as well. Without a dramatic jump in the quality of soft or hard product, I just don’t get how this can sell any better than it is now.
I disagree with the notion that AA offers a “true” longhaul first class product… It’s as “first class” as United’s Global First, with perhaps a slicker (though less private) seat on the 77W, a minority of AA’s three-cabin aircraft.
In virtually every other respect, it’s business class, and reflective of the fares the product is able to generate, whether it be by EVIP upgrade from a paid business class ticket or a discounted paid fare.
“Indeed, while passengers used to avoid flying American in favor of BA to London, American now offers the far better business class product.”
Gary, I’m flying to London in a couple weeks (ex-ORD), and I WILL be avoiding American in favor of BA. Angled lie-flat makes that an easy decision. Still will be a good amount of AA angle flat seats for the next year or so.
As a person who flies 350k plus in Business and First on ALL US carriers I can say they are fine so quit your whining. It gets old after a decade. I have flown extensively on GCC carriers as well so I am qualified to speak. Sometimes when I read these blogs I think “If you want a private jet experience they pay for one!” -If you wanna talk about important things then compare these foreign carriers to the US and who is flying the plane? -A friend of mine who was a Head pilot instructor and trainer for a major UAE carrier told me that in 2014 they have fired 50 pilots who had faked their hours just within their company alone and he had reports from his counterparts at other carriers that they had taken similar actions. However in countries where media reports are closely monitored you dont exactly hear those things. Luckily we in the US we operate the MOST amount of planes in the world. Which means we own the most planes and we have the most amount of pilots. You can’t compare a huge fleet with ones that are a fraction of the size and expect our companies to redo all the cabins just to try to show them up. That’s not what we should focus on. As for me with in-flight services I eat before I fly because its not good to eat under pressurization anyways so I dont care about the food. I require a fully lie flat seat so luckily business and first with the 3 US majors have that. Most importantly is who we have flying our planes -something that those carriers continue to try to poach from because they know in the US we have the best flight school programs and some of the best pilots in the world. -A fancy seat and service is nothing without the talent in the cockpit and scope and size of the carrier to support that. Oh and that pilot friend returned to the US after a few years and took a job back at United. He said he didn’t like the mentality of the corp environment and he especially didnt like it he was trying to land an A340s and was being fired upon in Peshawar! #truestory
Angled flat doesn’t bother me much, but the US daytime PHL-LHR flight in the 757 isn’t even that. It’s straight up recliner. Big mistake and I’ll stick with the A330 from now on.
Angled flat is the worst. Expericed it in LH J and it was the absolute worst seat I’ve ever been on. At one point I even considered reversing position (head-toe) but figured it’d only be worse, if that’s even possible.
Fully flat J seats are the future for revenue generation.
@Chris
I don’t doubt your numbers but the “if you build it” piece is only half the puzzle. Sure you can have a real F product but the bean counters for the US legacy carriers have kept chipping away the real F experience. Cutting corners on items such as food and wine, and ground experiences whiles competitors abroad kept it going strong. Why anyone would pay a full rate for UA GF at this point is beyond me.
Thank you Gary! Finally, someone who understands that US carriers can’t operate true first class! I’ve been defending this POV for years on various airline forums.
It just doesn’t make sense for the majority of routes served by US carriers.
I agree with those who say that it is the improvements to international business class on the US airlines in the last 20 years that have made it so that first is only a small incremental improvement, and so more people believe it is just not worth paying for. I take first occasionally for miles or when I get an inexpensive buy-up option, but when I do it just serves to reinforce that it is not that much better. It is the seat that is the important thing. (Personally, I don’t mind the angled lie flat, for example on AF, but I think it is personal preference.) Oh, and whenever I am looking, I don’t find the Middle Eastern airlines to be the low cost option.
The lie-flat business class seat was clearly the death knell for three-cabin service. What more can an airline realistically do for you? There aren’t enough sheiks and move stars to justify a third cabin. And the US doesn’t have the right service culture to support it even if there was some demand.
Ironically, if I’m flying biz class, I don’t WANT a first class cabin. I want the airline to be offering me “the best they’ve got” — not holding something back to give to the handful of pax further front. Indeed, when I was selecting a Cathay NYC-HKG flight earlier this year for biz class, I chose the EWR service because it didn’t have three classes! If other biz class travelers feel this way, it could more profitable to nix first class.
JR, I agree with your comment 100%. I wander if we have a mutual friend who is the Head Pilot training instructor in Colorado. Anyway, all the whining about food and very few travelers mention the safety and skills of the pilots in the cockpit. We have been flying on United on their “old” 777-200 between LAX and HNL and other areas 10-12x year. We flew with Continental before the merger and we loved it. But even now we have good experiences with United. Their Honolulu based crew is always pleasant and service oriented. We buy business first most of the time just to have more leg room and comfort. Getting there safely is our priority, our flights get there on time or early and our luggage does not get lost. We tried Delta but our experience was not good. Hawaiian is good, but they do not have TSA Pre or a lounge at LAX. I guess is all a matter of preference.
First class Shmirst Class. Same attitude to Business class, etc. The back half of the plane gets there at the same time as the front of the plane. I’d rather spend money OR points on more flights, not cushier ones. Who needs a laz-y-boy recliner to get from the US to Europe? Man, my grandparents were WEEKS in a crappy boat to get across the ocean, I can sit up for a few hours!
Talk about first world problems!
Sub. (Forgot to specify)
Gary — Very nice write-up to give us thought about the evolution of premium class airline travel the past few decades. It also makes us appreciate that much more, the opportunities we currently have to book award seats in true international first class.
Actually, on my great-grandparents’ boat they had a lie-flat. But the F&B weren’t very good. Also no PDB or amenity kit. On the other hand, they were in their early 20’s. I flew long-haul economy in my 20’s, but have a hard time with it now.