Airlines go beyond first class to adapt to luxury-seeking flyers

[DALLAS] Caviar, champagne, stretch-out-as-far-you-can legroom and 27-inch seatback screens. Americans are happier than ever to part with their money for a better flying experience – economic uncertainty be damned – and airlines are shaking up their cabins to cash in on the demand.

United, Delta and American are among the major US airlines overhauling their cabin layouts, including adding private suites on some widebody international flights, in a competition aimed at luxury-seeking travellers.

“There was probably always more demand for premium, but we simply weren’t meeting the demand. We didn’t have enough products,” United Airlines Holdings chief executive officer Scott Kirby said during a recent interview with Bloomberg News.

While the company had been offering bigger seats, it stopped short of including other comforts, such as posh food or the latest in-flight technology. Now United is offering those extras and Kirby said, flyers are indulging.

“More customers are buying up into the premium product. They are saying it’s worth the extra however much to buy a better product,” he said.

Experts say such changes are linked to the push for a better, and more personalised, flying experience, fuelled in part by the brief trend of extending business trips to add personal time and the short-lived “revenge travel” that followed pandemic lockdowns.

“There has been such a shift where consumer expectations are higher than ever,’’ said Emily Weiss, senior managing director at Accenture. Airlines are trying to align their cabins with that shift, she said.

But the change has come at the expense of the workaday economy seats that most Americans are used to buying in the rear portions of the plane. At a time when economic uncertainty is driving a consumer spending pullback on ordinary items, the largest carriers are betting that upper-income passengers’ travel habits will be more durable, even during downturns.

“Over the past decade, premium revenue growth has outpaced main cabin revenue growth,” wrote Deutsche Bank analysts in a recent note. These high-end customers are loyal, taking advantage of other brand-related offerings, such as a credit card and other activities, “all of which can enhance profit margins”, analysts said.

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United’s upgrades

United chief commercial officer Andrew Nocella has said Premium Plus, the cabin between economy and the airline’s poshest Polaris seats, is ripe for expansion. “That’s the cabin that’s generating very good returns,” he said.

In May, United unveiled its Elevated interior on Boeing 787-9s that will operate mainly on international routes. The initial aircraft, with 99 premium seats, or about 45 per cent of the total, will start flying in 2026 between San Francisco and Singapore and San Francisco and London.

Those planes will have eight Polaris studio suites with more room, doors for privacy, lie-flat aisle access seats and 27-inch seatback screens. Amenities also include hoodie pyjamas and slippers, noise-cancelling headphones and caviar service.

The carrier expects at least 30 of the planes in its fleet by 2027.  Premium revenue rose 5.6 per cent in United’s second quarter, while the economy cabin was negative.

Two decades ago, there was a big gap between what first class offered versus economy seating, and few customers took advantage of the high-end option, said United’s Kirby. Now customers have more choices, including in the coach cabin, and they like it.

“The truth is, we have made it better for everyone,” he said.

Premium experience

Customers travelling in the top-class suites routinely get priority handling for check-in, security, boarding and baggage, as well as access to lounges.

“This experience is beyond just the suite or the seat specifically,” Geoff Ryskamp, vice-president and executive advisor for hospitality at Medallia, which advises companies, including airline,s on customer experience. “It’s not really what’s happening on the aircraft but begins with the booking experience and extends through baggage claim.”

The largest carriers sweep in billions in revenue through their credit card and loyalty programmes. Loyalty plan memberships have swelled as airlines linked them to free onboard Wi-Fi and increased the number of ways to earn points when using credit cards co-branded with major banks. Consumers who join the programmes often acquire credit cards and, over time, travel more and migrate to premium travel.

Delta Air Lines will have a record number of premium seats next year, while main cabin domestic will be flat to slightly down, president Glen Hauenstein has said. Well over 50 per cent of its revenue is tied to premium products and services, non-ticket fees and credit card spending, he said at a September industry conference.

Delta began flying Delta One suites in 2017. The airline has been actively expanding premium cabins in domestic and international markets, enabling it to both sell more upscale options and reward its most frequent flyers with upgrades, Hauenstein has said.

American Airlines Group began flying Flagship Suite seats in June on a new Boeing 787-9 aircraft. The carrier expects to have 30 new 787-9s by 2029, helping increase its lie-flat and premium economy seating by half by the end of the decade. The Flagship Suite eventually will also be on the carrier’s retrofitted Boeing 777-300s and Airbus SE A321XLR aircraft.

American’s 51 Flagship Suites, including eight that are larger preferred versions, feature privacy doors and more bed space and living area. The lie-flat seats have a  “chaise lounge” option, and there’s a wireless charging pad and multicourse meals. The airline’s 32 upgraded premium economy seats include adjustable leg and foot rests and other frills.

Delta last year grew Premium Select from international routes to the domestic market on some New York-Los Angeles service. American will begin offering its Premium Economy class on New York-Los Angeles flights in October.

On both carriers, the seats come with priority check-in, security and boarding, amenity kits, more legroom, hot entree choices and a pillow and blanket. BLOOMBERG