Airlines ditch first class to save cash

[Greg McDonald]

From news.com.au:

With global airline losses tipped to top $US5.2 billion this year, novel strategies are being used to generate revenue, reports the Herald Sun.

Singapore Airlines has copied low-cost carriers by charging economy travellers $50 for seats in the exit aisles that offer added leg room.

Other bleeding carriers are making big changes to their premium cabins in the face of falling demand from business travellers.

Philippine Airlines is stripping the first-class seats from its four Boeing 747s, and Air New Zealand is extending the premium economy section in its long-haul fleet.

The plan is to allow newly budget-conscious passengers to trade down from first and business class, says Air NZ.

The Centre for Asia Pacific Aviation reports that Cathay Pacific plans to sell five Boeing 777-200s over the next two years to raise cash, although CEO Tony Tyler is concerned about the ability to find buyers in this climate.

Qantas, Emirates and Singapore Airlines have acknowledged softening demand from the business market.

They fear ticket sales will decline further as the crisis takes hold during the first quarter next year.

Outgoing Qantas CEO Geoff Dixon offered a frank account of what's happening to the national carrier in a recent speech in Melbourne.

He said bookings had deteriorated, particularly in international markets, and consumer confidence had been dented. Fluctuating exchange rates were also curbing demand.

"Overseas holidays have become relatively more expensive for Australians," he said.

Emirates senior vice-president for the Asia-Pacific region, Richard Vaughan said passenger numbers had softened, especially among business travellers from key financial centres.

He said Emirates would report a small full-year profit within a few weeks, but the figure would be less than the $US1.4 billion last year.

The International Air Transport Association, which represents more than 200 airlines worldwide, reported that global passenger traffic in September fell for the first time since the 2003 SARS crisis.

While the effect of the downturn had previously been isolated to the Asia-Pacific region, the problem had since spread to North America, Europe and Middle East markets.

"The deterioration in traffic is alarmingly fast and widespread," IATA director-general and CEO, Giovanni Bisignani said in his September traffic report.

"Even the good news that the price of oil is falling is not enough."

[Johannes C]

About the news on Cathay selling its 777-200 (non-ERs), from what i read in other discussion it is also as a part of the plan to retire its aging 777-200s, they are almost 10 years old now.

But the overall crisis sure do affect the whole business.

[Mike W]

Originally Posted by Johannes C

About the news on Cathay selling its 777-200 (non-ERs), from what i read in other discussion it is also as a part of the plan to retire its aging 777-200s, they are almost 10 years old now.

But the overall crisis sure do affect the whole business.

10 years you say? Yeah, get rid of the old bombs!

[Michael Morrison]

Given the opening up of Taiwan - China flights, CX have probably realised they won't need 15 x daily widebodies flying to Taiwan!

[Andrew McLaughlin]

Originally Posted by Johannes C

About the news on Cathay selling its 777-200 (non-ERs), from what i read in other discussion it is also as a part of the plan to retire its aging 777-200s, they are almost 10 years old now.

But the overall crisis sure do affect the whole business.

It's more a move to rationalise their fleet, and it's better to move them on while they still retain some value. Like Qantas, former CX aircraft are well regarded in the used market. The much more economical A333s carry similar loads to the 772s and are doing well on most of their 'regional' routes, while the non-ER 773s are being used on the higher capacity sectors.

The 744s are slowly being replaced by 77Ws, although they'll retain some for those routes with ETOPS issues or when that extra bit of capacity is required.

The airline is also seriously looking at the 748, but being notoriously conservative as it is, is adopting a wait and see approach to make sure the program is on track and the aircraft can deliver on its promises.

[Edward Terry]

Originally Posted by Andrew McLaughlin

Like Qantas, former CX aircraft are well regarded in the used market.

What kinds of operations would make an aircraft less valuable in the second-hand market?

[Andrew McLaughlin]

Originally Posted by Edward Terry

What kinds of operations would make an aircraft less valuable in the second-hand market?

...when compared to aircraft operated by airlines for longer periods, or on higher frequencies, or from countries with less stringent oversight of maintenance standards for example.

[Saj_A]

With oil prices declining and some carriers now cutting fuel surcharges and baggage fees, airlines will always look at other ways of revenue generation.

Cutting back on First class products isnt exactly a smart move, because for most airplanes, thats what decides whether a flight is profitable or otherwise given that margins are higher than other classes.

Wont be long before some airlines charge for a window seat!!

[Andrew M]

This is the first I have heard that Air NZ is extending their premium economy again !!!

[Andrew P]

Originally Posted by Saj_A

With oil prices declining and some carriers now cutting fuel surcharges and baggage fees, airlines will always look at other ways of revenue generation.

Cutting back on First class products isnt exactly a smart move, because for most airplanes, thats what decides whether a flight is profitable or otherwise given that margins are higher than other classes.

Wont be long before some airlines charge for a window seat!!

for PA, it is very good move as most people in 1st class, are friends and relatives who have bludged a free upgrade

Banjo