A380 premium focus may soon turn to low cost
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The early days of the A380 have spawned unprecedented luxury in premium classes, making the most of the exclusivity factor to promote both the new aircraft and the operating airline itself. Singapore Airlines expertly exploited the fact that it was the first to fly the new generation aircraft and, well before its first flight, had generated massive publicity for itself with an online auction.
The early days of the B747 – the last time there was a size step-up of such magnitude – had also stimulated PanAm to carry a grand piano in its upstairs bar for some time. But that marketing approach changes over time, and jousting between airlines with their A380 configurations is beginning to spread, as more airlines receive their deliveries. Anyone who has travelled long haul in the back of a B747 recently will bear witness to the fact that, well, things change. The closest you will get to a grand piano in row 63 is what you hear on an iPod.
The fact that one customer had been prepared to pay over USD100,000 to be sitting (lying) in SIA’s first class bedroom suite on the first commercial flight of the new Airbus achieved headlines acros all of the world’s media. With all the hype around the aircraft and its various fit-outs, this week in Dubai, British Airways’ Middle East manager felt obliged to flex some premium muscle.
BA is putting its B747s up against Emirates’ A380 on the London-Dubai route but, he said, BA’s A380s will in due course be configured with a “significantly larger” business class section than Emirates’ (which carries 514 seats in its A380 three class configuration). BA won’t receive its first A380 until 2012, when it plans to place them on its busiest routes, such as Hong Kong, and the US west coast.
But, when this ego-competition slows, any aircraft that is capable of carrying more passengers will eventually do so – just like the B747 before it. There is an economic gravity force that encourages higher seating density. That gravity field is influenced by two main factors: the passage of time (so that the exclusivity factor ceases to generate higher yields); and the prevailing economic climate (will there be enough premium passengers to fill the acres of premium space?). The limited price-sensitivity of premium travellers means that the ability to fill business class seats by discounting is lower than for the leisure segment, making it harder to stimulate traffic by reducing fares. That means expensive empty space. Putting in more economy seats, which can be filled with low fares come what may, becomes a better – if lower profile – option.
But a comparison with the step-change from the B707 to B747 does not fully illustrate the upside options with the A380. For example, the lowest of the A380 seating densities so far announced is Qantas, which takes delivery of its first order next month. The Australian airline, whose international stage length profile is one of the world’s highest, is to be configured with only 450 seats, contrasting for example with SIA’s 471. That means that, in theory, it could actually pack around twice as many seats into an all-economy A380 configuration. The shifting B747 configurations never offered an increase of that magnitude. (Interestingly, Qantas’ two class B747-300s currently also carry 450 seats.)
Consequently, the temptation for upsizing will become vastly greater with the new aircraft, when such remarkable improvements in seat cost are possible. Weapons of the calibre of the A380 can only move inexorably towards higher seating density. And, as business markets slow, and the curiosity value of the A380 diminishes, that temptation to exploit better seat economics will necessarily grow.
- Short haul/high density services: 604 seats in two-class configuration (eg for India);
- Medium haul/ “11-hour routes” (including London): 514 seats in three-class configuration;