As the first few months of the new economic year slides by the hurt is coming, early January is always a “I don’t care” month as the wining and dining of the festive new year is still in the blood, but come February and the festivities have been replaced by the stark reality of well everything.
Airports are crowded still but the numbers are well down as they should be, but people generally are getting on with their lives, the Airlines living on the edge have already long gone (XL and co) and the majors have already mothballed inefficient aircraft and layed off excess staff, for many it will be a relief as the frantic building and capacity numbers level off for a short while, Airlines will moan, but times like these are generally good not bad, excess can be bad for business, efficiency very good, the industry was always good at getting both right.
Here is not to say everything is now hunky dory, its not and not by a long run, it will drop deeper yet, and numbers will drop steadily more and more as the year goes on and still more Airlines will fail or merge, but again the system will be better and stronger for it and there will be real winners and losers, LCC carriers are already seeing benefits, the good ones that is, but prices are very low and margins are very small, but bums on seats are constant and people are still moving around and fuel is cheap, so that is good new for all, Long Haul LCC’s are moving up as well for Air Asia is going along as if nothing is happening around them and more and more markets will open to these models as the industry gets lower and lower, good LCC’s are certainly going into good boom times and more and more so as the economies go south.
For the everyone else they have a huge stinking lead weight around their necks…Business Class, I touched upon this situation in my Journal “The New Bloody Battlefield” back in October 2008, now it is more than that, it is the game changer.
Problem is Business Class was the central core of most Airline’s (Mainly Legacy Carriers) profit centres, but in trying to reap as much as they could from the bounty harvest there was really not much price or service difference between either First and Business class, and the gap between them and the rest of us just got wider and wider.
Another if bigger problem is for the last few years is that most Airlines have pored mzillions into this class, almost all front line carriers have reseated and redecorated this area as if there was no tomorrow, now they are well up a stream without a paddle and very expensive hardware to sell to the same people who can’t afford it anymore,
Super Economy was put in to fill the gap between Cattle Class and the high nobs and it does work very well, but the Airlines don’t really want to push it that much (but they do now), One it pulls down the executives from Business so that was a really big no no. two they take up to much space were as they could in the same space put in extra tourist rows for more bodies (and more Money), so that was a really bad idea too, but now the game has changed around and the Airlines are in a real tiddle of what to do, but the reality is they have no options, Super Economy has to work, problem is what will happen to business class?…..If you are paying today $5000.00 for a Business class seat and you can afford it then the extra $1000.00 for first as this is not a stretch, otherwise everyone in Business is going to go down to Super Economy to save big dollars, so what do you do, do you pull out your Business Class and replace them with Super Economy like Air New Zealand and (up the service and cost) a little, or severely discount your Business class seats (and services) to stop the drift, in other words closer to Super Economy than first.
Another problem with Business is Frequent Flyer Points (FFP) discount the seats, and everyone wants (loves) the freebies, if you are flying Super Economy and if Business is close in price then go for the upgrade or if you fly Business and carrying chunks of FFP’s then why not go Super Economy free to Las Vegas…
So to trends..no doubt a shift in deep price changes for Business Class has to come and quickly, a lot of freebies will go and just as quickly, so the differences between Business and Super Economy will have to be small(er), mostly the lounges and food, more likely baggage, it would be a good move, someone that flys Super Economy regular now would pay an extra $500.00 to fly business for the extras and the Airlines would stop the drift and prestige of regular business clients going really down market and sitting at the back.
FFP’s are going to be tightened to the point of worthless, extras(which cost little) will be the order of the day for repeat business not free air miles, every seat has to earn now, as the loss of high business traffic income will really hurt the bottom line, the trick will be to be flexible in the fact that Super Economy and Business Class will be almost the same thing, it will be the extras and cap pulling that will change the price, also if you have more business traffic then Super Economy can fill the need and vise-versa, overfill from Super Economy can go up to Business with no loss on either.
But Business Classers don’t expect the grande flourish of attention of yester yore, Airlines and Airports will cut services to the bone to save costs, even First will notice a few cost cutting differences, It is going to hurt Airlines more than you think dropping the price of this lucrative income stream, they will cry loudly as they sweep their pen through the old prices, British Airways and certainly Qantas will have people jumping out of windows at the loss of income..
But what of the redecorating, its is more closer to First than Business in concept so the distance down now from Business to Super Economy is more distinct than ever, the Airlines that skimped a little on the drapes my now have an advantage in flexibility than the more up market redo’s don’t have, so what do you do make it First Class?, or pull out the flashy hardware and put in something more middle ground, expensive…yes both ways…it will be interesting to watch what they do, otherwise the beautiful seats will be empty, in the short term some upgrades are going to have some very happy clients that will certainly get more of a bang for their buck than they ever dreamed of.
Personally I welcome the idea, it will be more fair than, the them (Rich, First, Business) and the rest of us, they have been lauded and fettled over for years like spoilt rich kids that mostly don’t even pay for their own seats or services, while the rest of us who actually pay for the things (seats) have had services reduced to towel throwing and cups of water and treated as extra cargo (it is a known fact that some Airlines note Economy as Human Cargo!), but we do fill your planes and put profit on your plates, now we are important again to warrant at least some quality services or just plain old fashioned service.
We may even now because the prices are even close to reasonable again pick and fly again in Business Class, now that will be a turnaround, the people who worked and saved their own money getting service……It has to be better…. or I’ll put it on the Visa…oh I forgot, I can’t do that anymore…So just save your money then.