Airlines cut First Class as demand “evaporates”

First Class cabins on new aircraft are likely to become a thing of the past as dwindling passenger demand has seen airlines start opting for economy and business class-only seat configurations on new deliveries, leading aviation executives told Arabian Business.

“Qatar Airways already had a strategy in place over the last four years that we will do away with First Class,” the carrier's CEO Akbar Al Baker said as he took delivery of the region’s first Boeing Dreamliner 787 aircraft last week.

The Gulf carrier – which is marketed as ‘the World’s Five-Star Airline’ – has opted to install a two-class configuration on the new 787 aircraft and eliminate First Class. The decision, Al Baker claimed, was a reaction to dwindling demand among passengers for premium priced seats.

“Demand for First Class has evaporated, especially within the business community… However, the product we have really is First Class, but we are selling it as Business Class,” he claimed.

While Al Baker has chosen to keep some First Class seats on A380 long-haul flights, Ray Conner, executive vice president of Boeing Company and CEO of Boeing Commercial Airplanes, said this was a growing trend among airlines when configuring their new aircraft for delivery.

“I think that is the typical thing many airlines are doing now. You are finding a lot of times the airlines are not able to sell those First Class [seats] and First Class tends to take up a lot of space… I think we are going to see more customers doing that,” he said in an interview in Seattle.

With the International Air Transport Association (IATA) forecasting that global industry profits are expected to be around US$3bn this year, down from a peak of US$15.8bn in 2010, many airlines around the world are curbing their luxury offering as a result of the global downturn.

American Airlines earlier this year reduced its international First Class seats by nearly 90 percent, while United Airlines reduced its overseas First Class rows by around a third. Also cutting back are Australia’s Qantas Airways and Germany’s Lufthansa.

Air New Zealand was one of the first major full service airlines to drop First Class cabins from its long-haul aircraft in 2004 and it has now suffered as a result, said Saj Ahmad, chief analyst at StrategicAero Research.

“With the economic lull we see in key markets like Europe, Asia and the US, companies too, can ill afford to justify splashing out on first class travel - especially when the price is hard to justify.

“That's why the investment in "Premium Economy" has risen as First Class has fallen away. People are prepared to pay more to upgrade from economy, but not from Business Class to First Class,” he added.