10 years ago last month(January 2000) British Airways changed business class flying forever when they introduced the lie flat business class seat. I am sure that the revenue management team putting together the pricing and yielding plan for that launch did not realise that 10 years later they would be causing the death of first class. The launch itself completely changed the pricing for the standard 3 class airlines. In the early nineties (with the old Business Classes) the general rule for pricing between Economy, Business and First was "double double". Business was twice the cost of Economy. And First twice the cost of Business. But with flat beds stripping out seats, the pricing had to change. The rule went from "double double" to "by four by one point five". Sydney to Europe in economy was a $2,500, Business by 4 at $10,000 and First by 1.5 at $15,000. The gap between the price of Economy and the price of Business grew too great to withstand the Global F'n Crisis.

Today Qantas announced (during the publication of their results) that they would spend $400mm refitting most of the fleet to eliminate first class in all but 12 of its A380s.

On Jan 26 this year Air NZ announced their new plans for class configurations. They announced a revamped business, high end premium economy and the first efforts at beds in economy class. It does not include a first class (Upgrade:Travel Better blog post here on the announcement).

I therefore conclude that First Class is on its deathbed. My prediction is that within the next 3 years (by end 2013) all but the most luxurious of carriers that have flat or near flat Business Class seats (ie everyone bar Emirates, Qatar, Etihad and maybe Singapore) will follow suit and remove First Class from their configurations. That will leave Business as the new First with a huge gap to Premium Economy and smaller gap to Economy. In effect having moved from a 3 class airlines product to a 4 class airline product to a 2.5 class range of product.

Continue reading on tims-boot.blogspot.com

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  • Tim Hughes

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