Scott McCartney for the Wall Street Journal:
The big three U.S. airlines—American, Delta and United—match each other more closely than ever. The three were created from the merger of six large airlines over the past eight years and now each has the profits to spend upgrading its product. They’re all intent on not letting one rival gain a cost or product advantage.
Airlines say the similarities just mean they are all coming to the same conclusions about what customers are willing to pay for and what they aren’t. “The market dictates what your product will look like,’’ says Brian Znotins, United’s vice president of network.
Three mergers later and we are just now figuring out that the three remaining major U.S. carriers are basically copying each other. The “race to the bottom” language is appropriate at times but really the carriers are simply competing for the passengers who do not necessarily care who they fly. With the low cost carriers like Spirit and Frontier offering a no-frills experience, the majors are happy to follow suit and charge for the privilege of more legroom or early boarding. The majority of passengers simply want the lowest fare available that fits their schedule, add to that analysts who want to see profits, and you have what is driving airline decisions.
Remember, they are reporting record profits, all while customer complaints increase. The result is a form of collusion by following. The airlines are not meeting in back rooms to decide what amenity should be cut next, instead they just wait for one to cut an amenity and then follow suit. The latest way of trying to compete with low cost carriers like Spirit and Frontier is the basic economy fare. Delta, American, and United are all working to offer a fare that has zero perks, including no pre-reserved seat assignment and no mileage earning. These fares are not necessarily cheaper than fares of the past, but when you compare them to fares that do earn miles they appear cheaper.
This is not a trend that will be changing anytime soon. With new low cost airlines like Norwegian entering the U.S. longhaul market, the reduction of amenities on the three major airlines while charging for perks will continue. It will take a spike in oil prices along with a reduction in travel before anything changes.
The Financial Times on Why Luxury Air Travel is Taking Off Again
An interesting tidbit:
“Everyone thinks first class must be diminishing, but its quite incredible how more and more airlines are renewing their first-class offer and having more first-class seats on board,” says Nigel Goode, director of the design agency PriestmanGoode, whose recent projects include new first-class cabins for Qatar Airways, Swiss, Lufthansa and Air France. “There is quite a resurgence.”
And yet the picture isn’t straightforward. “Absolute numbers are up, but it’s the composition that is the really intriguing thing,” says John Grant, executive vice-president at OAG. Look at individual airlines and you see big discrepancies. In China, where flying first has traditionally been an important status symbol for executives and politicians, as well as in the Middle East, carriers have rapidly expanded their first-class offering. However European airlines, and US carriers on international routes, have tended to scale back.
Really, it is the Middle East and Far East carriers who are bringing the resurgence. Western carriers are simply trying to keep up and some are doing better at it than others. And I doubt we’ve seen the end of western carriers getting rid of longhaul first class cabins. Maybe the answer is for some western carriers to focus on the business class traveler experience and make it as comfortable and beneficial for flyers as possible while keeping the price in the range of employers.
This short article from Business Insider seems to suggest we as travelers are getting exactly what we want. From the article:
The reason flying is the way it is is because that’s exactly what today’s fliers want.
Specifically, fliers want:
- Safe, rapid travel between two cities
- The lowest possible price
Oh, sure, people who fly won’t say that they’re getting what they want — because then they would reveal themselves to be cheap bastards who care mostly about price.
While it is true that travelers are getting low priced, relatively fast transportation between cities, the amenities that used to be offered on the same flights have been eroded to keep the price low.
I think what travelers want has changed a little in recent years and the above list needs to be amended to include power ports and internet connectivity. These two items have become even more important travelers over the last few years and most of the airlines are just now getting these things installed or playing catch up figuring out how to do so. I would also add “cleanliness” to the list. My last few flights on United have been on planes that were absolutely filthy and it was not a pleasant experience.
Are travelers willing to pay more for a better experience in flight? Based on Delta and United reconfiguring a number of aircraft to remove economy seats that have extra legroom and replace them with regular economy seats, my guess is no. There is a small segment of the traveling public that is willing to pay for more amenities but most just want a seat between two cities.