US-based Airlines Plan Luxury Upgrades
By David Armstrong, San Francisco Chronicle | Jul. 24, 2007
United Airlines and American Airlines, the nation's largest air carriers, are preparing to go head to head with foreign competitors on costly makeovers designed to attract high-paying customers, the airlines said on July 23.
Both companies, recovering from years of losses, are scrambling to catch up with international carriers that have long showered passengers with pampering and perks in business class on international routes, where major airlines make most of their profit.
Big flat-bed seats, more leg room, ever more high-tech amenities and elaborate in-flight entertainment systems with music and video on demand are all in the flight plan for American, the world's largest airline, and United, the second-largest.
Details were revealed in separate announcements at the annual convention of the National Business Travel Association, which began on July 23 in Boston.
United will install 15.4-inch video monitors in international business class on its Boeing 777 aircraft, triple the size of its present video monitors, and install flat-bed seats that recline to become a 76-inch-long bed. American will also install 76-inch-long beds in international business class on its Boeing 777s, provide interlocking tray tables to create more room for dining or working and install wiring to make it easier for fliers to use their laptops.
Travelers at San Francisco International Airport, where United and American run international flights, will start seeing changes in business and first class late this year and early next year. United will take several years to reconfigure all of its 97 wide-body aircraft, as will American, with its more than 100 international wide-bodies, executives said.
"San Francisco is important as the engine of growth for our traffic to Asia," said Graham Atkinson, United's senior vice president for worldwide sales. United operates nonstops from SFO to Beijing, Shanghai, Seoul, and Nagoya, Japan, and has applied to the Transportation Department for permission to begin nonstop flights between SFO and the business center of Guangzhou, China, next year.
United is spending hundreds of millions to upgrade its business and first class, according to Atkinson, who wouldn't disclose a more precise figure.
United and American are spending the big bucks in hopes of making even bigger bucks from premium customers, chiefly business travelers, who are able to pay for pampering. A round-trip business-class ticket on major carriers from SFO to Beijing or SFO to London's Heathrow airport typically goes for US$5,000 to US$6,000.
Unlike low-cost carriers such as Southwest Airlines that make money on volume, large carriers such as American and United try to lure high-paying customers and give them perks and room.
"Business class is the battleground," said Atkinson. "In the U.S. aviation industry, the 8 to 10 percent of passengers who fly internationally in business class generate 36 percent of revenue."
American's Don Casey, the airline's managing director of international planning, agrees.
"The business class cabin on international flights is the most profitable we have," he said without revealing dollar figures. "To the corporate clients who are willing to pay top dollar, it's very important to be able to maintain the productivity they need when they travel. Most companies want their employees to have a brief rest and get down to business."
American and United, with the rest of the U.S. aviation industry, suffered billions in losses after the Sept. 11 terrorist attacks that used their hijacked aircraft, then lost billions more during the recession early this decade. They have a lot of catching up to do.
British Airways, Singapore Airlines, Cathay Pacific Airlines, Virgin Atlantic Airways, Emirates and other leading international carriers did not have to endure as punishing a slump as that which slowed U.S. carriers. They have long had the sorts of amenities that American and United are now rolling out.
"They weren't in the position we found ourselves in the past four or five years," Atkinson noted. "If you aren't able to make money, you can't invest in the product. Now we're going to focus on the customer."