“The airlines are thinking more and more every day like retailers,” said industry expert Henry Harteveldt, founder of Atmosphere Research Group. “They are thinking: ‘How do we maximize the profitability on every seat and every flight.’ ”
Investing in the premium traveler makes sense: First and business-class travelers rarely cringe at high fares because their travel bills often are picked up by an employer or client. Plus, airline experts say, fares for premium passengers generate a disproportionate share of an airline’s profits while economy fares barely cover fuel and labor costs.
After years of struggling to rebound from deficits and razor-thin profit margins, Southwest Airlines, United Airlines, Delta, Alaska Airlines and American reported record earnings in the three-month period that ended June 30.
The carriers attributed their rosy financial reports to fuel prices that have dropped nearly 30% compared with last year, increased revenues from bag fees and other passenger charges and steady growth in travel.
American posted the highest net income for any airline in aviation history — $1.9 billion in the second quarter — just 18 months after emerging from bankruptcy. The Fort Worth carrier is investing heavily — a total of $2 billion over the next few years — in a menu of extras.
Premium passengers are getting seats that lie completely flat with direct access to an aisle, as well as touch-screen entertainment systems to play free movies and TV shows.
Newly renovated lounges feature showers, cocktail bars and complimentary food, such as Greek yogurt and oatmeal for breakfast. American also has private check-in areas for VIP passengers at airports in Los Angeles, Chicago, Miami and New York.
“They are not going around spending money like drunken sailors, but they are putting it where they see that investing money will pay off,” said Seth Kaplan, managing partner for the trade publication Airline Weekly. “They have the luxury to do that.”
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The most expensive amenities and services are reserved for premium fliers on transcontinental, long-haul and international flights.
For flights between L.A. and New York and San Francisco and New York, American this year created first-class cabins just for pets. They’re cozy compartments near the flight attendant station to hold a dog or cat in its carrier.
United Airlines, Delta and American have begun offering chauffeured cars to help premier travelers make connections at Los Angeles International Airport. But not just any cars: United uses Mercedes Benz cars, Delta picks up its travelers in Porsches and American relies on Cadillacs to transport its most prized passengers.
In June, Delta completed a $229-million terminal upgrade at LAX that includes a private curbside entrance for the carrier’s biggest spenders.
There’s no such thing as premium economy, with more leg room (33″ seat pitch), plush seats, wider seats, better food (or just any food at all), and free pillows and blankets. The three most important features for most travelers are price, price, and price. And the airlines have…
AT 1:01 AM AUGUST 23, 2015
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Top-grade passengers — part of a new category dubbed Delta One — get whisked into a private lounge, away from snooping paparazzi, where they are offered free snacks and drinks and access to an expedited security checkpoint. The reception and ambience are upmarket, with a desk made by a local artist from parts off a retired DC-9.
Delta has hired a master sommelier to match wines with the onboard meals for the high-paying passengers.
“We have continued to invest in the people who invest the most in us,” Delta spokesman Anthony Black said.
United began Aug. 1 to hand out new amenity bags to premium international passengers. The bags include high-end Cowshed skin-care products from London’s Soho House & Co., which operates private member’s clubs.
Etihad Airways last year introduced nannies, trained at Norland College in England, to entertain, feed and pamper the children of premium passengers on long flights.
Some of the airline investments are trickling down to economy fliers too.
Many of the new aircraft that have been ordered in the last few years include charging outlets for all seats, wireless Internet and improved entertainment systems. A few airlines, including United, American and Delta, have restored free beer and wine for economy passengers on long flights.
American Airlines spokesman Casey Norton said premium passengers are important to the airline but the latest investments benefit all passengers.
“We are going to offer a product that differentiates us from the competition and make sure that we provide a travel experience that customers like and want to buy,” Norton said.
Still, the trickle-down effect only goes so far to satisfy regular travelers.
Airlines are employing fewer staffers at airport terminals, leaving travelers to check themselves in at computer kiosks and self-serve bag-check machines.
Las Vegas’ McCarran International Airport is a pioneer, with more than 400 kiosks, including machines that scan passports and allow passengers to tag their own luggage.
And most airlines are cramming in as many passengers as possible to increase profits. By replacing older seats with light-weight versions offering thinner seat-back cushions, airlines free up room to insert an extra row or two of seats.
“What we have now is cattle cars in the sky,” said Rich Gritta, a professor of finance and transportation at the University of Portland in Oregon. “Flying is no longer the fun experience it used to be.”
United Airlines, for example, recently finished installing slim-line seats in all its Airbus planes. On its heavily used short- to medium-range A319s and A320s, the airline has added six to 12 additional seats per cabin — a move that’s getting poor marks from customers.
“The new slim-line seats on the A320 are terrible,” a passenger posted on the SeatGuru.com website. “Although they claim to offer more legroom, I felt extremely squished. When the person in front reclined their seat I had no space available to really move my legs.”