Etihad CEO On Cabin Class Simplification And Business Class Plus

Abu Dhabi-based Etihad Airways has a reputation as a great airline to fly on but a tough business to make a dollar from. Over the years, the losses have mounted. But the man in the hot seat at Etihad is trying to change that, and he’s using the strategic levers at his disposal, including cabin class simplification.

Etihad is eyeing cabin simplifications as one route back towards profitability. Photo: Etihad

Etihad’s CEO Tony Douglas is attempting to transform the airline from an upscale but loss-making operation into a much leaner beast, all without losing that traditional Etihad luxe touch. A simplification of the various cabin classes are among the changes in the pipeline.

Etihad’s biggest plane, their now-defunct Airbus A380, featured multiple seating options from 3-4-3 seating up the back to your own cabin up the front. The variety of seating options gave prospective passengers plenty of choices, but it wasn’t making life easy at Etihad.

Cabin class simplification on Etihad’s radar

The airline is stepping away from offering multiple seating options on their planes. There will still be choices, only not as many. That reflects the economic realities at Etihad and broader travel patterns.

In an exclusive webinar interview with Simple Flying, Tony Douglas talked about reducing some of the myriad cabin choices at Etihad.

“I think we’ve probably seen, however, globally, that the trend has continued to see a higher-end business class, diluting the need for what would have been historically a clearly separate product between first and business.

“What you’ll see increasingly on Etihad’s fleet is what I would describe as”business plus”, and then an economy product, as opposed to the many different differentials between economy, economy space, business, first, and even the Residence, i.e., five different classifications of products historically on A380. We’ve looked to simplify and build on the quality of the way in which our offer presents itself.”

Traditionally, Etihad has sold economy and economy space seats in its economy class cabins. Photo: Etihad

A first class swansong at Etihad Airways?

The axing of the Etihad A380s has made the broader cabin simplification task simpler. The demise of the A380 at the airline automatically takes the top-tier Residence out of the equation.

Short of flying private, the Residence set the benchmark for deluxe travel. Seating up to two passengers, the private cabin took up one-quarter of the first class cabin floor space on Etihad’s A380s.

First introduced in 2014, the Residence went straight onto the travel bucket lists of millions. As a point of difference and marketing tool, the Residence worked well for Etihad. As a profit center, probably not so well.

The Residence represented a kind of first class on steroids; however, it was unobtainable for most. The Residence was prohibitively expensive. But even standard first class could be on the way out at Etihad. Onboard Etihad’s A380s, there were nine other first class seats. With the A380s gone, that leaves only a handful of Boeing 787-9s with eight-seat first class cabins.

Etihad has 39 Boeing 787s in its fleet. Only five Etihad 787-9 Dreamliners include first class cabins. Those five Dreamliners are the first five 787-9s Etihad accepted across 2014 and 2015. Etihad has 96 planes across its entire fleet, meaning less than 5% of the fleet now includes a first class cabin. Despite this, Tony Douglas insists first class cabins have a future at Etihad.

It’s not the end of first class,” he told Simple Flying’s Joanna Bailey. “We have a first class product on our 787s as well – not all of them. We have that (first class) scheduled into those marketplaces where pre-COVID, there was a market for selling first class tickets.”

Etihad retains first class cabins on just five Boeing 787-9s. Photo: Etihad

Focus on a top-shelf business class product

Ever improving business class cabins are now cannibalizing the wider first class market. Not so long ago, business class was a bank of wider than usual seats with decent recline, footrests, and non-vintage champagne. But in Etihad’s lifetime, business class on most long-haul airlines has morphed into a product far better than previous generation first class products.

Competitor Qatar Airways sets the pace here. Aside from its A380s, Qatar Airways has never included first class on its planes. Instead, they have Qsuites – toney business class capsules that other airlines have rushed to imitate and helped render first class redundant.

Tony Douglas recognized the rise of what he calls “business class plus.” Unlike the first class seats, a high caliber business class product is installed across all of Etihad’s long-haul fleet.

Missing from Etihad’s fleet is a premium economy cabin – an interesting strategic choice for a long-haul airline. Some long-haul airlines have embraced the concept. Others have eschewed it or only come to the premium economy party recently.

Traditionally, premium economy cabins tap into cashed-up leisure passengers who are keen to avoid a numbing 14 hours in economy class but reluctant to splash out the big bucks for business or first class.

On the plus side for Etihad, it is one less cabin class in the mix as the airline moves towards cabin class simplification.

Top shelf business class products have helped render first class redundant. Photo: Etihad

Is Etihad a future two-class airline with a few tweaks?

The simplest kind of cabin class is one cabin class. But that will never do for a long-haul airline like Etihad that wants to continue styling itself as a premium airline. Etihad will likely become a two-class airline, business and economy, with some bells and whistles also available in the economy class cabins for a fee.

Right now, Etihad offers three products in its economy class cabins – standard economy, economy space, and economy neighbor free. All utilize the same seat type, but economy space provides around 30% extra legroom.

Economy neighbor-free allows passengers to block out (for a fee) one or two seats next to them on selected long-haul flights. Determined by available inventory close to the departure date, economy neighbor-free is a neat way for Etihad to generate extra revenue on flights with empty seats. It is also a way for Etihad to differentiate its offering while maintaining a simplified cabin structure.

The trend away from first class and towards simple airline cabins is not just restricted to Etihad. It is a worldwide phenomenon that was underway well before the travel downturn. The last 18 months and the concurrent financial pressures have accelerated the trend. Etihad’s Tony Douglas is simply acknowledging the inevitable.

Article Source simpleflying.com



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