Airlines ditch first class to save cash

[Greg McDonald]

From news.com.au:

With global airline losses tipped to top $US5.2 billion this year, novel strategies are being used to generate revenue, reports the Herald Sun.

Singapore Airlines has copied low-cost carriers by charging economy travellers $50 for seats in the exit aisles that offer added leg room.

Other bleeding carriers are making big changes to their premium cabins in the face of falling demand from business travellers.

Philippine Airlines is stripping the first-class seats from its four Boeing 747s, and Air New Zealand is extending the premium economy section in its long-haul fleet.

The plan is to allow newly budget-conscious passengers to trade down from first and business class, says Air NZ.

The Centre for Asia Pacific Aviation reports that Cathay Pacific plans to sell five Boeing 777-200s over the next two years to raise cash, although CEO Tony Tyler is concerned about the ability to find buyers in this climate.

Qantas, Emirates and Singapore Airlines have acknowledged softening demand from the business market.

They fear ticket sales will decline further as the crisis takes hold during the first quarter next year.

Outgoing Qantas CEO Geoff Dixon offered a frank account of what's happening to the national carrier in a recent speech in Melbourne.

He said bookings had deteriorated, particularly in international markets, and consumer confidence had been dented. Fluctuating exchange rates were also curbing demand.

"Overseas holidays have become relatively more expensive for Australians," he said.

Emirates senior vice-president for the Asia-Pacific region, Richard Vaughan said passenger numbers had softened, especially among business travellers from key financial centres.

He said Emirates would report a small full-year profit within a few weeks, but the figure would be less than the $US1.4 billion last year.

The International Air Transport Association, which represents more than 200 airlines worldwide, reported that global passenger traffic in September fell for the first time since the 2003 SARS crisis.

While the effect of the downturn had previously been isolated to the Asia-Pacific region, the problem had since spread to North America, Europe and Middle East markets.

"The deterioration in traffic is alarmingly fast and widespread," IATA director-general and CEO, Giovanni Bisignani said in his September traffic report.

"Even the good news that the price of oil is falling is not enough."