From long-haul to short-haul, Asian carriers are looking to the premium end of market growth that has been neglected as low-cost carriers rapidly fill the skies.
Like the rest of aviation markets, Asia is also experiencing a downturn, but by different metrics: single-digit growth instead of double-digit growth.
Naysayers of the all-premium model point to the failed trans-Atlantic start-ups and say the same fate awaits their Asian counterparts. But a key difference from last decade is that while the products being pushed in Asia may be fledging, the positioning is established. These premium flights are coming from Qantas, Hong Kong Airlines and Tony Fernandes, all of which are firmly planted with connections.
The first entrant is Hong Kong Airlines, which is planning a daily all-premium Airbus A330-200 flight linking the financial capitals of Hong Kong and London (Gatwick) from March 2012. The aircraft will include 34 “Premier” suites and 82 “Club Classic” recliner-style seats (no direct aisle access for window seats), both with Thales i5000 IFE and OnAir connectivity. The carrier’s seat map indicates Premier class will use EADS Sogerma’s Solstys suite in a 1-2-1 configuration that converts to a 6’1” bed while Club Classic will in a 2-2-2 configuration with 51” pitch. Sample pricing places Premier at US$4,880 return, $1,000 less than British Airways and Cathay Pacific. Club Classic is $2,690, $600 more than BA’s premium economy.
The carrier has limited onward flights in Asia and no feed in Europe, but with the low density configuration has more weight available for cargo.
Tony Fernandes, the founder of AirAsia, plans to establish a business jet-style operation in Kuala Lumpur with Bombardier regional jets, according to local reports. Possibly to be named Caterham Jet, the new carrier’s target destinations include Bangkok and Jakarta in regional markets where low-cost carriers have come to dominate. Fernandes, a prolific tweeter, has stayed mum, except to say, “if there is [a Caterham Jet] MAS would be very, very involved. Why don’t we wait and see if it’s true then assess”. In August, long-time rivals AirAsia and Malaysia Airlines (MAS) swapped equity and Fernandes joined the MAS board.
Caterham’s positioning is not clear since MAS affirmed it will launch a regional premium carrier, but more mainstream with 737s as an effort to indicate it is rejuvenating its short-haul product. Carriers in recent years have hastened to make investments as they tried to combat LCCs. MAS in December acknowledged it needs to differentiate upwards rather than solely trim an engrained cost base. Thai and Lion Air also plan to launch regional carriers with frills.
The MAS carrier is further complicated by Qantas’ disclosure it is considering basing its new premium carrier in Kuala Lumpur and working with MAS. Qantas had favoured an Airbus A320 Sharklet fleet in Singapore, but there have been protests by Singapore Airlines and genuine opportunities created in Malaysia after Fernandes, a distant Qantas ally, joined the MAS board. Qantas had last envisioned the carrier having a new business class product based on currently available seats – its B/E-manufactured Skybed is growing old – with regular economy seats in the back, possibly with extra legroom.
The most recent flagged narrowbody premium operation is Odyssey International, which is reported to have ordered 10 Bombardier’s CS100 aircraft to operate from London to New York and other destinations, a throwback to last decade’s Maxjet, SilverJet, Eos and L’Avion. Reports have played up Odyssey targeting BA’s A318 operation between New York and London, of which the CSeries would have improved fuel burn and fly the west leg non-stop, but BA’s A318 service is priced the same as its widebody services and now comes with anti-trust immunity from partners American Airlines and Iberia.
The Atlantic remains an entrenched market while Asia awaits carving – if you get in on time.
(Photo above of now defunct all-premium carrier Maxjet’s cabin)