Middle East airlines' premium seats to stay put

Unlike other international airlines, the stronger Middle East airlines are not in favour of reducing the number of premium seats in their aircraft even as the global premium air travel is on a sharp decline. The rapidly falling premium air traffic is prompting airlines across the world to rethink their seating plans and contemplate reducing the number of business class seats in favour of additional economy seats, according to a recent report by Centre for Asia Pacific Aviation (Capa). Australian carrier, Qantas' Chief Executive Officer, Alan Joyce was recently quoted by the Australian media as saying the airline is considering reducing the size of its A380 business class [currently 72 seats] in the wake of falling premium numbers. "The configuration is not right for us in the current environment. Ideally, with the amount of aircraft we have coming, we would like less business class seats and more premium economy," he was quoted as saying. Singapore Airlines, which reported further deep reductions in traffic last month, has 60 Business seats in its A380s, as per the Capa report. Bold stance But the Middle East carriers have no intentions of trading their premium seats for economy class. Emirates, with the largest number of business seats in A380s [76], said it has no plans to reduce the number of first and business class seats offered in its cabins. "We have no plans to reduce the number of first and business class seats offered in our existing cabins, or in our immediate aircraft deliveries, in response to current market demand," an Emirates spokesperson told Emirates Business. "We cannot comment on other airlines, nor can we reveal details of our premium cabin revenues. Emirates' fleet comprise a range of aircraft types and seat configurations, which allows us a lot of flexibility in terms of how we deploy our capacity," the spokesperson added. Kareem Murad, Vice-President – Research at Shuaa Capital, however, is of the opinion that the airlines can change the seat configuration on the aircraft yet to be delivered. "If the Middle East airlines are working on healthy load factors then changing the configuration of the planes already on board is not easy. They can, however, change the configuration of the ones yet to be delivered," he said. Emirates President Tim Clark had said earlier this month during Iata annual general meeting in Kuala Lumpur that the airline's year-to-date first and business class traffic had plunged 50 per cent on certain routes, even though its passenger numbers were up 13 per cent year-on-year. Seat reconfiguration Asked if the change in seating plans could drive airlines towards profits, Shuaa Capital's Murad told said: "Given price elasticity of demand, if the business class seats are not fully occupied then reconfiguring might be more profitable, although generally margins are higher for business class as per seat margin… but the reconfiguration might fit more than one economy seat per business seat." Similarly, Etihad Airways, which in May this year unveiled its $70 million (Dh257 million) first class revamp, said it has no plans to reduce its premium cabin configurations. "A downturn is exactly the time when an airline needs to demonstrate its commitment to the very highest standards of service excellence," James Hogan, CEO of the Abu Dhabi-based airline, told Emirates Business . He added: "The economic turbulence that the aviation industry is experiencing will give way to calmer times, and when it does, our investment and product innovation will ensure that we have not simply remained competitive, but that we are the market leader." Agreeing with the phenomenon, Capa said in its report that many airlines have only recently completed (or are in the process of completing) multi-million dollar cabin upgrade programmes designed to win premium travellers. "But as economic conditions have swiftly changed, airlines have been caught out," the report said, adding that while mix of travel has changed dramatically over the past six months, airlines can only change their seating plans very slowly. "For Middle East, depending on the airline, the feasibility of this option [reconfiguration of seats] will vary from one case to the other, depending on passenger demand," said Murad. The Middle East premium traffic continues to hold up better than most regions, Capa said in the report. Europe-Middle East premium volumes were down 8.1 per cent in April 2009 year-on-year, while intra-Middle East volumes fell 9.7 per cent. Middle East-Asia and Middle East-Southwest Pacific (i.e. Australia and New Zealand) were hit harder, falling 14 per cent and 19.5 per cent, respectively, though below the overall worldwide average 22 per cent reduction, Capa report said. "As a result, the Middle East is holding onto gains made in its share of total premium revenues and traffic since the onset of the global economic crisis, though losses by the region's carriers are growing as fares come under pressure," the repo