Air France and the incredible business of business class

Seats up to $500,000 each in First Class (First) and 50,000 in Business Class (Business), dishes concocted by the greatest star chefs, prestigious wines, movies on the menu. …: unlike short-haul flights where service is being cut under pressure from cheap, long-haul flights (from 6am) are constantly getting more expensive. In particular about business class, the nerves of aviation warfare. It is the most profitable cabin on an airplane, much more than the First (which is made up of more show business personalities than businessmen, with the exception of some CEOs or members of the executive committees of very large companies), whose unit cost is higher .

Hundreds of millions of euros

While business class (the “J” in the jargon as the letter appears on boarding passes) receives only about 10% of the carriers’ long-haul passengers, with prices potentially reaching almost 10,000 euros, it generates almost a third of turnover . To fill it, airlines are investing hundreds of millions of euros to improve airport services, cuisine, entertainment, seating … Air France, which unveiled its new Business seat on Tuesday, manufactured by Zodiac, has invested 200 million in improving its long-haul flights. business class, ie almost half of the more expensive Air France-KLM budget.

For companies, these investments never stop. Often the entire fleet is barely equipped with new seats that it is already necessary to think about the next step. The lifespan of a good business class chair is 7 years. “Renewing the product is mandatory, otherwise it will become obsolete and overtaken by competitors,” explains a manager of a company in the Middle East. For those who cannot follow it, the sentence is final: they risk leaving the Premium market!

Because if companies (especially European and American) could calculate their price on powerful tools such as the network, hubs, permanent contracts, loyalty programs in the 90s, then that is no longer enough today. It is also necessary to have an excellent quality of service.

“There are more than 3 billion air passengers in the world. They don’t belong to any company. They are the ones who choose the companies they want to fly with. If your product is expensive and of poor quality, customers will look elsewhere,” says Temel Kotil, CEO of Turkish Airlines.

The 2000 British Airways Headquarters Revolution

As a result, “there is a big battle over the quality of service,” explains Air France-KLM CEO Alexandre de Juniac. “The market has changed, the level of passenger demands has changed”. Over the past twenty years, innovations have multiplied and advanced. “There is talk of an escalation,” explains a manager. Which is not accompanied by a price increase. The market cannot be very competitive.

The starting point for the upscaling of business classes started in 1995 when the American Continental Airlines abolished its first class in favor of a “Business/First”, of better quality than the traditional business classes. This innovation prompted the other competitors to improve their Business product and question the retention of the Premiere, which most Majors will retain, both for prestige reasons and for maintaining this market in certain geographic areas, especially in emerging countries. But it was British Airways that really revolutionized Business in 2000, with its seat being converted into a completely flat and fully horizontal bed! A concept that until now could only be found in the first classes, notably with Air France, which it first launched in 1995. In Business, the seats were indeed tilted about 130-140 degrees at the time (150°-160° Business/First).

Race for innovation

Contrary to what its competitors thought, British Airways did not cannibalize its first class (which is also more expensive) but managed to impose new comfort standards in business class. This “full flat bed” has since become the norm among the industry’s majors looking to play in the high-end market. Above all, it has evolved. Longer (1.96 m on Air France, compared to 1.83 cm on BA in 2000), wider (87 cm on Singapore Airlines A380s), accompanied by increasingly sophisticated video systems ranging from entertainment to content connectivity to that of passengers , the list of “+” has continued to grow.

“It’s the one that comes out with the latest innovation. There are plenty of other things that are invented in the coming years that we don’t even think about today,” explains a business executive.

Pressure from companies in the Gulf

This race for innovation reflects the fierce competition in this market. The circle of companies that play in the high-end field in the major leagues has in fact no longer expanded. In the 90s it was limited to a few companies (Air France, Swissair, British Airways, Cathay Pacific, Singapore Airlines, United Airlines, Qantas, JAL, ANA, even Emirates, but the Dubai company was still a dwarf…) . In the 2000s, this list grew. In Europe, Lufthansa has worked hard and has risen to the level of the best. But the great upheaval came with the rise of the Gulf companies. Emirates, Qatar Airways and Etihad (Abu Dhabi) have become not only industry behemoths but also benchmarks of quality, forcing all competitors, like Singapore Airlines, to level up.

“These companies have provided exceptional service and prices have come down. They have made air transport more important than competitiveness and quality of service,” explains Alexandre de Juniac.

More attractive rates

Such a level of quality allows them to offset the disadvantages of a connecting flight with business people who usually prefer direct flights to optimize their journey, while showing more attractive fares than non-stop flights. Other airlines are joining this high-end battle, such as India’s Jet Airways, still a minor long-haul player, and especially Turkish Airlines. At the same time, Chinese companies are catching up with a “big V” rate. And even the US companies that didn’t have the resources to invest in the product during their long restructuring in the 2000s are reinvesting heavily in new booths.

Europeans condemned to excellence

Suddenly, faced with such formidable competitors with a lower cost structure, European companies, Air France foremost, are condemned to compete or even outperform them in quality to justify high prices. This is the whole purpose of the French company’s chic plan.

“We want to be number one in terms of service quality. With the costs we have in Europe, we have to offer a price that is in line with the quality of service. It is a rational choice in relation to our costs and the reputation of the brand that exudes values ​​of luxury and excellence,” explains Alexandre de Juniac.

The brands or image of the countries from which the companies originate are, of course, very powerful marketing tools. Faced with global demand, companies must reconcile their roots and adapt locally to particular markets.

Many business people in Eco class

When passengers’ expectations have changed, so have companies’ expectations. They are the ones who fund their employees’ tickets. The crisis has further tightened travel policy, especially in Europe and France.

“For CAC 40 companies, the proportion of business people traveling for business is 60%. It rises to 40% by taking all companies,” notes a travel distribution specialist.

Of course, there are big differences between airlines and companies. Some prohibit business class for all journeys, others allow it only for very long flights or if the stay on site is short, or even by mixing it between the return journey, either with economy or with the intermediate class between economy class and business, set up by a large number of airlines during the crisis to counter the transition from business class to economy class.

The company a sign of recognition of the employee

However, some companies are withdrawing.

“After strict policies, some companies are loosening the screw and consider the fact that employees travel for business as a sign of recognition and a kind of bonus,” explains Soline de Montrémy, Director of Corporate Sales at Air France.

Moreover, as one industry veteran put it, “despite the tools that limit companies’ choice to use in companies, it’s a national sport for workers to bend the rule”. And there, in addition to safety and timetables, the product as well as all the services of carriers, including loyalty programs, play a major role in the appreciation and choice of travelers.

>> Read here : The big return of Zodiac in Air France’s business class

>> Photos of the new Air France business seats can be seen here