Qantas 747/380 Re-vamp Emphasies Y+, Affirms Air NZ and V Aus

QF 747 First Class Mess.jpgFirst class is being thrown out on Qantas 747s (above)



My colleague Siva Govindasamy attended this morning’s Qantas press conference. The Qantas Group announced traffic was marginally up, its half-year earnings were down 72% compared to last year, and the big ticket item: from the end of 2011 to 2012 Qantas will undergo a A$400m fleet revamp.

Key note: the announcement on the fleet revamp wasn’t an announcement. It was a confirmation. The Australian Financial Review first ran the story last November, from which point Qantas declined to comment. And no wonder. Under the fleet revamp, first class will be removed from 9 of the 15 747-400s that have first class. All together Qantas has 28 747s, according to Flightglobal’s ACAS database.

The A380 isn’t fairing better. The 6 A380s Qantas has, and six on their way, will retain first class but see a decrease in business and corresponding increase in premium economy. The remaining 8 on order (ACAS shows Qantas also has 2 on option) will have business, premium economy, and economy–no first class.

The question that immediately comes to mind is what this decrease in first class says about the prospect for premium travel, as Siva wrote about. Earlier this week IATA said business travelers who have been relegated to economy may not ever return to business class. You can also read that as first class passengers relegated to business won’t return to first. And, of course, British Airways expects to end business class on short-haul routes. If it’s going to end on short haul, surely long-haul won’t go away unscathed.

A second question that comes to my mind is what this decision says about premium economy. Answer? Sold. The 747s will see an increase in Y+ of four seats (if I’ve got Qantas’s figures right) while A380s will see an unspecified increase in premium economy.

Y Plus V Aus.jpgV Australia and Air New Zealand are no stranger to the potential of Y+ (and Air NZ is stepping up its Y+ to quasi-business class). At the V Australia launch last February, Godfrey remarked to me he expected premium economy (right) would be the carrier’s best-selling product. He re-affirmed that this past December at the launch of Melbourne to LA flights on V Australia, tell me:


We have a boutique business class…and forty premium economy [seats], which have done very well for us. We’ve exposed less of our footprint, about a third, to premium whereas Qantas was closer to a half. They were clearly configured for the best of times, not what we’re seeing right now.

An aside: Godfrey noted it was unlikely V Australia would change its configuration any time in the next five years.

To crunch some numbers, premium economy accounts for 11% of all seats on V Australia and 15% on Air New Zealand (777-200), but 9-11% on Qantas 747s and 7% on Qantas (A380). Between Qantas’ 747s and 380s, the 380s are poised to receive the biggest increase in Y+, affirming the trend Air NZ and V Australia started with large Y+ cabins will stay in this region.

How long before more carriers ditch high-end premium cabins for mid-tier Y+ cabins?



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