Narrowing The Gap

In business class, Virgin’s 737s offer little – a standard business class seat, pitched at 38in, with a power outlet and a Samsung Galaxy Tab. Streaming wireless entertainment continues to rollout, but isn’t yet offered on all flights.

The innovative Kiwi carrier has the opportunity to shake up its offerings across the Tasman.

-XFA and -XFB offered cradle sleeper seats, narrow as they were, and with a middle seat in the centre section, pitched at 60in. While not ideal, the window passenger could at least vault gracefully (or otherwise) over a sleeping aisle neighbour at a 1. 5m pitch, something that’s lost on the 737.

Comparing the newer A330s with the 737s, the angled seats are more spacious, offer built-in on-demand entertainment, are pitched more generously, and allow passengers in the centre section the opportunity of an undisturbed flight, with nobody climbing over them. And the gap will only widen once B/E Aerospace Super Diamond fully flat beds with direct aisle access are installed.

In economy it’s even more stark: the only entertainment on Virgin’s 737s is wireless streaming (good luck keeping your device charged all the way across the country) or the possibility of renting a Samsung Galaxy Tab, compared with a seat nearly half an inch wider, ondemand IFE, AC power, and a USB socket – and with wider seats in a much roomier 2-4-2 layout.

One bonus for Brisbane passengers, though: more flight choice.

“We have replaced some of the Airbus A330 services on the Brisbane-Perth route with Boeing 737 services and also added two extra Boeing 737 return services per week, resulting in more frequency on the route,” a Virgin spokesperson told Australian Aviation.

Yet overall, the loss of widebody service is a minus for passengers.

But it doesn’t have to be that way.

Narrow doesn’t always mean tight

Internationally, a new generation of narrowbody aircraft is putting paid to the idea that widebody services are ipso facto superior.

In Europe, the Middle East, the United States and across the Atlantic, premium narrowbody services are growing in popularity among airlines and passengers.

All-business class aircraft serve premium routes, including British Airways’ London City-JFK A318 service linking the tiny airport next to the UK’s newer financial district and BA’s long-time hub in New York with direct flights (though not nonstop westbound – there’s a fuel stop in Shannon that also serves as immigration preclearance on some flights). Qatar Airways also links its Doha hub with London on an all-business A319. All Nippon Airways shuttles between Tokyo and Mumbai on an all-business 737-700, while PrivatAir has done the same for Lufthansa, Swiss, KLM and others – most recently SAS on the oil-rich Stavanger-Houston route.

Of course, the Australian (and New Zealand) market for premium narrowbody services isn’t necessarily all-business, but it does have two key mission demands similar to these flights: a mixture of daytime flights across the Tasman and transcontinental services that are both daytime and redeye flights.

Tasman flights require a good recliner product…

Across the Tasman, only Emirates’ fifth freedom flights, continuation services from South America, and some of Air New Zealand’s Auckland services are operated by widebody aircraft. Qantas’s Jetconnect subsidiary offers a twoclass service similar to the betterequipped domestic Boeing 737-800 mainline aircraft.

Virgin Australia’s New Zealand division is less differentiated, with a more barebones (ie, without power or seatback entertainment) middle-seat-free premium economy and economy product. Virgin has announced that it plans to install business class on these ex- Pacific Blue aircraft, opening up speculation that its trans-Tasmanalliance partner Air New Zealand might do the same. Air NZ operates some flights between eastern Australia and Auckland using its Boeing widebody fleet, where business class is sold as business.

Air New Zealand’s fleet of Airbus A320s, which it uses on some flights to Auckland and all trans-Tasman flights to other New Zealand ports, is one-class but relatively well-equipped with on-demand seatback entertainment and power. NZ’s Seats to Suit ancillary product strategy permits some market segmentation between a seat-only fare and the top offering, middle-seat-free Works Deluxe, while frequent flyers with status are seated in the extra-legroom Space+ section for free.

With Air New Zealand’s recent signature of a deal with Airbus for three A321neo aircraft in addition to ten A320neo jets, the innovative Kiwi carrier has the opportunity to shake up its offerings across the Tasman. There’s no shortage ofexamples on A321 aircraft – and similarly sized Boeing 757 jets – to show how it might be done.

…while transcons have two seat mode requirements

Australian transcontinental flights – principally between Perth and Sydney, Brisbane or Melbourne – come in two flavours: westbound daytime services around the five-hour mark (50 minutes fewer for Melbourne), and eastbound flights that are an hour shorter.

Westbound, most passengers want a bite to eat (that’s the first 90 minutes), the chance to watch a movie or get some work done with a glass of something (that’s the middle of the flight) and perhaps a snack or drink before arrival.

Eastbound flights fall into three categories: redeye overnight flights (departing after 11pm and arriving at the crack of dawn), redeye morning flights (departing before 10am) and daytime flights (the remaining 13 hours). Flights are split roughly half and half between redeye and non-redeye flights.

For the redeyes, the trick is to enable a decent sleep to either replace a night’s rest or top up a shortened pre-airport snooze. For eastbound daytime flights, the situation is much much the same as westbound flights.

The problem for the airlines is partially one of soft product throughout the plane – nobody wants a full clanking, rattling meal service when they want to be asleep, though that’s relatively easily solved – and partly one of business class hard product, which is more difficult to fix.

Three quarters of flights (westbound plus eastbound daytime) are probably fine in a modern recliner seat with enough space not to feel cooped up, all the mod cons (like USB and AC power sockets) and good entertainment. Essentially, somewhere between Virgin’s old cradle sleeper offering and its new angled lie-flat seats.

Could the twocarrier models used by both Qantas-Jetstar and Virgin-Tigerair lend themselves particularly well to this as an option?

But for a full quarter of flights, business class passengers want an international business class experience. And these days, that means flat beds, ideally with direct aisle access.

The trick for the airlines is finding (or, more realistically, creating) the product that fits both the daytime flights and the redeyes. Realistically, Australian transcons don’t really need the top of the range products that Virgin Australia will offer with its B/E Super Diamond seat, and that Qantas will offer with its Thompson Vantage XL product.

The gap between regular economy and some of the world’s best business class seats means there’s an opportunity for an innovative airline to provide a premium service to bridge that gap. It’s being done elsewhere, and there are lessons – and questions – that could give Australia’s airlines some good ideas.

P is for premium, S is for service

In October 2004, United Airlines began to offer United p. s. , a premium Boeing 757-200 service between New York JFK and its west coast hubs at Los Angeles and San Francisco. At the time, United’s New York operations were significantly more limited than they are today, now thanks to its 2010 merger with Continental Airlines (which has an enormous hub operation at Newark, across the Hudson from Manhattan in New Jersey), and primarily used to consist of domestic connections to its hubs at Washington Dulles and Chicago O’Hare.

Initially, p. s. consisted of a threeclass operation with angled lie-flat seats in first class, sleeper seats in business class and economy seats pitched at 34in, similar to the Economy Plus extra-legroom product introduced five years previously. Soft product, too, was upgraded from the standard United domestic offering.

In 2011, p. s. was changed to a two-and-a-half class service, with a combined BusinessFirst cabin with B/E Diamond fully flat beds in a 2-2 configuration, updated Economy Plus seating and a regular economy cabin pitched at 31in.

Interestingly, United offers p. s.

service on the LAX-JFK route alongside roughly twice as many flights from LAX and other LA-area airports to its main hub Newark, which are equipped with standard domestic configurations rather than the upgraded p. s. product.

And Delta operates a nearly identical 757-200 service on its own transcontinental US domestic flights.

Is there a model here for an Australian airline to offer a premium narrowbody service – in both business and economy – on select transcontinental flights while also operating standard domestic equipment for volume traffic?

American turned 767s into premium A321s

Until this year American Airlines operated a fleet of Boeing 767-200 aircraft on what it called its Flagship services between New York JFK and Los Angeles or San Francisco.

These aircraft were equipped with standard 2-3-2 seating down the back, a set of relatively decent recliners in 2-2-2 in business class and a more spacious cradle sleeper in 2-1-2 in first.

Those aircraft were replaced with an Airbus A321 offering a 3. 5-class service unique to the US domestic market. Up front in first class is the Zodiac Cirrus seat similar to Cathay Pacific’s long-haul business class (and to Virgin Australia’s new B/E Super Diamond widebody business class) in a 1-1 layout. In business, the increasingly standard B/E Diamond seat (not to be confused with Virgin Australia’s Super Diamond) is arranged in a 2-2 configuration. An extra-legroom Main Cabin Extra and standard economy cabin take up a remarkably small part of the aircraft – less than a third, compared with two-thirds on the older, larger 767s.

Could an Australian airline take this leap, and decide not to fight for volume passengers on certain transcontinental routes? Could the two-carrier models used by both Qantas-Jetstar and Virgin-Tigerair lend themselves particularly well to this as an option?

JetBlue mints new upgraded experiences

US low-cost carrier jetBlue, with its spaciously pitched Airbus A320 and Embraer E190 aircraft, has been held up as a model for narrowbody operators before.

Earlier this year, the airline ventured into the premium market by launching its Mint product, a transcontinental Airbus A321 between, again, New York and LAX/SFO. In the front is the Thompson Vantage XL fully flatproduct in a staggered 2-2, 1-1 layout that also enables mini-suites with closing doors. This is the same basic seat model that Qantas will operate in a 1-2-1 layout on its Airbus A330s, though Marc Newson has had his hand in the design of Qantas’s product.

Down the back it’s an extralegroom product at 37in, or jetBlue’s new economy standard at 33in.

With one of the best hard products on the market, and a hipster-focused soft product with tapas-style food and an amenity kit of product samplers – not to mention keen pricing as Mint kicks off – jetBlue has won deserved plaudits.

Is there an option for an Australian LCC to do something similar? Could Jetstar’s cattlecar maximum-density A321s see a premium option up front while maintaining 28in economy?

Open Skies are premium skies

British Airways’ motto of “if you can’t beat ‘em, buy ‘em” translated well into French when it bought all-business class airline L’Avion in 2008, to combine with its OpenSkies subsidiary. OpenSkies now operates on the business and diplomatic route between New York’s Newark or JFK and Paris’s second airport, Orly.

With a total of three Boeing 757‑200 aircraft, and after a history of adjusting the amount of business, premium economy and economy seating on board, OpenSkies now offers the 2000 version of the British Airways Club World fully flat beds (the one with the fan) in a 2-2 layout in Biz Bed up front, one of the most spacious premium economy offerings with a 52in-pitched cradle sleeper seat in Prem Plus, and some very basic economy seats stuffed down the back.

Combine an enormous outstation operation in New York (JFK is more hub than outstation for BA) with a desire to stick it to Air France on one of the routes formerly served by Concorde, plus some practically predatory pricing and staff costs of a subsidiary, and it’s clear to see why the service is popular. Might an Australian airline look to move in on a particular premium route – perhaps one more served by its competitor – in an evolution of the OpenSkies model? Could an aircraft the size of a 757 (like an A321, say) do well serving mid-haul markets like Auckland, Wellington and Perth out of a currently secondary airport like Canberra?

Will Air New Zealand’s Seats to Suit suit suits?

One of the criticisms of Air New Zealand’s Seats to Suit (STS) product concept, which is in place on all its international narrowbody A320s, is the lack of business class. Only a few of its Australian flights see widebodies with proper international business seats, which is a positioning problem for an airline (and a partnership, given its alliance with Virgin Australia) that is jockeying for premium traffic.

The gap is especially noticeable when Virgin-Air NZ is set upagainst the Qantas-Emirates-Jetstar behemoth, which makes Auckland the second-largest A380 Emirates hub in the world after Dubai when all three Australian tag flights are sitting on the tarmac in Manukau.

Air New Zealand currently has a set of international A320s that date back to 2003, and which sent shockwaves all the way to Seattle when the Kiwi carrier bought Airbus jets for the first time. Air NZ was also the 2012 launch customer for Airbus’s A320 Family winglets, which the airframer brands “Sharklets”.

While the international 320s offer a decent hard product (especially compared with Virgin Australia’s ex-Pacific Blue 737-800s), it’s all-Y, all the time.

Air New Zealand’s Airbus order placed this June at the IATA AGM in Doha seems on the surface of it geared towards a one-for-one replacement, with 13 A320neo family aircraft due to arrive between 2017 and 2019.

But two parts of the order stand out: one the addition of a late-model A320ceo for domestic service to be delivered in 2015, and the fact that at least three of the neos will be A321s. CEO Christopher Luxon has publicly stated that business class is an option for the A321s, especially on the Auckland-Melbourne and Auckland-Sydney routes.

Yet the cost-conscious carrier (and the even more cost-conscious Luxon) has to be eyeing the 168-seater international A320s closely. Cabin crew staffing, previously an issue in the airline’s Zeal320 and Freedom Air Airbus fleet history, could be reduced to three if the A320s were converted into 150-seaters.

Virgin America, probably the closest thing the US has to a domestic airline that positions itself as a fully premium brand, offers 149 seats on its A320s. In an alleconomy configuration, JetBlue’s A320s carry 150 – yet it’s clear from the establishment of its Mintproduct that jetBlue didn’t think its standard product competitive on key transcontinental markets.

Could Air NZ cull three economy rows from the front of its A320s to add two rows of a standard (or even relatively spacious) business class, in addition to its Seats to Suit product – or as a replacement?

BA’s mid-haul fleet has a unique Vantage point

In 2006 British Airways’ new Club World seat was supposed to standardise the airline’s worldwide offering across the fleet. Yet in addition to its all-business A318 and OpenSkies subsidiary, British Airways operates a fourth (some would say fifth, counting OpenSkies Prem Plus as business-minus) type of business class seat on an Airbus A321 fleet it acquired when it bought former rival bmi in 2012.

On these ‘mid-haul’ aircraft, BA offers a Thompson Vantage seat inan alternating 2-2, 1-1 layout that was a precursor of jetBlue’s Vantage XL product, but is more dense and slightly less spacious than the XL version. Economy is a very standard 31in seat.

BA uses these aircraft on flights in the firmly mid-haul five to six-hour span to destinations in the Middle East, North Africa and Central Asia, where timezone complications mean that flights are often very early or very late, and where premium demand means an upgraded business class is expected.

A model like this was reputed to be one of the options under consideration for the mooted Qantas-Malaysia Airlines narrowbody premium airline.

Plans were deep-sixed in 2012, but the airline had been expected to be based in Kuala Lumpur and tentatively called ‘Red Q’, though nimbly nicknamed ‘Qantasia’.

Could either of the Australian airline groups leverage their Airbus narrowbody LCC’s costs into a new low-cost, high-comfort sub-brand?

An evolution of Project Darwin is still a possibility

The original codename for the Qantas-Malaysia Airlines codeshare was Project Darwin – but what if that referred primarily to the location of a hub for premium narrowbody services rather than a reference to evolution? Clearly, the idea is tempting enough for the Qantas Group to have a first crack at things. Jetstar’s 2009-2014 Darwin base failed the survival of the fittest test, largely blaming competition as Darwin Airport’s international carrier list grew. But was that withdrawal based on Jetstar’s single LCC product, the current capabilities of this generation of A320 aircraft, or the inability to make the NT work as a market? Darwin Airport has clearly been doing the strategy thinking to lay

While widebody aircraft have lower operating costs per seat, the challenge will always be filling those. IAN KEW

the groundwork for DRW as a hub, which would “allow airlines to feed traffic from multiple Australian destinations via Darwin through to Asia”, NT Airports CEO Ian Kew told Australian Aviation. “While widebody aircraft have lower operating costs per seat, the challenge will always be filling those from the east coast on a year- round basis. Narrowbody aircraft are easier to fill as they have less capacity, and it means that airlines can operate increased frequency. ” “The introduction of extended range narowbody aircraft such as the A320neo and 737 MAX will further open up opportunities for Darwin. In the past hubbing operations have been limited to destinations within five hours flying time. These new aircraft will allow direct services to Thailand (Darwin’s largest unserved market in Asia) as well as New Zealand (our largest unserved market overall). So the immediate impact for Darwin is general reach, rather than the hub,” Kew said.

Drawing some range circles from DRW, an Airbus A320neo’s 3,725nm (6,900km) range indicates a curve that includes southern and eastern India, all of China east of Lhasa, and the entirety of Japan. A larger standard A321neo’s 3,650nm (6,750km) range drops just a few cities, with the longer range A321neoLR boasting 270nm/500km of extra legs. An A319neo’s 4,200nm (7,800km) range includes almost all the rest of India and China.

A premium airline – or a premium subfleet or full subsidiary – with a hub in Darwin might conceivably give an Australian carrier a significant product advantage flying to Asia. Smart bank times, a competitive product and the chance to fly with a single stop via a relatively small and uncongested Australian airport could give a network effect that would disrupt Australia-Asia flying like never before.

Provide a hard product suitable for maximising sleep, but which also enables density, like the B/E Diamond fully flat bed. Add in a strong pre-flight dining option like British Airways offers in New York. Include an upmarket onboard meal service like jetBlue’s small plate tapas. Staff it with relatively inexpensive crews and pilots on, say, Jetstar or Tigerair conditions, or those of a new subsidiary with overseas crew bases to cater to an international market. Combine it with fast Australian customs clearance (especially useful for non-Australia/NZ nationals) in Darwin, like the BA London City service.

Link it in to the purchase-driving loyalty programs of either Virgin Australia or Qantas, possibly including well-timed connections over Asian hubs onto Emirates (for Qantas and Jetstar) or Singapore/Etihad (for Virgin Australia and Tigerair), to serve the increasingly important NT market.

And combine that with the option of using some of the aircraft for domestic premium flying on eastbound redeyes from Perth, where its product would also be in demand.

Now that would be a narrowbody evolution.