Skift Take
Airlines are increasingly placing a heavy emphasis on premium products, and we discuss why in this episode of the Skift Travel Podcast — as well as why some carriers are quietly withdrawing from China.
Several prominent airlines have recently made significant investments in premium cabins and products. Airlines Editor Gordon Smith discussed that trend and his recent in-depth look at airlines that are quiet quitting China in this episode of the Skift Travel Podcast with Head of Research Seth Borko.
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Key Points
Increased Focus on Premium Cabins: Many airlines, such as Lufthansa, Air France, and Cathay Pacific, are revamping or introducing new premium cabin products, especially first and business class, as part of their brand strategy. This shift highlights the importance of brand positioning and differentiation through luxury offerings.
Differences Between Domestic and International First Class: In the U.S., domestic first class is generally less luxurious than international first class, often featuring a standard recliner seat rather than a lie-flat bed and enhanced entertainment. Internationally, first class offers a high-end experience, including spacious suites, luxury bedding, and exclusive dining.
Premium Economy Growth: Many airlines are expanding their premium economy offerings, which provide a middle ground between economy and business class. This cabin class has become increasingly popular due to its added comfort, especially for long-haul flights, without the high price of business class.
Quiet Quitting Concept Applied to Airlines: Western airlines, especially European carriers, are reducing flight frequencies and cutting routes to China, resembling “quiet quitting.” Instead of leaving the market completely, they are scaling back their presence due to several operational and strategic challenges.
Economic and Geopolitical Pressures: Tensions between China and Western countries, combined with China’s economic slowdown, have influenced Western airlines’ decisions to reduce flights to the region. Although demand exists, revenue potential is lower than pre-pandemic levels.
Episode Summary
Airlines are increasingly investing in premium cabins, including first class, business class, and premium economy, as a means to enhance brand positioning and capture high-margin passengers. Many leading airlines, such as Lufthansa and Cathay Pacific, are rolling out new first-class suites to create a luxurious, aspirational experience. In the U.S., domestic first class remains less opulent than international first class, often limited to reclining seats rather than lie-flat beds.
Premium economy has also seen significant growth, offering more comfort than economy at a lower price than business class, appealing to budget-conscious travelers on long-haul flights. This investment in premium products reflects a long-term strategy, as airlines commit to these costly upgrades with the expectation of sustained demand. Installing new seats requires safety certifications and significant downtime for aircraft, underscoring the strategic nature of these changes.
The feature “Why Are Airlines Quiet Quitting China?” explores how Western airlines, particularly European carriers, are scaling back their operations in China, reflecting a trend similar to “quiet quitting.” This approach means they are not leaving the market entirely but reducing flight frequencies and cutting routes. A significant factor contributing to this is the restriction on using Russian airspace, which adds approximately four hours to flight times for European airlines, raising fuel and operational costs.
In contrast, Chinese carriers still benefit from flying over Russia, allowing them to offer shorter and cheaper flights.
