What do you all think of this latest trend among airlines of catering the service levels they offer to each specific route? A kind of Low Cost v. Full Service hybrid.
I for one, don't like American's idea of limiting First and Business Class "perks" to just the wider seat, but not offering any other benefits like better food on long flights
Airlines Taking Niche Approach to Many Flights
By MICHELINE MAYNARD
New York Times
Published: May 15, 2004
assengers who sit in the business-class section on American Airlines' daily flight from Boston to Manchester, England, beginning today may notice that something is missing: business-class service.
American's all-coach-class experiment on the route, a major departure from industry practice for scheduled trans-Atlantic flights, is the latest in an industry trend toward niche marketing.
American, the largest airline, assumes that nearly all its Manchester-bound passengers at this time of year are leisure travelers paying coach fares, and that filling the plane with them is a better bet than laying on premium service for a business-class section that might go mostly unsold.
Other airlines are also increasingly tailoring service to specific market niches, sometimes to an extraordinary degree. Lufthansa and Singapore Airlines have made some flights all business class. Air France has even created a specialized airline, called Dedicate, to cater to a narrow group of business travelers: engineers and executives in the construction and oil and gas industries, who must often get to out-of-the-way places where tourists rarely tread.
These efforts are in addition to the subsidiaries that some of the major traditional airlines have started to compete with low-fare rivals. Delta Air Lines has Song, for example, and United Airlines, a unit of UAL Corporation, has Ted, both meant to attract price-conscious domestic leisure travelers, the niche exploited very profitably by JetBlue and its peers.
"For the first time, airlines are sitting down and looking at their assets, and trying to figure out the best way to deploy them," said Darin Lee, senior managing economist with LECG, a law and economics consulting group in Cambridge, Mass.
In the past, Mr. Lee said, airlines fell into two clear categories, full service and low fare, and passengers knew exactly what to expect from each. Now those lines are blurring. The old full-service airlines are becoming less so, the no-frills carriers are adding some frills, and both are varying their offerings more from route to route and flight to flight.
For example, American's service to Manchester will now resemble a low-fare airline's in many ways. American is using a narrow-body Boeing 757 jet on a trans-Atlantic route for the first time in a decade; the last effort was quickly abandoned because first- and business-class passengers wanted more room for their full fares. But that is not an issue this time.
American is not removing the big, wide business-class seats from the front of the cabin, at least not yet. They will be given to frequent fliers and to those paying full coach fares. But the meals, movies and other amenities will be the same throughout the plane.
"We'll have to see how it goes," said Daniel P. Garton, executive vice president for marketing at the AMR Corporation, American's parent. An American spokesman said bookings were in line with the airline's expectations, but declined to be more specific.
Whether adding frills or removing them, airlines are basing many of their moves on the experiences of more successful rivals. American executives said they were fascinated by the cost-cutting tactics of Ryanair, the discount Irish airline owned by Ryanair Holdings. "They've really gone to scorched earth," Mr. Garton said.
Ryanair is stripping every bit of weight and complexity that it can from the fleet of Boeing 737's it plans to use on its shortest flights, hoping to save hundreds of thousands of dollars in operating costs for each plane. Out come the window blinds, the reclining seats and even the seatback pockets that hold emergency instruction cards, airsickness bags and airline magazines.
Other discount airlines are looking upmarket. ATA Airlines, a unit of ATA Holdings, plans to add a business class to its planes by the end of the year, following AirTran, a unit of AirTran Holdings. Ted, United's discount start-up, also offers a premium service, called economy plus.
Along with optimizing costs and revenue, these airlines and others are trying to stake out a distinct brand identity, and to avoid being seen as equivalent to and interchangeable with rivals. "Everybody in the industry is trying to differentiate themselves," said Joanne Smith, vice president for marketing at Song, the low-fare carrier started last year by Delta Air Lines.
In American's case, the strategy will vary from route to route. Even as it strips down its Manchester flights, it plans to add features for high-fare passengers on others, and is studying ways to customize its services using its Web site. One idea is to let fliers rent DVD players and select films in advance, with the player and disks awaiting them as they board. The airline may also try allowing passengers to order meals before boarding from a wider menu than the usual chicken or beef, said Henry C. Joyner, American's vice president for strategy.
Song's approach has been to try to attract women, who make up the majority of adult leisure travelers and who generally book vacations for their families, Ms. Smith said. "Once you win the hearts of women, you know they'll talk about it," she said. "They'll become evangelists for the brand."
To that end, Song dresses its flight attendants, male and female, in uniforms designed by Kate Spade in its signature lime green and charcoal gray, colors chosen to stand out in an industry that tends to stick conservatively to red, white and navy blue. Song has also sought to set itself apart with the variety of merchandise it sells on board, including martinis freshly shaken at seat side, fine candy and meals made with organic ingredients. The newest offerings include a low-carbohydrate roast beef wrap sandwich and a low-carb cocktail of Bacardi rum and Diet Coke.
As fast as airlines innovate, however, competitors can copy. After JetBlue won customers' praise for its seatback entertainment system, Frontier, Ted, Song and other airlines quickly installed similar systems. Even the famously frugal Southwest Airlines acknowledged pressure to match the idea, though it has not decided to do so.
Mr. Lee, the economist, said that passengers can expect the airlines to keep experimenting with services tailored to all kinds of market niches, whether sumptuous, Spartan or between.
"These segments are a moving target," he said.