“Airlines are trying to find a point of difference to attract customers, and are doubling down on soft products because it is faster and the supply chain is quicker,” said Jonny Clark, an airline brand consultant.
Supply chain problems have dogged the industry since travel restarted at scale in 2022 following the coronavirus pandemic. Delivery delays from Boeing and Airbus have led to many aircraft being delivered years late, while there is also a shortage of new seats because of production delays.
Factors including tighter certification rules, shortages of labour and electronics shortages for embedded in-flight entertainment systems had all combined to slow deliveries of seats, industry experts said.
“There are lots of little things you can do,” said Etihad chief executive Antonoaldo Neves regarding the luxury touches. “To get new seats takes a long time.”
His airline has focused on ironing out the problems that most irritate frequent flyers – lost bags, cancellations and missed connections because of delays.
Hong Kong’s Cathay Pacific faced delays refitting their new business-class seats with sliding doors, but this week unveiled the new cabin, which includes an on-board art gallery.
It will take until around 2027 before it completes the installation of the new cabin on 30 of its existing fleet of Boeing 777 aircraft. The airline’s new first class, meanwhile, is scheduled for introduction on the new, heavily delayed Boeing 777X model. These will not appear until 2026 because of delivery delays.
Lavinia Lau, Cathay’s chief customer and commercial officer, said there had been a “slight delay” in the introduction of the new business-class cabin.
“The first couple of aircraft are being slightly delayed, but we will try to catch up with the rest of our schedule,” she said. “Supply chain issues and challenges – that’s a known fact. And we are facing this as much as every other airline.”
Middle Eastern airlines were under particular pressure to elevate the passenger experience, said Rob Burgess, editor of frequent-flyer website Head for Points. The airlines need to persuade passengers to take an indirect journey with a stopover in the Persian Gulf.
“It is a case of keeping every box ticked, from seat to food and drink and entertainment,” Burgess said. “Each customer will prioritise these elements differently, and you want to ensure you are on top with whichever one someone cares most about.”
The spending on upgrades comes as airlines are making strong profits. The International Air Transport Association forecasts the global industry will record net profits of US$30.5b in 2024, with a net profit margin of 3.1%.
High-spending holidaymakers have also replaced many businesspeople at the front of the plane following a decline in corporate travel. These leisure travellers typically expect a richer experience when flying compared with corporate customers, who value privacy and sleep.
Clark said passengers were becoming more demanding.
“Airlines have had a couple of good years of profits and are doubling down to offer more and more to passengers,” he said. “I’m not sure how valuable some of these initiatives are, though. To be honest, the caviar... how many people are going to eat it?”
Written by: Philip Georgiadis in London and Chan Ho-him in Hong Kong.
© Financial Times
