Air luxury is back with Airbus

Big seats lure big wallets as the A380 lifts off at last. Roeland van den Bergh reports.

Lying back and sipping champagne in a private suite on the world's biggest jetliner, it would be difficult to imagine being on the front line of a heated airline battle for the business traveller.

But the weapons of airline warfare are all around. The huge leather-clad seat that converts to a bed, an equally impressive television screen, the finest wines and foods, and unrivalled service.

After decades of relative service regression, airlines are piling on the luxury and space for passengers with the money to travel at the pointy end of the plane.

Private first-class suites, like those on Singapore Airlines' first Airbus A380 double-decker jumbo, have not been seen since the era of the majestic flying boats in the 1940s.

Upstairs, business class passengers relax in wider "sofa" seats that convert to full-length beds and have direct aisle access, eliminating the awkward climb over a neighbour.

All this is in response to a new threat to the world's flag carriers like Air New Zealand and Singapore Airlines - budget airlines.

Cut-price providers are increasingly training their no-frills sights on the lucrative long-haul routes.

Traditional full-service airlines are responding by differentiating themselves from their low-cost competitors and targeting the premium market.

Economy seats, which make up the bulk of the aircraft, cover the cost of fuel. Where the profit is made is from high-priced business and first-class seats, Air New Zealand deputy chief executive Norm Thompson says.

A return trip from Auckland to London costs about $1800 in fuel for each passenger.

With an average economy fare of about $2200, that leaves just $400 a seat to cover all other costs.

"You really have to focus on filling the front-end cabins because if you don't do that your revenue at the end of the day is not going to cover your costs," Mr Thompson says.

Air New Zealand's plans to increase leg room and again offer free food and drink in the front half of its domestic Boeing 737 for those paying the highest fares are also directly linked to new competition.

Pacific Blue starts flying between the main centres on Monday, resulting in the cheapest fares falling up to $20.

Mr Thompson says the airline must anticipate new competition and give passengers no reason to leave. That requires continuous improvement.

DEREK Sadubin from Sydney's Centre for Asia Pacific Aviation says the battleground forming in the Asia Pacific is between the airlines chasing the high-yield and quality-conscious business traveller and the high-volume, low-yield leisure market.

As a result, the tussle for the premium market among the established long-haul carriers has intensified, he says.

The A380, with its acres of floor space providing more options for premium seats, will be the main weapon in the fight for market share.

Singapore Airlines is in the box seat, taking delivery of the first four of its 19 A380s on order during the next 10 months.

Qantas and Emirates, which will eventually have the biggest fleet of 55, will then receive one each.

But others, including those not buying the A380, are not sitting on their hands.

Air New Zealand combined first class with business class in 2005, introducing the first, and still only, true bed seat on routes to New Zealand.

To bridge the increased price gap to economy, the airline added premium economy, which has more leg room and business class service.

Mr Thompson says Air New Zealand expects to lose some passengers to the A380 from February when Singapore Airlines puts it on the London route that connects to New Zealand.

But there is not the demand for private suites for a tourist-focused destination like New Zealand.

- © Fairfax NZ News