Air Transport World

Asia's class divide: leading-edge airlines continue to pour on the service enhancements in the battle for premium passengers while others looks to the price-sensitive business segment to fill the front end. (Passenger Service).

Ever since Malaysia-Singapore Airlines snubbed its nose at IATA and offered free drinks to economy passengers in the late 1960s, Asian airlines have been at the forefront of service innovation. That tradition continues today, but with a bottom-line twist. Despite last year's economic slowdown and the post-Sept. 11 downturn, many of these airlines are proceeding with cabin upgrades intended to put them in a class of their own.

The Teal Group's Richard Aboulafia puts the strategy into perspective: "This is all about grabbing market share with upgrades, even though it may be unprofitable in the short term.

Not surprisingly, British Airways has been at the forefront of cabin innovation, pushing the envelope and forcing Asia/Pacific carriers to respond if they want to keep a fair share of the lucrative market back and forth to Europe. BA's chief executive, Rod Eddington, credits the introduction of beds in business class for the airline's pre-Sept. 11 fiscal turnaround, and that same focus has helped to limit post-Sept. 11 losses to well under analysts' predictions.

Of course when almost half of your revenue comes from the front of the cabin, the battle to win just one more share point is intense. …

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