São Paulo – Economy class passengers of United States-based carrier flights are not new to having to pay for drinks in some routes. And Qatar Airways passengers are also not new to paying for extra leg-stretching room or a vast array of TV programs.
These differences are not restricted to certain companies; rather, it separates Western and Eastern companies more and more. Whereas the North American, Latin American and European carriers break a sweat to cut costs and lower operational costs, their Arab and Asian competitors invest to captivate customers from the economy class up.
According to the air transport professor at the Federal University of Rio de Janeiro (UFRJ), Respício do Espírito Santo, what drives US-based and European companies to cut costs, including in-flight services, and Asian ones to invest, especially in in-flight services, is not strategy, but rather lack of funds.
“North American carriers are suffering from cash flow issues and domestic competition,” he says. In 2010, United had a net profit of US$ 253 million (in 2009, it incurred losses of over US$ 600 million) and Lufthansa, US$ 1.23 billion. In the fiscal year ended March 31st, Emirates Airline, based in the United Arab Emirates, posted a US$ 1.6 billion profit.
Espírito Santo underscores that United States carriers are still recovering from consecutive economic crises, the latest of which took place in 2008. Besides, these airlines are in the most competitive domestic market in global aviation, where they are also faced with competition from low-cost carriers, which possess virtually no in-flight services. In many cases, the solution is to cut in- and off-flight service costs and join a competitor in order to survive. Such is the case with United, the result of a merger between United Airlines and Continental Airlines.
Whereas airlines based in Western countries suffer from competition and poor performance, the same cannot be said of Arab and Southeast Asian carriers. According to Espírito Santo, two main reasons drive Eastern carriers to invest in their passengers. “Emirates, for instance, is a state-owned company that is part of a broader project of the emirate of Dubai, which involves tourism, projecting their country, marketing… It is part of a bigger project,” he says.
He highlights that in the East, there are no large, powerful companies in the executive jet industry yet, as is the case in the West. “That is why a ‘VIP’ or ‘highly VIP’ passenger from Europe or the US will rent a jet or use a jet of his own company’s instead of spending US$ 25,000 on a first-class ticket,” he says.
A professor at the School of Economics and Administration of the University of São Paulo (FEA-USP) and aviation specialist, Gilson Garofalo claims that the crisis of 2008 still affects the performance of airlines, but emphasizes that passengers are not as concerned about on-board glamour as they used to be, and highlights that the option of paying for tickets in instalments helps popularize the means of transport.
“Western carriers want to sell tickets at lower costs and are sacrificing comfort. In-flight services have been made simpler in order to cut losses,” he says. On the part of passengers, claims the professor, the important thing is to arrive at the destination. “Amenities do not make much sense nowadays. Flying has lost the glamour that it had in the past. Passengers want to arrive at their destination safely,” he adds.
In spite of differences in the services supplied before and during flights, the price variation in economy classes is not so broad. A simulation of a trip with one connection between the 15th (departure) and 27th (return) this month, from São Paulo to Beijing, costs US$ 2,244 from United. The same destination, on the same days, costs US$ 2,504 from Emirates. Air France charges US$ 2,900.00 and British Airways, US$ 2,265.47. A ticket for the same destination purchased from the US-based Delta Airlines costs US$ 2,359.90, although with two connections on departure and three on return. When it comes to pricing, the big exception was Lufthansa, whose ticket sells for US$ 4,821.13.
The director of aerospace consulting firm Multiplan Consultores Aeronáuticos, Paulo Bittencourt Sampaio, goes back in time to explain the battle of in-flight services. He recollects that when the tourist class was first established, in 1952, carriers began serving sandwiches to passengers, while the first class continued to enjoy haute cuisine. Products supplied by European carriers used to be better than US-based ones, which filed a complaint with the International Air Transport Association (Iata). The organization then standardized in-flight snacks, but allowed the airlines to choose the filling.
“On-board services from US-based carriers have always been weak. The Europeans were good, they had tradition, but air transport was massified in the Western world and they saw a need to compete. That led them to worry about cutting costs, and they wound up similar to the US-based carriers,” says Sampaio. Whereas the US-based ones charge for the alcohol that they serve on board, except for flights over the Pacific, Asian and Middle Eastern ones pay attention to detail.
“In a very discrete way, so passengers will not be embarrassed, a flight attendant for an Asian or Arab carrier will pay attention to them and struggle to fill their glasses with wine or some other beverage before it is empty. This holds true even of the economy class,” he says. Among the Eastern companies that stand out for their care toward passengers, Sampaio names Thai Airways, Cathay Pacific, Singapore Airways and the Arab carriers Emirates Airline, Etihad Airways and Qatar Airways. “They maintain very high standards of in-flight services, from the decoration of the aircraft to the services provided,” he claims.
On a market that is dynamic and highly sensitive to turbulence such as civil aviation, it is not easy to make forecasts. Sampaio underscores that the Arab airlines have been putting pressure on their European competitors. “The Arab carriers are causing great apprehension in Europe and the United States, because they are geographically well-positioned to draw in passengers from Europe, Oceania and Asia, with access to India and China,” he says. The European ones, however, continue to cut costs.
“To me, the strategy of cutting spending on in-flight services is a mistake,” says the specialist, because even if the Arab and Asian carriers charge a bit more for their tickets, passengers in long-distance flights want comfort. The amenities and good in-flight services may be the deciding factor when it comes to choosing which carrier to fly with.
*Translated by Gabriel Pomerancblum
