TWA Fan 1

The key to commanding a high yield with PE is to create sufficient leg room, and space between the seats to truly differentiate the product from Y. Also, the soft product is often the same as in J, in order to allow the product to stand out from Y, but also to keep the catering order as simple as possible (from a catering standpoint, Int'l PE is treated the same as J).

The fact is that, especially on transpac, a correctly positioned PE could end up being the consistently highest earner of all cabins, because there is a considerable premium over Y but a price point low enough to ensure stable demand, and this at a much greater density than any J.

TWA Fan 1

You also need to calculate the likely LF in Y vs a PE section.

If you take out 99 seats of Y which consistently sold at an 80% LF but your new PE section only has 72 seats but consistently comes in at 90% (as a function of the relative scarcity of supply in PE), then this must be factored into the RASM calculation.

Using these relative factors, would mean one would calculate RASM's on 79 Y revenue seats vs 65 revenue PE seats, meaning that PE would have to be priced at about 21.5% higher to break even, and if you are pricing at 37.5% considerably more profitable...

From NYC

What I found particularly interesting about the OP is the fact that CO is still holding to the delivery of the 787 before announcing what their BF seat, and the Y seat, is going to be. With the further delay in that delivery just announced, along with the fact that Boeing is not prepared to give any sort of date when delivery might, let alone will, begin, there is a chance that CO will not get delivery of any 787’s in 2009, or maybe just 1 or 2, since everyone who is waiting will be clamoring for at least one plane to get started with. This means that CO could go for at least a year to 2 years before announcing what the seats will be, let alone actually having any to put butts into. How long before the whole fleet is re-seated once it finally gets underway?

I think that this really puts CO at a competitive disadvantage aside from the issue of how are they going to serve all the destinations that are coming up without having the right number or type of planes.

UA and Delta will have completed changing over their seating by the time CO is only getting started! If CO doesn’t come up with something startling whenever they do finally get around to showing off their new BF, I think they will really be behind it, despite whatever travel managers are saying. Sure, a company may not want to provide what folks say they are not willing to pay for. But if the competition is providing it anyway for the same price, you better be sure to do so or customers, and their travel managers, will desert you.

CO once had vision to lead the game. Now, they just wait and wait while others take control.

TWA Fan 1

Agreed.

As far as waiting for the 787's word on the street is that CO is hoping to acquire some 773's before delivery of the 787's.

Hopefully this will work. Although the 773's don't have the fuel efficiency promised in the 787's they have more passenger capacity and could turn out to be critical to CO's Asian expansion in ultra long haul.

As far as lie-flat, I think the day is coming soon when the lack of true lie-flat will mean that CO will not be competitive and will have avery tough time commanding anything near full J, meaning that market forces will essentially force CO to adopt full true-flat at lesser density or face a greater erosion in RASM in the overseas premium cabin.

airlinepeps

I think its so funny how some of u go way beyond on what the new J product will be and how CO is going to be left behind. I would love to see the new J product to start rollin out in the near future but i know its not. Sometimes its not who will have it first but in the overall who will have the best seat comfort.

I think the wait will be well worth it im sure Continental has something up there sleeves with the new product it give them time to look at how the other airlines seats are in peformance and comfort.

And personaly Delta new Seats look hard as a bench and i sure wouldnt want to sleep on sticky leather on a 14+ hour flight

From NYC

I don’t know either what the new seats will eventually be. For all I know they’ll be memory foam and the most comfortable seats in the air, and they’ll be on gimbals so you don’t feel any rocking or turbulence at all.

All I was writing about was that CO’s decision to wait for their 787’s to come online before showing us what they’ll be puts them at a competitive disadvantage for what could be 2 or more years. It’s great that you have such faith in CO, but do you really think that they aren’t in a position right now to test Delta’s seat privately, or UA’s?! What other airlines, and the type of seats they’ll have by the middle of 2009, do you think CO needs to wait for to know what their own decision should be? Southwest?!

Smisek’s been saying, “Forget about lie-flats”; after LK stated at an early DO that the coach seats would change and become more comfortable and would likely have footrests, they are staying the same. So, from past words to practice, you can reach your own conclusion, and I sincerely hope I’m wrong and that your faith is rewarded, ‘cause I’ll be happy to sit in them.

But if they hold to this....

pbarnette

I think it is hilarious how someone is willing to dismiss the competition based upon what they have seen in a picture or mock-up, without ever having sat in the seat. To which I ask, how many flat-bed seats have you tried within the past year?

And I think the point is just that CO has told us that the first seats won't roll out until they receive the 787. That is 2009, at the earliest. That will be 1 or 2 787s. We can assume that their capacity will be constrained beyond that, slowing the roll-out on the rest of the fleet. Extrapolating from the 1 per 6+ months roll-out of the AVOD we are all promised on the 757, I honestly wouldn't be surprised to be waiting until into 2011/2012 or beyond (maybe well-beyond) for the roll-out to complete. At that point, comparisons to the product that others have now is completely pointless, because the more innovative carriers will likely be rolling out yet another version of their flat-beds, learning from their mistakes on prior versions. I mean, BA is already on their second generation flat bed within the same time period that CO has not made anything other than minor changes to BF.

I think the delay is a bad long-term idea and is being done strictly to save cash-flow in the short-term. There is nothing wrong with that, but it is not bold leadership and the product is slipping behind, and will remain that way on much of the fleet for what could be another 4 years or so. That is a lifetime. And for people to state that here is perfectly reasonable.

And in the meantime, I will gladly wait for the new BF to roll out. I won't be paying for it unless it is cheaper than the better products like BA or VS or whomever, but I'll happily wait and just fly better products until CO decides to roll something out that competes.

From NYC

Exactly my point. It was one thing to base the new BF roll-out on a delivery schedule for the 787’s when they were due in mid-or-so 2008. Now, however, with delivery date unknown even to Boeing, who knows when, or if, CO will get their 1st 787 in 2009, or maybe even not until 2010. Then the slow, gradual rollout because CO is so constrained by the number of planes it has for the routes it is and wants to fly to that they’re not gonna take a whole bunch of planes out of service at one time to re-seat them. Meanwhile, the present seating falls further and further behind, while CO holds to some artificially defined date that, beyond their control admittedly, falls further and further into the distance. If that’s the case, generation 1 BF seating will be meeting generation 3, maybe even 4 on the competition.

It’s kind of like the big 3 US auto companies a decade + ago preferring to take profits rather than to innovate, as the rest of the competition was working hard to clean their clocks. We know now how well that plan worked out in the long term.

Babu

A lot of other people seem to agree with you.

http://www.flatseats.com/Reviews/co-j.htm

HeathrowGuy

Extremely unlikely. United is increasingly falling behind in its modification schedules on account of the problems experienced in the ONE 767 aircraft operating the new seats. Delta has only committed to installing the new lie-flats in its 777 fleet -- while those can be modified by 2010, the 767s will likely remain as-is (i.e., no lie-flats) once the current refurbishing cycle is completed.

Of CO's direct long-haul international competitors, less than a handful of carriers offer lie-flats on a route where CO competes head-to-head.

So while I want to see an innovative new BF product, let's not kid ourselves into thinking that BusinessFirst is somehow far behind everyone else. It's not, and CO has a good year or so to plan out the next generation of BF before it's at risk of BF becoming genuinely uncompetitive.

TWA Fan 1

Well, for one thing, there are only a handful of competitors, period, in this marketplace.

However CO does go head-to-head with competitors that offer lie flat (in at least one cabin) on (assuming NYC as one market -- EWR & JFK):

1. EWR/JFK-HKG
2. EWR/JFK-NRT
3. EWR/JFK-LGW (and soon LHR)
4. EWR/JFK-CDG
5. EWR/JFK-FRA

In most of these markets, though, the only true lie-flat is in F.

HeathrowGuy

My point exactly. CO has to plan for a next generation BF, and apparently is, but the situation is not nearly as dire as some suggest. If anything, CO benefits from observing and learning from the stumbles of its competitors in implementing and marketing their lie-flat products, so that the next-gen BF gets done and done right from the very start.

TWA Fan 1

Agreed, so long as Larry Kellner does not allow his reflexive conservatism to get the better of the initiative by settling for an inadequately innovative product.

Rolling out a new BF that will last for about a decade is not a good time to cheap out...

HeathrowGuy

This may be part of the problem. The life cycles of longhaul premium cabins have been shortening significantly since the mid-late 1990s, making the judgment calls regarding the new product even more difficult. The worst thing that could be done would be to make the same mistake as AA, which is spending gobs of money to install a new product that's a full "cycle" behind where the marketplace is heading.

TWA Fan 1

Agreed again. Then again, one is more likely to end up with a wasted effort by cutting corners and making too many compromises in order to save money up front.

While I agree that AA made a colossal mistake, I think it presents a very clear cautionary tale specifically to CO as to what not to do (make some important product changes but in too tight a space). In any case, CO's AVOD is already better than AA's (even if CO is introducing it at the usual Kellnerian glacial pace).

One more point: The fact is that BF may not be true lie-flat but it is a truly excellent hard product in its category (I'm leaving aside the soft product issues for the time being because they are far more malleable). There are a number of reasons for this, most notably the tremendous width of the BF seat (especially on the 777's).

The sad thing is that everyone focuses almost entirely on seat pitch and true lie-flat, while the fact is it is possible to have quite uncomfortable true lie-flat by having a seat that is either too narrow or too hard, or both.