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Is It Time To Stick A Fork In First Class? Competition Is Undermining Airlines' Elite Economics

Are the days of first class flying coming to an end?

That’s the question raised – and the tentative conclusion reached – this week by Matthew Bennett, publisher of First Class Flyer, an online magazine and website focused on high-end travel. He raised it following recent quiet moves by American and United, the nation’s and the world’s No. 1 and No. 3 carriers, to lower prices dramatically on their first class seats on many routes to Asia.

Certainly the price cuts on trans-Atlantic routes to Europe and trans-Pacific routes to eastern Asia are responses to the slumping Chinese, Asian and other global economies and to the devaluation of the Chinese yuan. But they’re more directly a response to the intense price competition on routes between the U.S. and Asia being driven primarily by the three big Persian Gulf carriers – Emirates Airlines, Etihad and Qatar Airways.

By traveling via the Gulf carriers’ hubs in the UAE and Qatar Americans have discovered that they can reach southern and Central Asia, and Australia just as fast as they could by taking the more traditional trans-Pacific path. And, because of the Gulf carriers’ aggressive pricing strategies that have made them major players in the global air travel market in a very short time, Americans are finding that they can get world class high-end service at prices much lower than what they previously were paying on the big-name U.S., European and Asian carriers.

That’s why American, United and No. 2 Delta – indeed, with Delta taking the lead – have been lobbying furiously all year to convince someone – anyone – in Washington to rein in what they say are the Gulf carriers’ unfair competitive advantages (which the Big Three allege are the result of the Gulf carriers being government owned and illegally subsidized companies).

The Gulf carriers are not dramatic low price/low frills discount carriers along the lines of U.S. low price carriers like Spirit, Allegiant or even Southwest. In fact all three get extremely high marks for the quality of their inflight services. But they consciously are keeping downward pressure on the price of premium class international fares.

As you can image, the U.S. Big Three and other big-name international carriers including British Airways, Air France, Lufthansa, JAL, Qantas, and Singapore Air that long have dominated the...


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