Imperial Class: A little background

If we do end up with (most) airlines converting to premium offerings and ditching coach class, we’ll be right back where airline travel started. My old friend and former boss at Lockheed, George Hamlin, has a column, “Suite Life,” that talks about this and other factoids from the era of super glamorous air travel over at Air Transport World.

As he recalls:

Airline service began by catering to a premium market. … As commercial aviation advanced, there were numerous other aircraft types that were fitted with berth-type sleeping facilities. In addition, as aircraft became larger, it also was possible to install more luxurious passenger accommodations.

One big shortcoming, though. None of today’s ultra premium offerings seem to have figured out how to integrate showers and other necessaries into the suite, something the rail industry did 80 years ago. One must still trudge down the hall to the shared “facilities.” I don’t know how you feel about this sort of thing, but to me, it’s totally unacceptable. You can be sure that Captain O’Leary and her colleagues will get it right.

Where are coach passengers going to go? Well, if you scroll down on George’s page, you’ll find a link to a column entitled “Which is better: A380 or 747-8I? Maybe both,” in which we read about Russian carrier Transaero. This airline, based in Moscow and ranking as Russia’s second largest, is ordering both the A380 and the 747-8 Intercontinental. Why?

Moscow-based Transaero has two main goals, [CEO Olga] Pleshakova said: “The mass transit of tourists and [winning] the intense competition for business travelers on medium-haul routes from Russia to Europe, the Middle East and the Far East.”

In pursuit of the first goal, Transaero plans to utilize the A380, into which it will pack 650 passengers. To meet the second objective, the carrier is inclined toward the 747-8I.

I think what this means is that if you fly coach, you’ll soon look back on today’s spacious 10-across rows and 31 inch pitches with fond nostalgia.(Seat info from seatguru.com)

Other posts on Imperial Class:

https://slightlyeastofnew.com/2013/05/27/newly-merged-airline-ends-coach-class-service/

https://slightlyeastofnew.com/2013/11/23/imperial-class-a-progress-report/

https://slightlyeastofnew.com/2014/05/14/the-march-to-imperial-class/

https://slightlyeastofnew.com/2014/06/21/bad-news-for-imperial-class/

11 thoughts on “Imperial Class: A little background

  1. Chet,

    Here’s a really interesting question.

    Given the dispersed nature of North America, and the geographical distances involved, what does this mean about our long term future prospects and prosperity?

    I could imagine that the Northeastern US, being very densely populated (at least compared to the rest of the US) could end up with a situation similar to that of Europe once air travel becomes not affordable. Canada similarly along the Windsor-Quebec City corridor would end up like the Northeastern US. Central Mexico, in an area around Mexico City would also be able to enjoy some degree of physical communication owing to the population densities.

    The rest of the North American continent though would be in trouble, cut-off from each other. Perhaps a case could be made that similar prospects could occur along the West Coast? Compounding the problems substantially, are desertification, and the inability to respond to problems (ex: a major hurricane in the southern US or a major earthquake off the East Coast).

    Perhaps a high speed rail system, although extremely expensive to build, perhaps $500 billion to $1 trillion in 2013 USD might be a worthy investment after all. The Japanese, China, many of the European nations, and several other nations have all invested a lot of money in this. It would also suggest that investing in infrastructure, while we still can is of dire importance.

    Chris

    • Chris,

      That is an interesting question.

      Boyd suggested FWIW that one of the traits organizations need when confronting stress and unpredictable change is the ability to form similar implicit orientations among its members. That is they need a certain level of agreement on the problems they confront and the philosophy for solving them.

      Obviously a nation of 300 million people or a continent of half a billion won’t have anywhere near the same level of Einheit as a military until that has lived and fought together over months or years. But any organization needs to agree on basic principles in order to take effective action.

      It seems to me that we have lost even the minimal level needed to confront the problems you identified. Do you really think, for example, that Congress would vote a half a trillion dollars to develop high speed rail? That sounds like an enormous amount of money, but it’s a tiny fraction of what the wars we’ve initiated since 2001 will cost. And that’s not even counting the benefits to the economy an investment in infrastructure would bring. But when a sizable segment of the American population believes that the federal government can do no good at all, do you see any possibility of taking action on this scale?

      So one might think that one of our national priorities would be to rebuild Einheit.

      I have no idea how this will play out. I remain optimistic, but I can’t explain why.

      Chet

    • Here’s an example from today’s Wall St. J:

      “Maryland’s Incredible Purple People Mover — How the state’s proposed $2.4 billion light rail could take taxpayers for a ride.”

      The author, Mary Anastasia O’Grady, writes a regular column for the Journal and so, presumably, speaks for that newspaper and its owners.

  2. Hi Chet,

    “It seems to me that we have lost even the minimal level needed to confront the problems you identified. ”

    I think that for a lot of people, there is a tendency to think that the quality of the nation’s leadership and engagement of their fellow citizenry has very little impact on their own quality of life, when it is the total opposite.

    In some cases, a substantial proportion of the population appears to be ignorant too on a lot of issues. Whether that is because they feel they have something better to do with their time (ex: watch popular TV shows, read up on celebrity gossip, or some other activity), or whether it is involuntary (ex: not enough time because must work for very long hours) probably depends on the person.

    Regardless, a culture of civic engagement and awareness of the major challenges the US faces appears to be on the decline among the citizenry. My generation, Generation Y is not very politically active, although when they are, they are generally centrist (centrist by Canadian standards, which would probably be quite progressive by American ones).

    “Do you really think, for example, that Congress would vote a half a trillion dollars to develop high speed rail? That sounds like an enormous amount of money, but it’s a tiny fraction of what the wars we’ve initiated since 2001 will cost.”

    Actually, I view that $500 billion as an initial down-payment, for what will undoubtedly bring future costs, such as expansion plans, and other things, such as R&D for newer, better trains. Notice what is happening with high speed rail in Japan for example. The trains there last perhaps ~15 years, as high speed rail does cut short on train life expectancy because in Japan, trains can go for over 3000 km (about 2000 miles) per day.

    The military and the wars seem to have an effectively “spend as as much as we can” mentality. The only reason why they are going down in the Obama administration is because of the state of the economy is such that there is no way to continue maintaining the Bush II level of military spending growth, particularly because the US economy remains weak and the various tax cuts for the very wealthy.

    Given this situation, no, I cannot imagine that anything like a major infrastructure construction would be possible.

    “And that’s not even counting the benefits to the economy an investment in infrastructure would bring.”

    When we study France in particular, and Japan, yes the benefits do exceed the costs of construction – in fact they a symbol of national pride for both nations. Of course, I am simplifying things here.

    For one, building of large high speed rail requires dedicated, specialized engineers, and very high skill labor, something present in those nations (built up over many years), but not as much here. The US does have a very impressive freight system, but not necessarily one that is designed for high speed rail, which means that it will have to start at the bottom of the learning curve.

    There are other issues of course.

    – Quality of roads in North America (decaying)
    – Gridlock in certain areas (most major cities have gridlock during the “rush” hours)
    – Water systems (some areas are experiencing intermittent shortages, partly due to rainfall issues, but also because of poor infrastructure)
    – Electricity and deliver systems

    Too long to list here.

    “But when a sizable segment of the American population believes that the federal government can do no good at all, do you see any possibility of taking action on this scale?”

    I think as hard as it is for many Americans to recognize this, but governments are necessary.

    Do I see any possibility of this happening? The answer is, things are going to get a lot of worse before they can possibly improve.

    The other issue I see is that a substantial proportion of the American population really does believe that they are “exceptional” and that bad things cannot happen to them. This mythology seems to withstand empirical evidence.

    The idea that they are the superpower because of a few factors – the good fortune to live in a continent with lots of natural resources, the mistakes made by the other “Great Powers” in the late 19th and first half of the 20th century, the boon from immigration of intelligent people, and the policies pursued in the 19th and first half of the 20th centuries is anathema to many.

    Finally, the idea that this can be lost through mismanagement is also anathema because they feel they are “exceptional”. What I find most disturbing about all of this is the self-inflicted nature of the problems.

    Regards,

    Chris

  3. Chet,

    I think you’re working with a hypothesis contrary to fact here, if you look at the order books for Boeing and Airbus, or their market forecasts, http://www.boeing.com/boeing/commercial/cmo/, for example, you’ll see that the A380 and 747-8I just are not selling very well. There’s even speculation that Boeing will pull the plug on the 747 as soon as the replacement Air Force One is delivered.

    Meanwhile, single aisle jet orders are booming. “Low Cost Airlines” like Southwest, JetBlue, Ryan Air in Europe and others (NOK–in Thailand–I believe) are growing like wild fire.

    True, the premium airlines of the Middle East–Emirates, Etihad, and Qatar are all in heavy growth modes right now, but I think the more reasonable future prediction is that mature/traditional airline business models will be replaced by modern ones–low cost airlines for local travel, the Middle East “9th Freedom” connectors for intercontinental. Disruptive innovation is the order of the day.

    (Disclaimer: although I do work in Boeing Commercial, I learn more about the market online from public sources than anything I read inside). 😉

    -Andy

  4. Hi Andy,

    Thanks. If you could be a little more specific on which hypothesis you think is “contrary to fact,” it would make it easier to debate.

    Disruptive innovation is always the order of the day, although it’s easier to spot in hindsight.

    Chet

    • Sorry. Poorly written comment.

      Specifically, the notion that there’s a mass movement to large twin aisle airplanes–A380 and 747-8I–to be used as cattle cars. It’s just not happening. The sales numbers and forecasts don’t support the hypothesis. Sales of plain jane, unadorned coach/business class single-aisles (737, A320 families) to low-frills, low-cost, customer-centric airlines (Southwest, JetBlue) are booming. I hesitate to call Ryan Air customer centric, but it’s low-frills and low-cost—and booming.

      Clayton Christensen’s Innovators Dilemma predicts what you predict–that mature airlines like American, United, and Delta will move from low margin segments to high margin segments, abandoning coach class to the young upstarts… but who cares? We’ve got the new airlines and soon enough the old will be irrelevant and gone, just as we’ve seen in industry after industry. “Imperial Class”, but itself is not a sustainable business model, just as high-margin film was not sustainable for Kodak and high-margin mainframes were not sustainable for IBM.

      -Andy

      • Andy,

        Thanks!

        The article wasn’t about jumbo cattle cars, although that’s still a possibility for shuttling about the hoi polloi (frankly, I was thinking more about used 747s and other wide bodies). And you’ll also notice that I didn’t make any prediction about whether DeltaUnited-American’s strategy was going to work. Depends on its culture, in particular, how agile the merged company is. As for narrow bodies, my guess is that they will follow the regionals into oblivion. You and I will be taking the bus a lot more.

        Kodak is an interesting case. It took a generation for film to (virtually) disappear. For this entire period, Kodak had time to adapt. And they did try — my daughter bought a Kodak printer a few years back. But the reason they failed was that they weren’t as good a company as their competitors: I don’t have any evidence, for example, that the idea of cheng / chi ever occurred to them or that they had an organization capable of it. IBM, on the other hand, seems to be doing quite well.

        Anyway, I’ll wager you a first class upgrade on Spirit that I’m right, but we’ll have to wait, say, 20 years to settle up because, as you know, these innovative disruptions take a long time.

        Chet

  5. Indeed! I had to remind my wife just the other day that GM and Chrysler were in fact destroyed by Toyota. Sure, they are still in business, but as shadows of their former selves and with different business models that largely copy the Toyota model, if imperfectly.

    I think FujiFilm handled digital brilliantly–they understood their core was gelatin products, not film and abandoned film for commercial gelatin.

    As for IBM, it’s an interesting question. Are they still IBM? The entity is doing fine, but they no longer are in the “business machine” business. Like your grandfather’s ax, when you change the handle and change the head, is it still your grandfather’s ax?

    One could argue that Westinghouse is doing great too–now that they’ve changed their name to CBS, sold off all of their industrial operations and bought a bunch of TV stations. Or Berkshire Hathaway–great example of a New England textile company adapting for the 21st Century!

    -Andy

    • Andy,

      Thanks again! Interesting question of when is a company still the same company. On the other hand, in the great scheme of things, I don’t think it’s very important. Companies change names, pieces break off, others get added, products and services come and go, all reflecting realities of the marketplace.

      My best story along that line came from a colleague at Kennesaw St. He used to be a high ranking exec at James River, which was bought by Georgia-Pacific in 2000. One day in the late 1980s, they were starting a meeting with one of their European partners when the delegation from that company informed James River that they were very sorry but they were breaking off discussions. When asked why, the answer was so that they could concentrate on their new corporate focus, cellular telephones, a business Nokia did very well in for a generation.

      Fuji’s story is a little more complex than you suggested. For one thing, they still make film. They also make a humongous number of other products including cameras and other imaging devices, medical equipment, and printers. For those who are wondering, they aren’t related to Fuji Heavy Industries, 1/6 owned by Toyota, who build Subarus and some stuff for Boeing.

      Could Kodak have imitated this strategy? Who knows? Hard to see why not, given their resources in, say, 1990. Kodak’s still here, sort of.

      IBM, for those who don’t follow these things, still makes a lot of computers, including mainframes, although hardware represents a declining share of IBM’s revenue and profit.

      So when the market changes, you have to change, too. Something I’m sure your strategists are working on even as we speak.

      Chet

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