aviation

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Logical End of the K-Shaped Economy

Edelinck, Gérard (n.1640 – d.1707-04-02), Triomphe de Louis XIV (Titre principal). Burin. Petit Palais, musée des Beaux-Arts de la Ville de Paris

[Updated version of my initial press release dated May 2018. I wasn’t wrong, just a bit premature.]

Newly Merged Airline Ends Coach Class Service
A news release

Chet Richards

ATLANTA, Georgia — May 27, 2030— (NYSE:DUA) — DeltaUnited-American (DU-A), the country’s premier global airline, announced today that it is ending coach class service and retiring routes and aircraft that serve the coach market. In conjunction with the move, the airline rolled out a new ultra-premium “Imperial Class.”

According to CFO Jonathan Tripp, the airline obtains 75% of its revenue — and all of its profit — from its premium offerings and upmarket financial services from companies like American Express and Capital One, despite such passengers making up less than 15% of its customers. Over the last five years, however, the airline has begun to face new competition from “semi-private” airlines such as JSX and Blade that offer experiences above first class, which he called “ultra luxury,” sometimes at twice the price.

To better compete in the ultra luxury marketspace, DU-A’s new Imperial Class will occupy the front section of larger aircraft, including select Boeing 777-10s, Boeing 787-10 Dreamliners, and Airbus A350-1500s. Passengers in the new class will travel by helicopter (where available) to special boarding terminals with “transparent” security checks. On board, Imperial Class customers will enjoy staterooms, as is now common on Asian airlines, but with additional amenities including enhanced soundproofing, jacuzzi tubs, salons with fitness, yoga, and massage rooms, and an exclusive on-board lounge. Discrete lightweight carbon fibre walls will separate the Imperial zone from first and business classes.

A unique amenity of Imperial Class is a ratio of one flight attendant per Imperial Suite. “All of our attendants are licensed massage therapists and certified yoga instructors,” noted DU-A Executive Vice President of Marketing and Client Services, Capt. Katherine O’Flannery. Imperial clients will be able to select their attendant online or through the company’s Imperial Courtier service.

“We designed Imperial Class to appeal to the growing number of discerning clients who appreciate the opportunity to show the world what their intelligence and hard work have accomplished,” she elaborated. “Business class, on the other hand, is for high achievers on their way up. I see their work lights on all night,” she explained, “while Imperial is for people who have already made it.” Comparing to semiprivate airlines, she noted that Blade can take you from Chicago to Paris, but “if you want ultra luxury to Beijing, Jo’burg, Buenos Aires, or Singapore, we’ve got you covered.”

When asked about domestic cities where there may not be enough demand to justify all-premium service, she confirmed that the airline plans to stop flying to those places, although they will retain suitable domestic routes with smaller, but still all-premium, aircraft. “Coach just got to be more trouble than it’s worth,” explained Capt. O’Flannery. “Coach passengers always buy the cheapest fares, but they still expect to be treated like royalty. I tell you, though, did you ever see the coach section of a 777 after a 12-hour flight? And those toilets! Our business class clients complain about even being on the same plane with those people, and who can blame them?”

“We’ll let Greyhound or Southwest worry about coach,” insisted Capt. O’Flannery. Commenting on losing the smaller markets now served by DU-A, she suggested that “Imperials who live in Rapid City can fly their Citations into O’Hare where our Rolls will pick them up planeside for flights to Paris and beyond.”

CFO Tripp estimated that the move would initially reduce revenue by some 15-20% but could double the bottom line. Achieving these results, however, will require substantial savings, primarily from headcount efficiencies. “We’re going to have to be vigilant,” he observed, “but the mergers that built DU-A have already structured our senior management bonuses to incentivize the level of savings we’ll need.”

Longer-term, Imperial Class has huge upside potential for revenue enhancement, he concluded. “For this elite segment of the market, price is not only no object, price is the object.”

DU-A unveiled a new corporate motto to complement these initiatives: “The romance of flight for those who can appreciate it.”

[Inspired by “Sorry Virgin – Sex and air travel just don’t mix,” by Natalie Cox, The Guardian, “Comment is Free,” 21 May 2013 http://www.guardiannews.com/commentisfree/2013/may/21/virgin-air-travel-sex-dont-mix%5D

Chet Richards, now retired and living near Hilton Head Island in South Carolina, is a Million Miler on Delta and close to that on Lufthansa. His family is from the South and his father was career Army, so, as he puts it, “we were flying Delta back when they used to swoop down to dust a few crops.” He still has great affection for the airline. Although the vision related in this news release came to him in a dream and originally appeared in this blog on May 27, 2013, the statistics in it are real.

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John, Pierre, and Harry

Many years ago, large corporations published well written, well edited, and often lavishly produced magazines that showcased their products and, inter alia, demonstrated their enormous resources and competence.

First flight, however inadvertent, of the YF-16, January 20, 1974. US Air Force photo

In 1991, one of these, General Dynamics’ Code One, published a wide ranging interview with Harry Hillaker, the chief designer of the F-16. It is a tour de force. Hillaker was there at the very beginnings of the effort to develop a new fighter optimized for close-in air-to-air combat. At the time, the Air Force was deep into bringing the F-15 into production. As Hillaker describes it, the F-15 was a continuation of the standard fighter lineage: You want to go faster? Add another engine. You want to go farther? Make it bigger to carry more fuel. Being larger also meant it had more capacity to carry weapons and electronics, particularly the ability to employ radar-guided missiles, which could operate well beyond the visual rage of the pilot.

The result was an airplane that, while demonstrating significant air-to-air performance improvements over its predecessor, the McDonnell Douglas F-4, was correspondingly more expensive. Many at the time also felt it would be more difficult to maintain, particularly under wartime conditions. Incidentally, John Boyd was heavily involved in the F-X program of the late 1960s, which became the F-15.*

Hillaker recalls how a small group of pilots, analysts, and engineers — the “Fighter Mafia” — adopted a completely different philosophy: Employ advanced technologies, particularly fly-by-wire flight control systems and designed-in instability, to develop a fighter that was much smaller than the F-15 while optimized for the type of close-in dogfighting that characterized air battles during the Vietnam War. At first, this group consisted only of Hillaker, Pierre Sprey, and Boyd.

To see how this all came together to produce the F-16, read the article.

Biographical note: At the time, I was a staffer in the TACAIR shop of an obscure branch of the Office of the Secretary of Defense, the Office of Program Analysis and Evaluation, the much subdued descendent of McNamara’s “whiz kids.” As the point of contact in our office for the Lightweight Fighter program, which included both the YF-16 and the Northrop YF-17, I probably met Harry Hillaker, although I truly don’t remember.

Lockheed Martin continued publishing Code One until 2016. They still maintain the archive and publish a newsletter, Vector Star.

*Robert Coram describes Boyd’s role in the F-X/F-15 in his bio, Boyd: The FighterPilot Who Changed the Art of War, chapter 15.