Because customers ‘aren’t buying it,’ American Airlines is dropping first class on all flights

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Customers have stopped booking seats in the premium cabin, so American Airlines is discontinuing its first class seat offering on long-haul flights.

“First class will not exist on the 777, or at American Airlines for that matter, for the simple reason that our customers aren’t buying it,” American Airlines’ chief commercial officer Vasu Raja said on an investor call Thursday. Raja was responding to a question about whether the airline intends to discontinue the offering on certain planes.

American debuted its new ‘Flagship Suite’ business class in September, as part of a plan to increase the number of premium seats available on its long-haul flights by 45% by 2026.

The Flagship Suite, which includes a lie-flat bed and a privacy door, will be available on America’s new Boeing 787-9s and Airbus A321XLRs beginning in 2024. The airline also stated that it will retrofit its 20 Boeing 777-300ERs with the new suite later that year.

The change is intended to reflect a shift in the types of journeys taken by passengers who choose to fly long-haul routes, according to Raja.

Prior to the pandemic, half of the demand for premium cabins came from large contracted corporations; now, Raja estimates, 40-50% of that demand is “blended demand” — trips that include both work and leisure components.

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“The rest is leisure demand that is willing to pay more for the quality of the business class seat,” Raja explained.

By eliminating first class, the airline will be able to offer more business class seats, “which is what our customers most want or are willing to pay for,” according to Raja.

In the third quarter of the year, the American Airlines Group, which includes regional carriers Piedmont, Envoy, and PSA, flew over 500,000 flights. Revenues increased by 13% over the same period in 2019 — the most recent comparable year owing to the COVID pandemic.

According to the airline, the third quarter’s results were a record for any quarter in its history.

It is not the only airline benefiting from increased travel demand as a result of the coronavirus pandemic.

United also had one of its best quarters in company history, according to CEO Scott Kirby. According to United, hybrid working, which makes it easier for people to travel or relax, is helping to fuel that demand.

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