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TravelHaven News Brief ― Farewell first class?

With the current economic downturn and a string of mergers, first-class and business-class airline seats are undergoing a strict evaluation by airlines to determine their value.

Southwest Airlines will not continue premium service on AirTran once their planned merger is complete. United Airlines is undecided about keeping first class on international fights when it merges with Continental Airlines, which offers a combined business/first class on such flights. Both United and Continental currently offer first class on domestic flights.

Premium seating is key to profitability for many airlines. In the first six months of 2010first class and business class represented less than 8 percent of total passengers, but 27 percent of ticket revenues for international traffic. Airlines are in constant competition to upgrade amenities like meal and wine service and Bose noise-canceling headphones to highlight their differences in the premium cabin. the next move may be lie-flat beds.

Many U.S. carriers have decided to improve business class while eliminating first. Others have kept first class primarily as upgrades or as leverage when competing for corporate accounts. But that tactic may be counter-productive today, as premium class seats have more accessible at a lower price point by using frequent flier miles and other discounts. This has hurt carriers in lost revenue lessens the value of premium classes to consumers.

Some foreign airlines are investing a lot of money to improve products and luxuries for premium passengers. These include Emirates, with showers on some aircraft, and Singapore Airlines, with an ultra-wide business class seat. Some carriers, including United and British Airways have introduced a fourth class ― premium economy, a hybrid of coach and business offering more cabin space, larger seats, extra leg room and more services than standard coach.

Henry H. Harteveldt, travel analyst for Forrester Research, predicts that “airlines are going to raise economy fares, offer more aggressive opportunities to upgrade via e-mail and at kiosks, increase the size of coach cabins, shrink business-class cabins and reduce or eliminate first class.“ That would mean fewer premium seats and fewer upgrades or free frequent-flier seats, which will increase profit margin. However, some believe carriers risk losing the competitive edge when it comes to high-end customers as they continue to cut back, seeing service as an expense instead of an opportunity.