International travel returns are provoking a struggle for high-cost passengers

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Singapore Airlines A380 First Class Suite

Leslie Josephs | CNBC

This week, Singapore Airlines unveiled its highest bid in the US: first-class suites with a bed, swivel chair, 32-inch touch screen and orchid-decorated desk. Each has 50 square feet and there are two bathrooms for six passengers.

It is a bet that passengers are willing to pay for luxury cabins after two years of blockades of the Covid pandemic, which have devastated travel demand. Other airlines are taking similar steps with the refurbished cabs. During the pandemic, they were able to make some improvements faster when they did not need so many aircraft.

A return ticket at one of Singapore Airlines’ apartments from New York to Singapore, with a stop in Frankfurt, Germany, is listed on the company’s website at $ 17,143.37, including tax in early May. One of 78 new business-class seats on the A380 that will be converted to 6-foot beds on the same day is $ 6,362.87. Both cabins are on the upper deck of the superjumbo aircraft.

Passenger demand for both cabins on the upper deck was strong, said Joey Seow, Singapore Airlines’ regional vice president for America. Business-class aircraft seats sell out more than 343 economy-class seats, a reversal of the pre-pandemic trend, he said.

“Normally, people would choose economy class because it’s cheaper,” Seow told CNBC aboard the A380 before leaving for Frankfurt on Monday night. “We see that more and more people are ready to pay for this space.”

Airlines around the world hope to benefit from this trend. This is crucial for airlines as they seek to return to profitability while facing new challenges, such as labor shortages, the recent sharp rise in fuel prices, new COVID-19 variants and the Russian attack on Ukraine.

Premium surpasses

Singapore Airlines A380 first class suites

Leslie Josephs | CNBC

Delta’s premium seating offer is increasing proportionately compared to 2019, in part because the airline has equipped some of its older aircraft with more spacious seats, said spokesman Drake Castaneda.

Carriers are relying on transatlantic travel especially this year, as several countries on both sides of the ocean in recent months, after two years of weak demand, they have lifted the blockade of Covid.

Growing plans

Singapore Airlines’ newest business class cabin debuts in New York

Leslie Josephs | CNBC

“At the moment, higher ticket prices do not appear to have a significant impact on premium demand,” said Henry Harteveldt, former airline executive and founder of the travel consulting firm Atmosphere Research Group. “Premium customers will be the last to feel the impact of higher fares simply because they have the means to afford premium travel.”

Trans-Pacific demand on long routes returned more slowly, especially in China due to the strict blockades of Covid.

Singapore’s Seow said looser travel restrictions in other parts of Asia were helping to encourage new reservations, but passengers were also interested in its shorter sections, such as from JFK to Frankfurt on the A380.

“We hope that with a better product we can satisfy more customers who may not have chosen us in the past,” he said.

Less margin for error

Carriers were allowed to experiment more freely during the pandemic. Historically low travel demand and a tangle of countries that have opened their borders have sent airlines looking for revenue-raising opportunities where possible.

Now that aviation fuel prices in the US are rising and uncertainty about the Russian war in Ukraine and its impact in Eastern Europe, airlines have less room for error. The closure of the airspace has also forced some carriers to fly longer routes to avoid Russia.

While United is still planning a robust transatlantic timetable, the airline said last week that it would not fly non-stop between Washington’s Dulles and Berlin, Newark and Prague or Denver and Tokyo, as planned.

“United regularly adjusts our schedule in response to a number of factors, including demand, costs and resources,” the airline said in a statement. “We look forward to returning these routes to our network as soon as the market allows.”

Some airlines are also restricted by plane. For example, American Airlines announced last month that it would further modify some international routes, such as Seattle-London, due to a break in deliveries to the Boeing 787 Dreamliner.

Since the outbreak of the war, some passengers have chosen Western European destinations with more traffic over Eastern Europe.

“We have certainly seen a decline in bookings for Eastern Europe and an increase in Western Europe,” said Kendra Guild, Product and Operations Director, SmarTours, which offers packages worldwide.

She said customers were not disturbing, but bookings in the Czech Republic, Poland and Croatia had fallen, while countries including Portugal, Spain and Ireland were relatively strong.

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