Air France renews first-class suite in battle for high-rollers

By Joanna Plucinska and Tim Hepher

PARIS (Reuters) - Air France on Tuesday unveiled a new first-class suite as it expands efforts to lure wealthy travellers from business jets and lend a 'French touch' to the tussle for premium revenue.

The CEO of parent Air France-KLM, Ben Smith, told Reuters the unspecified investment aimed to place Air France at the top of the European league in airline luxury, signalling a battle with British Airways and Lufthansa.

"A large percentage of the customers are flying for business reasons ... Many of them have the choice of a private jet or flying in first class," Smith said in an interview.

"What is new for us over the last few years is a marked increase in the number of luxury customers that are flying for leisure purposes."

The air travel industry is locked in a battle for high fare-paying customers as it recovers from the pandemic but is split over the value of investing in first class, with many carriers focusing on steady improvements in business-class seating.

Air France's latest first-class cabin, laid out in four pairs of grey, red-accented beds and seats on select planes, follows a years-long effort to re-invent a once loss-making product since Smith joined the national carrier in 2018.

The Canadian executive has long been a champion of first class even as many rivals retrench to business class. But he said only a handful of airlines had the depth of demand or ability to tap into assets like France as a destination.

"A lot of people like to experience France. When they get on the airplane outside France, they want to start their journey from San Francisco, Tokyo or Sao Paulo already in France through the environment on the airplane," he said.

The launch comes weeks after arch-rival British Airways launched its own new first-class cabin. Lufthansa also offers first class. Neither airline responded to requests for comment.

FRENCH BRAND POWER

Smith declined to say how much the investment in the new seats would cost, but the airline says its first-class service is already profitable, in part because the price of the ticket has risen in recent years.

An average one-way Paris-New York ticket costs around 10,000 euros in May, according to the Air France website.

Tuesday's rollout reflected the airline's efforts to strike a chord with France's broader reputation for luxury, with waiters passing Michelin-starred snacks in the presence of specially invited influencers in a Paris Fashion Week location.

Smith insisted, however, that Air France's "La Premiere" brand could stand on its own feet as a luxury product.

Partially state-owned Air France has long been synonymous with first class, with its passenger list so powerful that seats were once reputed to be bugged by the country's spy agencies.

Now, it must compete with now-common lie-flat seats in business class or increasingly accessible private jets.

Much of the cost is wrapped up not just in the seats but in bespoke ground services such as special check-ins or limousines.

There is also the hidden cost of creating a sub-fleet of airplanes that can only operate on a handful of routes.

"Unless it's rock solid, it can be quite marginal because of the operational complexity, the capital investment and the risk of substituting seats that they could be sure of selling in business class," said aviation consultant John Strickland.

(This story has been corrected to say San Francisco, not San Jose, in paragraph 8)

(Reporting by Joanna Plucinska and Tim Hepher. Editing by Bernadette Baum and Mark Potter)