Hotels in the Air: The Airline Battle to Redefine Luxury

For most people, air travel is something endured because it's quick and gets us to our destinations. But for those willing to pay a lot more, airlines are ready to provide as the market for on-board private suites heats up.

Beyond first class
When the typical person thinks "first class" in terms of air travel, things like a bigger seat, more legroom, and better service come to mind. But Middle Eastern carrier Etihad Airways is making ordinary first class look like the cattle car with its three-room suite.

According to Businessweek, the suite will cost $43,000 on certain flights (yes, that's more than a starting-level Mercedes-Benz) and will contain its own private bathroom. Although the 125-square-foot suite would make for a small hotel room, it's certainly a step up from economy class or even the larger first class seats on other aircraft.

But Etihad Airways isn't the only carrier to push the limits of air travel luxury. Air France-KLM (NASDAQOTH: AFRAF  ) has unveiled its "La Premiere" suite designed to be a step up from standard first class layouts. At 32 square feet, Air France-KLM's offering is significantly smaller the Etihad's skybox but still remains an improvement over traditional airline luxury.

Featuring a lie-flat seat, hotel linens, a privacy curtain, a 24-inch touchscreen, and four windows, Air France-KLM's suite is definitely ready to compete for the travel revenue of the super rich.

Why now?
Attracting the highest-paying passengers is a top priority for airlines, since they bring a greatly disproportionate share of revenue. Airlines have long known the importance of having something more expensive to offer, but as more money has been flowing into the industry in recent years, an arms race in aircraft improvements has been accelerating.

Part of this comes from the latest types of aircraft available. Air France-KLM uses a Boeing (NYSE: BA  ) 777-300 for its "La Premiere" suites. Theoretically, the same suites could be accommodated on a Boeing 747, but competition among airlines has pushed the airline to offer more luxurious suites in recent years on routes it services with the Boeing 777-300.

For its suites, Etihad chooses an even larger aircraft -- the A380 produced by Airbus Group (NASDAQOTH: EADSY  ) . Also known as the Superjumbo, the Airbus A380 has space for two full decks of passengers and can seat 853 in a maximum layout configuration. In this case, Etihad takes advantage of this massive space not to put in more seats, but to put in bigger suites. The sheer size of the Airbus A380 gives Etihad enough space to build a suite the size of a small hotel room.

Luxury in the air
Getting the business of big-spending passengers is critical to airline success, so airlines are making major upgrades to offer these passengers everything they could want. Airline investors and high-spending passengers alike should continue to watch to see how this trend continues. With most upgrades so far being on long-distance and trans-Atlantic routes, it will be interesting to see if these suites become commonplace for long-haul flights and whether they will find a place on shorter-distance flights.

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