Innovators, it’s time to fly coach class

If there’s one area of innovation in the airline industry right now that’s really taking off, it’s in building bigger and better first-class and business-class seats, as Washington Post columnist Harold Meyerson writes.

A passenger checks in at the new American Airlines Flagship Check-in at JFK airport, Wednesday, May 1, 2013 in New York. Just as they've made first class more enjoyable with new seats, tastier meals and bigger TVs, airlines are focusing on easing the misery of airports for their highest-paying customers and giving them a truly elite experience. (AP Photo/Mary Altaffer)
A passenger checks in at the new American Airlines Flagship Check-in at JFK airport, Wednesday, May 1, 2013 in New York. Just as they’ve made first class more enjoyable with new seats, tastier meals and bigger TVs, airlines are focusing on easing the misery of airports for their highest-paying customers and giving them a truly elite experience. (AP Photo/Mary Altaffer)

In a rush to squeeze as much money as possible out of business travelers willing to pay thousands of dollars for a premium seat, the airlines have created a cottage R&D industry that fetishizes things such as the lie-flat seat. And it’s not just the biggest airline majors — even JetBlue is now breaking with its decade-long policy of full-coach seating to introduce it’s first-ever lie-flat seats.

If you’re an average American who travels, that’s not good news. But if you’re an innovator, this should be a clear sign that the airline industry is headed for a period of peak disruption.

According to Clayton Christensen’s theory of “disruptive innovation” an industry becomes ripe for disruption once it begins super-serving its best, most affluent customers and ignoring the rest. Each stage in the maturation of a company or industry inevitably pushes it to embrace its best, most profitable customers. (And in this case, it’s the business-class travelers willing to pay full freight for premium seats on long-haul flights.) However, in the process, the companies fighting over the “best” customers gradually cede the low end of the market to new entrants. Over time, new technologies introduced for the low end of the market climb the price-performance curve and start to surpass the technologies at the high end. At that point, it’s game over for the market leaders. They are too big, too locked into their strategic mindset, to react quickly to a new era of innovation.

This may seem obvious – only the paranoid survive when it comes to disruptive new technologies — except that Christensen brilliantly proved it’s not. It’s in the corporate DNA of every company to focus on its best, most profitable products and ignore the rest. You don’t get promoted for letting low-margin products make it through the product pipeline, and you don’t get your annual bonus for championing low-end, unprofitable products.

As Christensen has pointed out, the airlines have focused for years on a single metric: maximizing revenue per mile flown. Every single change in the airline industry over the past few years can be viewed from this perspective: they want to fly deep-pocketed customers the longest distances possible in the most expensive seats available. In doing so, they’ve ignored that there are other factors that air-travel customers pay attention to — factors that could become the basis for a radically new type of airline industry.

This Wednesday, May 1, 2013 photo taken at JFK airport in New York shows a business class seat set turned down as a bed in American Airlines' new Boeing 777-300ER airplane. (AP Photo/Mary Altaffer)
This Wednesday, May 1, 2013 photo taken at JFK airport in New York shows a business class seat set turned down as a bed in American Airlines’ new Boeing 777-300ER airplane. (AP Photo/Mary Altaffer)

The only question left to ask, then, is, “What disruptive technologies will emerge that will attract the 99-percent of air travelers who don’t want to or can’t pay for expensive first-class seats?”

As much as we’d like to believe that something such as Elon Musk’s Hyperloop is part of the solution, his innovation actually doesn’t fit the classic model of a disruptive innovation. Assuming it can even be realized, it would be too good. Ideally, it would be better, faster, cleaner and more technologically advanced than what already exists (at least, from what we’ve heard). A true disruptive innovation, as Christensen has written, comes out of nowhere and surprises the market leaders because it doesn’t attract attention.

Keep in mind that Southwest Airlines originally disrupted the airline travel industry, not because it sought to compete with the big airline majors, but because it sought to compete with buses and their cheap, spoke-to-spoke connections and rapid turnaround times. The Economist’s Gulliver blog recently profiled nine different types innovations that could become the basis for a new type of airline travel industry — including an idea from the shipping industry, such that “people are pre-loaded into detached air-conditioned cabins that would then be rolled onto the plane, thus allowing passengers to “board” before the plane even arrives…” (Hey, like I said, these innovations start at the low end, where the market leaders can scoff at them.) And, if all else fails, remember that innovators continue to experiment with new shapes, configurations and sizes for airplanes that would push the big airline companies away from the “maximize revenue per mile flown” mentality.

This Wednesday, May 1, 2013 photo taken at JFK airport in New York the main cabin in American Airlines' new Boeing 777-300ER airplane. (AP Photo/Mary Altaffer)
This Wednesday, May 1, 2013 photo taken at JFK airport in New York the main cabin in American Airlines’ new Boeing 777-300ER airplane. (AP Photo/Mary Altaffer)

So, forget about the lie-flat seat, the “private suite” seat and all the extra amenities for long-haul passengers, and keep your eye instead on the low-end of the travel market. Eventually, these innovations will improve in price and performance and take over the airline industry, forcing a strategic rethink from the entrenched market incumbents. At which point, all the airline executives currently flying business class to their endless merger and acquisition meetings could find themselves out of a job — and forced to fly coach like everybody else. Who knows, they may even like it.

Dominic Basulto is a futurist and blogger based in New York City.
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