Competition among airlines for high-end customers is heating up in the region as Hong Kong flag carrier Cathay Pacific joins the fray, with analysts warning that patrons could face rising airfares despite the tussle for market share.
Cathay last month rolled out a new business class cabin, called Aria Suite, together with its premium economy seats on board its retrofitted Boeing 777-300ER aircraft.
It also announced a new first-class cabin featured in the carrier's 777-9s, as well as a flat-bed business-class offering on its Airbus A330 aircraft in 2026.
Aria-equipped 777s have a total of 361 seats, including 45 seats in business class where passengers can enjoy features such as a sliding privacy door, wireless charging and a 24-inch 4K screen with Bluetooth audio pairing.
Rival Singapore Airlines earlier announced a S$1.1 billion (US$817 million) investment to retrofit its 41 Airbus A350-900 long-haul aircraft with refreshed business class cabins and premium economy seats available from 2026.
As part of its multi-year plan, the carrier will launch its luxury first-class cabins on its seven A350-900ULR aircraft, featuring four exclusive first-class suites, including amenities such as electric window blinds.
The carrier's business class will be upgraded with a new seat design that includes sliding doors, similar to the ones designed for the coming 777-9.
Aviation analytics firm Cirium said business class fares were about 16% higher in August compared with the same month in 2019 for travel between Hong Kong and London, New York, San Francisco and Tokyo.
The firm noted Cathay enjoyed a 76% rise in air fares for the route to Tokyo-Narita, while British Airways saw a 47% increase for the route to London and American Airlines had an 85% surge for the route to New York.
But there was a 21% drop in the number of business-class passengers when comparing this August with the same month in 2019.
Shukor Yusof, founder of Singapore-based aviation consultancy Endau Analytics, highlighted the growing trend of airlines retrofitting premium classes, attributing it to more carriers seeking to extend the life of their aircraft to cope with a shortage of planes.
But he foresaw that airlines offering retrofitting services would still charge more despite predicting a drop in premium-paying travellers.
"Our forecast is for a drop in premium as travellers are now more price sensitive. First class in Europe and North America is a rarity but not in Asia-Pacific where people tend to enjoy pampering themselves and showing off," he said.
"Airlines, especially the big names, retrofit because there are still many passengers who don't mind being overcharged and consider premium travel a status symbol."
"Clearly the airlines will be the winners of these retrofitted premium products because they can charge more," he said.
Mayur Patel, the Asia head for travel data provider OAG Aviation, said Cathay's refit saw an overall increase of 67 seats, or 23%, in seating capacity.
"This shift reflects growing demand and better yield from premium economy, making it a smart move in line with evolving travel patterns and passenger segmentation," he said.
Patel pointed out that as travel demand normalised, airlines such as Cathay and Singapore Airlines were keeping their focus on product innovation to stay competitive, adding that first and business-class cabins and premium economy seats usually delivered the highest profitability.
"Airfares reflect market dynamics, balancing supply, demand and competitive pressures on each route. Premium cabin yields are high, and demand is strong," he said.
"Airlines will continue to optimise fare structures to maximise profitability across city pairs."
Cathay told the South China Morning Post it had experienced strong demand for premium cabins following the busy peak summer months for passenger travel in July and August.
The demand was driven by the conferences and exhibitions around the world with the start of the business travel season, it added.
The company said first- and business-class customers would be offered complimentary Wi-fi on connected aircraft, with this perk extended to Cathay Diamond members travelling in all cabins in November.
"We will always stay competitive in the market and we are always focused on providing value for our customers," it said.
Gary Ng, a senior economist at French investment bank Natixis, said there was an inevitable trend for premium airlines to refresh their business class cabins and premium economy seats as they generated higher profit margins with rising demand.
"With refurbished business class cabins and premium economy seats, airlines can charge higher to target those who are willing to pay more for high-end services," he said.
"This is also a way to retain their wealthy customers. Airlines need to keep investing in their hardware and enhancing their services to stay competitive. Otherwise, they will risk losing out in the race."
In July, Qatar Airways announced to roll out redesigned business cabins called Qsuite Next Gen next year on board its Boeing B777-9 aircraft, equipped with movable 4K OLED screens, which it said was a first for any airline in the world.
In March, British Airways also announced plans to roll out a new first-class suite for its route from the United Kingdom to the United States, as part of its A380 aircraft refurbishment plan.