Continental's Flat Seat Business Decision

(MoneyWatch)  I spent yesterday at NBTA, and I think I've got plenty to write about for the rest of the week. Today, I'm focusing on Continental's decision to launch a lie-flat seat in BusinessFirst on the 777, 757, and 787 aircraft. It's interesting to look at what went in to this decision.

You might notice that Continental isn't putting this on their 767 fleet. That's because they have yet to find a good seat that fits on that plane. Lie-flat seats are great, but as CEO Larry Kellner said, "Not going up on price was more important than a lie-flat seat." So, they had a tough task ahead of them.

This seat allows them to use virtually the same footprint that they have today. How does that happen? Well, the feet of the person behind you go underneath your armrest, as you can see below. It makes for a cozy fit, but it means the seats can be pushed closer together. That's how they can still pull this off without having to lose any space.

The decision to pursue a flat seat looks to be relatively straightforward. They haven't seen anyone leaving them for other airlines yet, but they think that within 5 years this will be required product to compete. So they're planning for it now.

And how do they know this is the case? They don't, but the writing does seem to be on the wall. They also frequently talk to their best customers to see what matters and what doesn't. And of course, they always consult their employees. I think Larry mentioned the employees more than 10 times during his little chat yesterday. So they do have a good idea of what their customers want, and what they want is a flat bed.

And that's how Continental ended up where they are. They are trying to stay ahead of the curve, and they appear to be doing that, at least versus domestic carriers. There were some tradeoffs, as you might expect. For example, to keep the same number of seats onboard, they make it somewhat difficult to get out of the window seat and over your seatmate. But, these issues were weighed, and Continental decided that this was the best way to go. It will be interesting to see if that turns out to be the right decision.