First Class is Disappearing in Name Only

(MoneyWatch)  Over the last few years, many airlines have ditched their First Class cabins. The most recent is Qantas, which plans to eliminate First Class, except on its flagship routes to LA and London. This follows what many airlines, including the likes of Delta (DAL), Virgin Atlantic, and Air New Zealand, have done, but it doesn't mean First Class is really going away. Instead, names are evolving.

Go back 30 years or more and you'll see that most airlines operated a two class configuration - First and Coach. Over time, Coach fares dropped and the onboard product degraded. Meanwhile, First Class continued to improve while fares rose. This opened up an opportunity for a new class, Business Class, to fill the gap.

The trends in Coach and First Class fares continued. Coach fares continued to drop and the product continued to degrade. First Class went in the opposite direction, and Business Class followed. Thirty years ago, flat beds in First Class were uncommon. But by the early 2000s, we began seeing flat beds creep into Business Class. As that happened, it opened up yet another opportunity for a new class -- Premium Economy.

Today, if you look at an airline like Virgin Atlantic, you'll see Business Class, Premium Economy, and Coach. Yes, First Class is gone, but the Business Class seat is better than anything you would have found in First Class in years past.

As Business Class has improved, the need for First Class has diminished. The global standard for excellence in First Class is now limited to a handful of ultra luxury suites at the pointy end of the plane (including British Airways' recently announced First Class upgrade). It's not a cabin for very many people, and for some airlines, it's not a cabin that should exist anymore.

So while First Class has pushed itself out of relevance for most airlines, Business Class is stepping in to fill the shoes quite nicely. No, First Class hasn't disappeared; it's just changed names.