Hawaiian Airlines Gambles on Big New Business Class Cabin

Hawaiian Airlines historically has been conservative with premium cabins, installing outdated products and adding fewer seats than competitors. But the carrier is making a big bet on flat-bed seats for its new Boeing 787s as it emerges from the pandemic, its chief operating officer said.

Hawaiian is putting 34 flatbed business class suites on its Boeing 787-9 aircraft, the first of which will arrive late next year. That’s almost twice as many as on the airline’s Airbus A330s, the carrier’s current long-haul workhorse. Overall, the 787s will have 301 seats, or 23 more than the A330s.

In bulking up, and significantly improving, the business class cabin, Hawaiian is following an industry-wide trend. Once, only business-centric carriers in major hubs installed opulent front-cabin flatbeds. But in recent years, leisure carriers have followed, with airlines like Fiji Airways, Air Europa and Air Tahiti Nui raising their standards. Retirees and honeymooners, among others, have proved willing to pay.

The trend is expected to continue in 2022 and beyond. Several U.S. carriers, included United Airlines and Delta Air Lines, have said on recent earnings calls that premium leisure is among their fastest growing segments. Travelers have been cooped up for almost two years, and they’re willing to pay more for space and comfort.

Hawaiian is looking for a bigger slice of this segment on its longest routes. Before the pandemic, Hawaiian maintained a strong business bringing Asian and South Pacific travelers to the Hawaiian islands on long-haul flights.

“It’s going to be an aircraft we fly long-haul to premium dense markets,” COO Jon Snook told Skift in an interview at Los Angeles International Airport. “It’s really going to be an ideal aircraft for Japan, Australia, New York — markets that will benefit from the comfort that that aircraft provides and the efficiency that it provides.”

Hawaiian has 10 firm orders for Boeing 787 jets. The first were due to arrive this year, but Hawaiian pushed back deliveries to save cash during the pandemic.

Trying Again

For Hawaiian, the approach is something of a do-over. Hawaiian had eschewed flat-beds, but it finally introduced a 18-seat cabin in 2017. It chose, however, an unusually dense configuration that does not always win high marks from passengers — at least those who have flown premium cabins on other airlines.

For routes like Los Angeles or San Francisco, it has been competitive enough. But against global airlines like Qantas, All Nippon Airways and Japan Airlines, all of which fly to Hawaii in normal times, it has been less so.

“Our lay-flat product on the 330 isn’t the best in class globally, but it has certainly been very successful in the marketplace that we fly in, given the relatively short stage length,” Snook said.

Hawaiian will use a new seat from Adient Aerospace, a joint venture between Boeing and Adient, a company that typically makes seats for cars. Adient has said the seats will be private pods, all of which will permit passengers easy access to the aisle. According to Adient, center seats can be combined to make a “Cabana Suite…where couples can enjoy a movie or meal together,” but airlines don’t always install every feature offered by a manufacturer.

Hawaiian has not divulged exact details about its cabin, though Snook said he expects customers will be “blown away” by it.

No Premium Economy

The other big trend in leisure is premium economy. Even during the pandemic, many airlines have called out premium economy as a bright-spot, noting once-frugal economy class travelers increasingly are trading up. That’s good for carriers, some of which have said premium economy is the most profitable space on an airplane, measured by revenue per square inch.

But Snook said the airline decided against adding true premium economy, instead sticking with its Extra Comfort product. Hawaiian offers several goodies to passengers who buy it on some long-haul routes, including early boarding and a small amenity kit. Still, the seat is essentially the same as economy, just with extra legroom.

With a few exceptions, U.S. airlines generally don’t sell true premium economy to Hawaii. But global airlines often have it on the long-haul jets they fly to Honolulu.

“Our Extra Comfort product generates a level of revenue that certainly makes sense of the real estate that we give it,” Snook said. “It’s tough to know if it could make sense to have a true premium economy in our marketplace.”

Long-Haul Markets

Before the pandemic, long-haul international routes accounted for roughly a quarter of the Hawaiian’s business, said Conor Cunningham, an investment analyst at MKM Partners. That business essentially has been non-existent since early 2020, with many Asian and South Pacific countries making it extremely difficult for citizens to leave.

Sydney plans to significantly ease quarantine rules soon, which could provide a boost when Hawaiian resumes service on Dec. 13 with five weekly flights. But the most key market for Hawaiian typically is Japan.

“We think that Japan is now in a place where the conditions exist that’s going to allow them to start opening up more broadly,” Snook said. “All the signs seem to be pointing to a place where we can be more optimistic.”

Many Japanese tourists seeking high-end vacations have a great desire to visit Hawaii. And Hawaiian executives suspect there’s massive pent-up demand. But how much this helps Hawaiian is probably a function of how the competition responds, Cunningham said.

Hawaiian struggled with competition when Hawaii reopened to U.S. tourists, as most U.S. carriers also rushed to add capacity to soak up the extra demand. When Japan opens, Cunningham said, Japan Airlines and All Nippon Airways likely will do the same.

“I don’t know when things will open up but I know when they do there are a lot of Japanese people who will want to come to Hawaii,” Cunningham said. “But JAL can’t wait to put aircraft into Hawaii. I struggle with the potential dynamic.”

The new 787s should make it possible for Hawaiian to go into new markets that may have less competition. During the pandemic, out of necessity, Hawaiian has searched for unusual routes that lack nonstop service on other airlines. It is now flying from Honolulu to Orlando and Austin, Texas.

It is continuing to evaluate new long-haul routes that might be flown by the 787s or by Airbus A330s. The 787s have more range — they can fly 16 hours or more — so the airline has a chance to connect far-flung places with Hawaii for the first time.

Hawaiian’s former CEO, Mark Dunkerley, sometimes suggested Hawaiian might expand into Europe with next-generation jets. But even though Hawaiian will have an aircraft capable of reaching the United Kingdom, and beyond, the airline expects to instead expand closer to home, Snook said.

“London isn’t on our immediate wish list of markets to go serve with that aircraft,” he said. “We think we’ve got opportunities closer at hand and less risky than flying to London. We’re looking for opportunities for us to be able to fly to places that we might not have flown to before. We think that there’s still growth opportunities both in Asia and on the mainland.”