Foreign airlines lure clients with posh frills

Global jet-setters can take advantage of on-demand video, free liquor

By John Boudreau/San Jose Mercury News |

7/2/2008 -

SAN JOSE, Calif. — Flying on domestic airlines these days is no frills and often no fun. But for those who fly foreign airlines, it's champagne and tandoori.

A new golden era of air travel is being ushered in as foreign airlines arrive in the United States with fresh-off-the-assembly-line airplanes staffed by young crews determined to deliver ritzy service at 35,000 feet.

"We are returning to the days when people actually want to fly," said Marc Casto, president of Santa Clara, Calif.-based Casto Travel, which books $60 million a year in international tickets for corporate clients.

Foreign carriers are legally prohibited from flying domestic routes. But for overseas flights, they are tapping into demographics like the large number of Silicon Valley tech workers who jet around the world and the Bay Area's large Asian population. Weekly flights from San Francisco International Airport to the Asia Pacific region have jumped 40 percent since early 2000, from 255 to 358 in June, according to Innovata, an information service to the travel industry.

Global travelers have long given the thumbs-up to well-known Asian brands like Singapore Airlines and Cathay Pacific Airways as well as lesser-known carriers such as Taiwan-based EVA Air, a pioneer in premium economy class. The skies, though, are getting more crowded as new foreign carriers swoop in, arriving in Boeing 777s equipped with on-demand video and free booze, even for those in economy.

Foreign carriers know topnotch service is critical to compete for the loyalties of travelers tethered to American carriers and their frequent flier programs, industry analysts say. And while many foreign airlines have partnerships with American carriers, they can't provide seamless connections in the United States as domestic carriers can.

So they work harder to make flying fun again, yet still offer fares at comparable or even lower rates than domestic carriers.

"We have the newest airplanes," said Zainul Aljunied, a former Singapore Airlines executive who is now vice president of India-based Jet Airways. "We have the best food. We have beautiful Indian and Singaporean stewardesses. What more do you want?"

Travel consultant Casto said corporate clients are dropping contracts with domestic airlines in favor of ones with foreign carriers.

It's not hard to see why.

The service model for domestic airlines — "sit down, put on your seat belt and shut up" — doesn't work well when the competition offers warm towels and warm smiles, said Alan Bender, professor of airline economics at Embry-Riddle Aeronautical University in Florida.

"On an American carrier, you are so afraid to ask for something extra," said Bob Lin, a Silicon Valley entrepreneur and venture capitalist who travels regularly to China and Taiwan. He, like others, refers to trips on American carriers — whose seniority rules allow the most experienced flight attendants to pick choice international routes — as "the grandmothers' flights."

"I ask for a glass of water and she says, 'I'll come back to you when I have time, young man,'" said Lin, who is 56.

Long flights on domestic carriers are so grueling that some passengers steel themselves by slamming down drinks before boarding, said Bender, who flies 200 days out of the year. "In the airport lounges, people are drinking at 7 a.m.," he said.

It wasn't always this way for U.S. airlines.

There was a time when Americans looked forward to — and even bragged about — an upcoming flight. It was a glamorous way to travel. Then came deregulation of the airline industry in 1978, which allowed market forces to play a major role in determining routes and fares. Prices dropped, and so did service.

The rise of discount airlines whittled away at the profits of legacy carriers during the 1990s. The Sept. 11, 2001, terrorist attacks further hammered the industry, causing bankruptcies. Airline employees have lost pensions and had benefits and salaries slashed, even as workloads increase. The latest crisis — soaring fuel costs — has led to even more service cuts.

Asian carriers, on the other hand, don't have to survive in cutthroat domestic markets. They benefit from lower employee salaries and even catch a break on fuel costs. The twin-engine Boeing 777, a favorite of many foreign carriers, is 20 percent more fuel efficient than the older four-engine Boeing 747, a savings of $20,000 or more per trans-Pacific flight.

United Airlines is giving its international first-class and business-class sections a multibillion-dollar makeover that includes lie-flat beds. Still, American carriers lag far behind their international competitors when it comes to replacing aging aircraft, aviation industry expert Bender said. But even new planes may not change their corporate culture.

"There are still going to be the grumpy flight attendants," Bender said.