4 ms·

Except that airlines still get the bulk of their revenue from economy class. The average margin may be higher per business/1st class ticket but the bulk of tota

Except that airlines still get the bulk of their revenue from economy class. The average margin may be higher per business/1st class ticket but the bulk of total sales and profit comes from economy. The airlines' discriminatory marketing actions are buffeted by disparate nature of their customer base (a group of strangers who'll typically never meet again after sharing a flight) as travellers don't have enough interest in and means of organizing. Otherwise, if economy class customers boycotted en masse, that airline would suffer more than if a handful of 1st class fliers did. United Airlines' scrambling after the Dr Dao debacle was driven by desire to stem the potential financial loss, not just PR crisis.

sokoloff 8y ago
> Except that airlines still get the bulk of their revenue from economy class. That's exactly backwards from anything I've ever read about airline economics. Do you have any references to support? https://kottke.org/17/03/the-economics-of-airline-classes https://kottke.org/17/03/the-economics-of-airline-classes suggests that on a given BA LHR<->IAD flight, the 122 economy seats total about $107K, the 40 premium economy seats about $106K, the 48 business class seats about $322K, and the 14 first class $122K. The 14 first class seats out-rev (and out-profit) the entire economy cabin.
- Geekette 8y ago
  No references off head but I stumbled upon it while working on airline related project some years back. The key thing being proper cost accounting showed it wasn't lucrative as portrayed. Citations on premium class margins don't account for the higher costs of servicing such customers (ground/airborne food and entertainment, lounges, transportation, exclusive services, etc). While some may have a few planes with higher #s of premium seats, many fleets (especially N. American ones), are comprised of mainly economy class seats. This is obviously less true for newer airlines or those upgrading most/all of their fleets. The invention of more seating groups like premium economy (same cabin, almost no difference in service offered and cost to do so) has made one of the biggest differences to date. Sales also extend to business and 1st class seats - this and frequent flier upgrades show that premium tickets are often sold at less than full markup.
  - sho 8y ago
    You really need references to support that claim because it's also the complete opposite of everything I've ever heard. While it's true that simply multiplying seat numbers by advertised prices is not giving the whole picture, and running lounges isn't free, the extra costs are absolutely outweighed by the far higher cost of the ticket. Full service airlines would fill the whole plane with business if they have the demand (and sometimes do). Economy can still be profitable, of course, and there's far more passengers of that class - so airlines will obviously still run all-economy flights if the business class demand is already satisfied on a route. There's no question they're less profitable, though.
    - daemin 8y ago
      Isn't the latest Singapore to New York flight entirely business class?
      - sho 8y ago
        Yes they do, although I'd be surprised if they fill it every day or even most days. J is notoriously choppy as it doesn't have the price discrimination carriers can use to smooth Y pax around to fill up the days. Simultaneously its strength and its weakness from an airline revenue perspective. Singapore has tried and failed in this product before; maybe this time the market is ready - still, it's probably not the license to print money one might imagine. I think quite a few financial/corporate centre city pairs support a business-only flight, though even with this famously rich city pair, BA1 from london city to NY is flown on an a320! It's a difficult product to make work. Upon further reflection I believe what the grandparent commenter was trying to say is that airlines, as a whole, get more revenue from economy pax, which is probably true for most airlines. On a route that supports a decent J component, though, they can rake in the cash.
      - isostatic 8y ago
        Business and premium economy

sokoloff 8y ago

> Except that airlines still get the bulk of their revenue from economy class. That's exactly backwards from anything I've ever read about airline economics. Do you have any references to support? https://kottke.org/17/03/the-economics-of-airline-classes https://kottke.org/17/03/the-economics-of-airline-classes suggests that on a given BA LHR<->IAD flight, the 122 economy seats total about $107K, the 40 premium economy seats about $106K, the 48 business class seats about $322K, and the 14 first class $122K. The 14 first class seats out-rev (and out-profit) the entire economy cabin.

Geekette 8y ago
No references off head but I stumbled upon it while working on airline related project some years back. The key thing being proper cost accounting showed it wasn't lucrative as portrayed. Citations on premium class margins don't account for the higher costs of servicing such customers (ground/airborne food and entertainment, lounges, transportation, exclusive services, etc). While some may have a few planes with higher #s of premium seats, many fleets (especially N. American ones), are comprised of mainly economy class seats. This is obviously less true for newer airlines or those upgrading most/all of their fleets. The invention of more seating groups like premium economy (same cabin, almost no difference in service offered and cost to do so) has made one of the biggest differences to date. Sales also extend to business and 1st class seats - this and frequent flier upgrades show that premium tickets are often sold at less than full markup.
- sho 8y ago
  You really need references to support that claim because it's also the complete opposite of everything I've ever heard. While it's true that simply multiplying seat numbers by advertised prices is not giving the whole picture, and running lounges isn't free, the extra costs are absolutely outweighed by the far higher cost of the ticket. Full service airlines would fill the whole plane with business if they have the demand (and sometimes do). Economy can still be profitable, of course, and there's far more passengers of that class - so airlines will obviously still run all-economy flights if the business class demand is already satisfied on a route. There's no question they're less profitable, though.
  - daemin 8y ago
    Isn't the latest Singapore to New York flight entirely business class?
    - sho 8y ago
      Yes they do, although I'd be surprised if they fill it every day or even most days. J is notoriously choppy as it doesn't have the price discrimination carriers can use to smooth Y pax around to fill up the days. Simultaneously its strength and its weakness from an airline revenue perspective. Singapore has tried and failed in this product before; maybe this time the market is ready - still, it's probably not the license to print money one might imagine. I think quite a few financial/corporate centre city pairs support a business-only flight, though even with this famously rich city pair, BA1 from london city to NY is flown on an a320! It's a difficult product to make work. Upon further reflection I believe what the grandparent commenter was trying to say is that airlines, as a whole, get more revenue from economy pax, which is probably true for most airlines. On a route that supports a decent J component, though, they can rake in the cash.
    - isostatic 8y ago
      Business and premium economy