4 ms·

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 was

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

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