The STRATEGY of AIRLINE CLASSES: How Airlines Make Money
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- Опубліковано 23 вер 2023
- Explore the fascinating world of airline economics and discover how airlines generate their profits through different seating classes. Learn how premium seats contribute significantly to an airline's revenue, and dive into the history and evolution of airline classes. Find out what the future holds for air travel and how technology and personalization are shaping the passenger experience. If you're curious about the business behind your next flight, don't forget to subscribe for more intriguing insights into the aviation industry. Safe travels!
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That video could have been 8 minutes shorter 😢
That frequent clicking noise between shots is very annoying
If you talk about “making money” you need to also account for costs. The biggest cost is the plane itself and lifting the weight of the plane into the air. And you need about four times more airplane for one business class passenger than one economy passenger. Airlines are increasingly looking at this “real estate” cost in their profitability calculations and not just the simple per passenger cost, and why more are introducing premium economy (charge a lot more than economy, but take up a lot less space than business class).
I wonder ... can we also throw in the fat salaries of airline executives into the cost? 🤔
Actually the financing. Sometimes the airframe separately from the engines!
Actually these days the upper class seats are more often filled with free upgrades for Elite tier members. So on a per flight basis on average you’re wrong. The upper class seats now moreso exist to keep elite members happy.
I was thinking along the same lines. I’m thinking about my in-laws that are die-hard Delta/American customers. They both have airline affinity credit cards which earn them miles and they pay for everything (even small items like sodas) with the cards and they usually don’t carry a balance. It adds up when you stop paying cash for those small items. They fly economy and use miles or convert the miles to a discount companion fare. The credit card gets a lot of those extra add on’s that are pure profit for the airline (like baggage) waived. They always have miles they have to use/lose.
What about the additional costs associated with first class?
Thank you very helpfull just subscribed
How does the model change for deep-discount airlines that have single class configurations with no included amenities?
In the last 3 decades airlines have cut leg space and seat widtth Additionally after the 2008 crash they took bailouts and cut the number of flights boosting load factors from an average of .56 to near 100%. This compounded the issues with seat sizes. Problem 1. Gone are the days where middle seats were more often than not empty. This increased people's frustration simply by being packed in like hogs going to slaughter. 2nd problem. Whenever there is an equipment or crew problem everything goes to shit because there's no where to push excess passengers.
Those things are why I won't be surprised when someone breaks another passengers neck mid flight. And it will be the fault of the airlines and the FAA for allowing things to get this bad.
On any given day, even individual seats vary in price within sections. Efficiency is the determining factor for aircraft type, routes and airports served so it's not just a seat sale calculation.
Not to mention what time of year you fly - those rates can vary wildly.
Thank you for sharing your observation of the industry.
When you get a chance gather a few Concorde photos of the British Airways and Air France ones in your future presentations. Thank
Again, thank you!!☺
It's very rare premium eco, business and first will be fully booked prior to take off. This is where comp upgrades come into place..
This ONLY happens if economy is overbooked
Not all passangers pay the same price. Depending on where they buy there tickets, the amount of discount they are able to obtain and the extras they wish to add on to the flight.
precisely. many pay via avios, credit card points and some pay 300 9 months out and some pay 1500 the night beforehand. there’s too many variables
Great research!
However, you probably forgot to include that airlines often squeeze out the maximum revenue possible from the Economy class through overbooking, excess baggage fees, date change fees, non-refundable fares for no-shows (even though that same seat is resold to another passenger!)
It's also interesting to see how well-dressed passengers were back in the day.
But as soon as the masses had access to air travel, t-shirts and shorts started appearing even in the hallowed First class!
This would have been considered a sacrilege by the early jetsetters!
I just subscribed to your channel!
That's sad to see people travel in a ugly look, sloppy, neglected and simply ugly. Yo don't have to be comfortable ina ugly look. I dress up when I flight and I want to look different than the crowd. Everyone own nice outfits why accept to be ugly when you happily on a trip? Make up and dress up!!!! Doesn't cost you a fortune being beautiful
I was once a bus driver for Qantas crews and they said business class subsidised economy seats, there were high profit margins on business and first class.
A couple of years ago, I was booked on a domestic US flight of about 1,000 miles. I had a discounted economy seat. At the gate, I asked if I could upgrade to first class. The answer was yes, for $50. I took it. Besides the cabin attendant, there was one other person in first. The front of the plane certainly didn't come close to covering the cost of that flight.
Lucky you!
I support ur channel
Outside of premium economy, they have to find people to fill those seats that's where the challenging part comes in. I went to japan recently from jfk on a boeing 777 jal airlines. Half the airplane was full there were so many empty seats in each class.
Not quite how this works considering that a majority of passengers in those more expensive seats got complimentary upgrades
That’s very basic things of country’s economy
90% population pay 10% taxes and 10% population pay 90% taxes
Far away from what I usually pay. 1000 € for eco and then BA, haha, I'll stay at home. And who wants to fly to Murica?
award flights make probably 1/3rd of all upper class bookings
Nope. Less.
and the other 2/3rds from multi billion dollar corporations paying their staffs ticket. only a handful if that are paying 5k cash
Which airline’s business cabin is that at 3:16?
Overall decent video. But the mouse clicking noise at some slide changes was annoying. And it’s 747 not 700 47
So economy seats get sold out being more affordable for the masses were the 1st class may be sold 50% and costing more for the airline expensive dining and all that malachy
Boeing seven-seven-seven lmao 😂😂😂
lol
Or the Seven Hundred and Forty Seven.
Does not work like this, the cost for first class, business etc.. Are much more than economy, catering, etc... Will reduce a lot this profits,. If you remove all those classes and put 400 economy seats, you can have more profits, but you put more pressure to fill all those 400 seats. Any way all depends of routes demand and companies core business.
Hi there, While our video simplified things using today's prices and a full flight scenario, the main idea was to show how price discrimination works. Airlines use different classes to cater to diverse budgets, maximize profits, and provide options for passengers. That's why we never mentioned their profits or costs because these numbers are simply not known per class. We can only estimate a revenue based on todays price, so you're right that airline economics are influenced by various factors. Thanks for your insights!
@@Aviatrix2022The numbers by class are most certainly known. They are analyzed up, down, left and right every minute of every day. Saying these numbers are “simply not known” is simply a lot of ignorance on your part.
@MrHotshots77 You are crazy... stop saying what you do not know... I worked in analytics and marketing for Virgin and the money is made in the luxury seats... in fact it can cost more to operate economy as they too need catering and human resource to operate. Unless the airline operate a Spirit model of charging for all amenities as extra at a steep price.. The real revenue is in the premium seat and this is the reason we had the airport customer service crew, push to have these economy passengers upgrade their seat at check in. The cost of meals as you put it never cost the company much more than the economy customers sometimes just $30 more per customer due to bulk catering. However the airline made Thousands more.... The reason I said you do not know what you are talking about, economy seats we termed "The charity seats" due to low profits.
Budget airlines like Ryanair and EasyJet make plenty of profit. They strip away all the bullshit and give you exactly what you paid for .
The airlines copied these pricing policies and service offerings from the steamship companies and railroads. It is probable that this was modelled on earlier mass transportation offerings.
Dude, do you realize large network airlines like Lufthansa order the Giants (747, 777-9, A330/340/340-600,A350, A380) for their cargo capacity... and I wonder how much the 787-9 actually can carry under the main cabin! The 777-9 is marketed as being able to load 50,000Kgs (110,000 lbs.) of cargo in addition to the riff-raff above...
You're forgetting about the cargo hold.
How about the cost?????
sometimes 777s fly 1hr flights because of the cargo load
And not forgetting their income from cargoes.
you’re taking last minute flight prices which aren’t accurate. you can fly london to dc for 400£ a few months out which is what? no more than 600 usd.
Was that a Dan appearance?
Yeah, it was. I had to do a double take
They really don’t make much money at all on any flights. They make a crap load of money through their rewards programs. Just look at their financial records.
🦁🦁🦁🦁🦁🦁LION c LIKE No. 130
But what is your basic message?
Very similar to tax revenue........
What about ancillary fees charged by airlines; some must make a killing on this given they seem to charge for everything these days,
Well with the advent of the internet and adjust for cost inflation, tickets are still cheaper than they used to be when than when they gave you two free checked bags on all airlines. Now you pay for what you get. Now you can go from city to city for as low or lower than $50 a flight, though the average prices fluctuate, it is now possible to get somewhere on a $50 ticket. Don’t expect to be treated like a king, when you’re paying for a pauper’s fare.
Those seat prices are nonsense.
But here's the thing, airlines actually lose money on most flights. They make most of their profits on fees, like baggage and seat assignments, that the economy passengers pay and those in business and first dont. Add the fact that nobody ACTUALLY pays for a business class or first class ticket. A majority of those are purchased using points or miles from loyalty programs and branded credit cards. Or they were at a certain level in the loyalty program and upgraded for free because the airline oversold economy. So dont try to tell me business and first class are paying for the flight.
Could this be more of a rip off of the Wendover production script in this topic?
this sound BOOOOM 💣💣 EVERY TIME it’s sooo annoying, leaving the video because of it
Because the industry’s business model has become flawed. What could you expect from a “purely for profit” and “top down” oriented system. The lowest class gets the lowest quality of service. Reverse it and everything changes. Plus, the inflation that has been created by financiers aggravated the situation. Not to mention that “deregulation” ensured the enrichment of investors at the expense of the public.
The Concord stopped service cause it crashed and the Governments decided that it was too risky to fly that fast. Even though it’s possible to still be safe after more innovation.
Not accurate.
it wasn’t profitable and too niche
No matter how you slice it, airlines suck and air travel sucks.
I disagree with you let me explain majority of people around the world are working class or poor so if you cater for the masses you make more money lets look at Tesco they cater for the working class or poor by being affordable for them but lets look at M&S or waitrose they cater for the well off rich snobs but tesco are uk no1 supermarket in profit etc same with lidle
You said the same thing over and over for 4 minutes
That’s a very flawed logic. First of all all the entire airplane would be filled with economy seats. If it was all economy, and the profit would be much larger. Second of all, how do you think Southwest does so well? They don’t have any premium economy it just standard economy seats with 32 inches of pitch and they generate a gangbusters profit. Second of all your numbers for Business Class and premium economy are completely wrong having flown both between Baltimore, Washington and Luhn, Heathrow, your inflating that price by 20%. I can get it discounted round-trip Business Class seat for $3200. I can get a round-trip premium economy seat for $2000.