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Trans-Alantic Y "Subsidies"?  
User currently offlineFlybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Posted (6 years 11 months 2 weeks 1 day 17 hours ago) and read 1553 times:

I was looking on the thread about Maxjet's substantial six-month losses and was tempted to read up on all the other on-class business airlines that traverse over the pond. Then I found this statement on the Silverjet website.

Quote:
"...Learning from the success of low-cost carriers, we fly a small fleet of 767's in a one class configuration. We don't have to subsidise 'economy' passengers, so we can pass on substantial savings to our customers.

My question is that if Y is so unprofitable across the pond, why do airlines even bother having them if they offer multiple classes of service? If long-range one-class services are so profitable (on the C and F classes), rather than just putting multiple classes on individual planes on long range fleets, just have planes dedicated to a particular class of service.

Personally, I think these all business class airlines are generally unprofitable because they have not affiliation with other major airlines. I mean the whole point of being a frequent traveller on a particular airline is to accrue enough FF miles so you can go to the Caribbean, Europe or Asia on your down time. One-class airlines are only appealing because of price... perhaps people who want an affordable luxury experience, but normally pay out of pocket. Serious FFs will take established carriers because of the frequent flyer benefits, the greater choices in scheduling and departure cities.


"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
8 replies: All unread, jump to last
 
User currently offlineDavid_itl From United Kingdom, joined Jun 2001, 7371 posts, RR: 13
Reply 1, posted (6 years 11 months 2 weeks 1 day 17 hours ago) and read 1522 times:
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Quoting Flybyguy (Thread starter):
If long-range one-class services are so profitable (on the C and F classes), rather than just putting multiple classes on individual planes on long range fleets, just have planes dedicated to a particular class of service

Like KL and LH with the Privatair arrangement whereby both airlines have "normal" transatlantic with 2 or 3 classes, with certain routes flown in all J class; BA's proposed venture out of mainland Europe will be all J class.


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25205 posts, RR: 22
Reply 2, posted (6 years 11 months 2 weeks 1 day 16 hours ago) and read 1477 times:

Quoting David_itl (Reply 1):
BA's proposed venture out of mainland Europe will be all J class.

Most news reports I've seen re BA's plans indicate that these flights are likely to offer a mix of J and premium economy (World Traveller Plus).

Quoting Flybyguy (Thread starter):
My question is that if Y is so unprofitable across the pond, why do airlines even bother having them if they offer multiple classes of service?

There are very few routes with enough high-yield demand to make all-premium class services profitable. Business traffic is also seasonal (much less traffic in the summer and other vacation periods) and also varies greatly by day of the week which is why most of the Privatair all-business class BBJ and A319LR services operated for LH/LX/KL don't operate on Saturday.


User currently offlineDeltAirlines From United States of America, joined May 1999, 8898 posts, RR: 12
Reply 3, posted (6 years 11 months 2 weeks 1 day 16 hours ago) and read 1473 times:

Part of the reason is most likely because a legacy normally would not be able to fill a 767 in an all-J configuration across the pond. Truth is, they can fill up the J cabin, which will cover operating expenses for the flight. Anything in Y is just gravy on top of it when it's all said and done (the marginal costs for Y passengers isn't all that much). Thus, it makes more sense for the legacies to fill up the 40 or so premium seats in the plane and have the rest with Y; when if it was all premium (say 150 seats) they might only fill up 50 seats on the plane.

User currently offlineWillyj From United States of America, joined Oct 2005, 468 posts, RR: 0
Reply 4, posted (6 years 11 months 2 weeks 1 day 14 hours ago) and read 1346 times:

Quoting David_itl (Reply 1):
Like KL and LH with the Privatair arrangement whereby both airlines have "normal" transatlantic with 2 or 3 classes, with certain routes flown in all J class; BA's proposed venture out of mainland Europe will be all J class.

But on the routes they use Privatair, aren't their fares just as high as on their traditional flights?


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25205 posts, RR: 22
Reply 5, posted (6 years 11 months 2 weeks 1 day 13 hours ago) and read 1310 times:

Quoting Willyj (Reply 4):
Quoting David_itl (Reply 1):
Like KL and LH with the Privatair arrangement whereby both airlines have "normal" transatlantic with 2 or 3 classes, with certain routes flown in all J class; BA's proposed venture out of mainland Europe will be all J class.

But on the routes they use Privatair, aren't their fares just as high as on their traditional flights?

Yes the same fares apply.


User currently offlineFlybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Reply 6, posted (6 years 11 months 2 weeks 1 day 12 hours ago) and read 1257 times:

Quoting DeltAirlines (Reply 3):
Part of the reason is most likely because a legacy normally would not be able to fill a 767 in an all-J configuration across the pond. Truth is, they can fill up the J cabin, which will cover operating expenses for the flight. Anything in Y is just gravy on top of it when it's all said and done (the marginal costs for Y passengers isn't all that much). Thus, it makes more sense for the legacies to fill up the 40 or so premium seats in the plane and have the rest with Y; when if it was all premium (say 150 seats) they might only fill up 50 seats on the plane.

Your explanation seems logical, but what about a Privatair type operation where you fly small long-range aircraft on those routes?



"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
User currently offlineMNeo From Bulgaria, joined Mar 2004, 776 posts, RR: 1
Reply 7, posted (6 years 11 months 2 weeks 1 day 11 hours ago) and read 1233 times:

Quoting Flybyguy (Reply 6):
Your explanation seems logical, but what about a Privatair type operation where you fly small long-range aircraft on those routes?

Im pretty sure that those routes do not carry that much cargo.



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User currently offlineIkramerica From United States of America, joined May 2005, 21516 posts, RR: 60
Reply 8, posted (6 years 11 months 2 weeks 1 day 11 hours ago) and read 1214 times:

Quoting Flybyguy (Thread starter):
My question is that if Y is so unprofitable across the pond, why do airlines even bother having them if they offer multiple classes of service?

One of the main reasons is that the concept of free and open skies is very, very new. And thus in the past, all flights would need to be approved by both governments in some capacity.

The more overall pax an airline would take on a route, the more likely the governments would be to accept that route, because it would maximize tourism and business.

That's still the case with most bilaterals. If some airline were to propose an all J route between SFO and China on a theoretical longer range 737, no matter how logical it might or might not be, senators from other states would object and play the "populace/class" card and say the country would benefit more from having UA fly a 744 instead.

Further, for those routes with limited access, it artificially limits supply, and with the past regulated fares, it allowed for all airlines to profit. Once regulation went away, the limited supply is still a tool to keep the prices of all fares up.

Once skies completely open, various adjustments to routes, frequencies, and capacity happen. But there is quite a bit of legacy thinking and metal to deal with even in those cases. The launch of a massive 757 assault on the TATL market is finally bringing a new way of thinking to that market, which has been relatively open for a long time (certain airports excepted). One would expect that in the future, a 737 and A320 replacement would be designed specifically for this market.

You see some carriers like LH, AF and Suiss offering some all J products now, now that they are private and free to do what is best for them rather than what is best for some minister's district. You see others like BA and VS creating high premium configurations, and carriers like NH and JL doing the same, when the routes demand it, even if it means decreasing Y capacity. You see all premium startups (without legacy structure) try to offer premium only, since they don't want to "subsidize" Y, but the question is can you do without Y entirely and still run a viable airline...

It's too soon to really know how it should all be. Too much legacy metal still in the air, too much legacy thinking is still employed in management, open skies agreements are all relatively new or still being negotiatied. But in 20 years, we'll see how much has changed.

Who knows. The next 737 and A320 versions might reintro the convertible concept, which would allow the same plane to offer Y seats in the summer, and be all J in the winter, and fly transatlantic. Or even be all J on days where there is demand for that, and offer Y on other days.

But one thing we can be sure of. How the industry looks 30 years from now will be very different than how it looked 30 years ago...



Of all the things to worry about... the Wookie has no pants.
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