Airbus Lover
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Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 7:57 pm

There are lots of airlines that only have 2 class service and some instead of having first, biz and Economy, they have only Business and Economy. VN and AC is the example.

Until the recent years, Premium economy product was 'invented' with these airlines (although BR was the first with 4 class serivce). Examples are VS and SK.

Lots of airlines currerntly service 3 class is also planning to or already reconfiguring to 2 class on all (or most) of their planes and leave F only on some routes. QF for example is reconfiguring B744s to 2 class for some routes. AA have changed the layout of their many B767s to only have 2 classes.

Singapore Airlines have 2 class B777s too for certain routes. MH is planning to switch to 2 class on some aircraft and so to improve their J class product (with flat beds etc.) and have a decent economy (which MH already has).

And we have 4 class airlines like BR and BA. Why do they do this? Do they really make a lot of money this way? We even have KE having a 4 class but Premium First, First, Business and Economy seating.... Now are all these viable?

I personally think 4 class might be a waste and F/C/Y is also less suitable these days and it seems that J/Y/Y+ are more attractive? What do you think? I travel on F and C quite often, more than Y that is because the bill does not come to me. And if airlines improve their C product to somewhere close to that F (like flat beds) and get rid of F and put in Y+ this I think will be most ideal. If I were to pay by myself, maybe I can't afford J but Y+ seems ok...

Now my questions are is first class not so popular these days? How does 3 class or 2 class config affect the airline's revenue? Is it better to have 2 class on most and only 3 class on some? Do you think it is good to have J,Y and Y+ since nowadays more people travel on Y and some might want Y+ but cannot afford J?

Sorry for the long post and I appreciate your views on this and what you prefer...
 
tsentsan
Posts: 1921
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RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 8:09 pm

Well, I speak for myself, and as I told you on MSN, I have never dreamt/will never dream of even sitting in a J class seat, so I'll just be contented with my little crampy Y class at the rear of the plane.

Anyway, u see the economies of the world now, all of them r not doing fantasically well, so that means most biz organisations are also not making record profits and spending $$ like nobody's biz... which means they have to cut down on their travel expenditure. So maybe last time when there was a boom in the economy, managers could take First class anywhere.. but now, managers have to sit in Economy, while Presidents get Business class. Even in the MNC I worked for, the Finance President had to take J class long haul. Ok, so its like what I'm trying to say is that the no. of F class pax is dropping. So airlines have respondeed to this by having 2 class aircraft to maximise whatever they can get from J and Y pax... Hence, we get 2 class 777s and such...

I dont see the motive behind 2 class 747-400s.... i think there's simply enough space for a 3 class 744... but oh well, Qantas has wierd ideas.....

Enuff ranting Big grin
Tsentsan
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thadocta
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RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 8:39 pm

Tsentsan - "I dont see the motive behind 2 class 747-400s.... i think there's simply enough space for a 3 class 744... but oh well, Qantas has wierd ideas....."

There may be enough *space* on a 744 for a P cabin, but if you only get one or two P passengers on every second flight, why bother having it there in the first place, particularly when the space can be utilised to much better effect with J passengers? Zone 1 seats 14 P bodies, but can seat - in Qantas' config - 22 J bodies. Does not sound like much of an incrase, but when you consider 22 full J seats compared to 12 empty P seats, it makes a hell of a difference fiscally.

When you look at the overall aircraft config, assuming zone ! for J and upstairs for J, you are then left with zones 2,3,4 and 5 for Y - giving you about an extra 60 or so (based JUST on zone 2) Y seats. And even if you sell these at bucket shops, they will still account for more revenue than 2 P seats and 12 empty P seats.

So whilst it might sound strange, QF have looked at their route structure, worked out where the P loadings are - LAX, NRT and LHR - decided to keep P on those routes and to have J and Y only on the other routes. And having looked through it, and having been upgraded to P for no other reason than the cabin was empty - that's right, there were ZERO P bodies on the flight - several times between Asia and Europe (either Paris or Frankfurt) I can see the fiscal logic of this move.

Dave
 
tsentsan
Posts: 1921
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RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 8:48 pm

Perhaps....

But why arent other airlines doing it too? Like BA/SQ/UA etc? If only Qantas is doing it, perhaps their First class product is not up to standard compared to the rest?
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meechy36
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RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 9:03 pm

AA is converting our whole fleet of 767-300's to a 2 class configuration.

Mike-BOS
 
Airbus Lover
Topic Author
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RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 10:37 pm

Mike- This is part of my question. AA was used as an example. Why are they following the 'trend' of converting to 2 class? Seems that lots of airlines are doing it... What is the reason behind and how does it affect the revenue/yield?
 
vermeer
Posts: 433
Joined: Fri May 12, 2000 6:21 am

RE: Airlines Losing Money On 3 Class Equipment

Mon Oct 21, 2002 11:53 pm

Some airlines will always have First class.
This because sometimes they really make a profit out of this cabin ( and here I think LH, the case that I know. They have paying F customers and they are very very strict about complimentary upgrades from C). And also they keep the F product in a way for customers to redeem their mileage, as an extra perk that is given at a cost.
 
jwenting
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 1:13 am

Tsentsan, Qantas isn't the only one and they weren't the first either.
KLM scrapped 1st from all their aircraft about 10 years ago when they did some soulsearching and found out that 99% of 1st class seats were non-revving employees paying a few guilders for the seat or free upgrades by frequent flyers.

Guess what makes more money, 24 businessclass seats of which 20 are sold or 10 1st class seats of which 1 is sold?
I wish I were flying
 
Airbus Lover
Topic Author
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 1:23 am

All solid points but I find what Vermeer said to be quite true. Maybe have a few seats to encourage frequent flyers to fly more and get upgraded. But how many perfect of people will do that?

I would think better by giving those valuable pax extra mileage or give them free upgrade from Y or Y+ like UA and NW Orient used to do on transpacific flights. My dad always had free tickets because it was buy one get one free frlom UA and NW and when you fly them, they will always upgrade you for sure if there are seats in First provided you buy Business ticket. But even if you buy economy, if there are seats in C you will be there or they jsut issue u a free upgrade voucher.
 
B747-437B
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 1:50 am

There is no easy answer to identify whether an airline needs to pursue a 3-class or 2-class or even a 1-class product strategy. The factors at play include the customer base, route structure, product delivery costs, competitive environment and revenue environment.

Airlines operating a significant portion of their ASMs over the North Pacific or in other longhaul arenas have historically been able to find a market for 3-class products. The North Atlantic, conversely, has proven that 2-class products are more appropriate. There are obvious exceptions to that generalization, but it stands true for the most part.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
cedarjet
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 2:01 am

The 747, despite having loads of room (as pointed out above), is actually very hard to configure into FJY, because of the shape of Zone 1. Airlines like USAirways offer a first class product, but literally only ONE row on the A330 (row 1, obviously). Where the hell would you put ONE ROW of five first class seats on a 747? On an A330, 767, 777 et al it's easy, you just put a curtain / divider about six feet back from door 1, but in a 747 you can't get 5 big seats across at the front, you'd need two rows (1-1 at the front, 1-2 behind) which doesn't leave enough room to do much with the remaining rear half of zone 1. You can't put biz in zone one and subdivide zone 2 cos you'll have business class ahead AND behind first. No good either. Maybe the front half of the upper deck on a -300 or -400 but it's still kind of complicated.

You see, there IS still a market for first class, and airlines can make a tonne of cash if they do it right (ie one row of five seats), but it depends on the equipment. Qantas could sell 5 seats on a trip to Paris, there are loads of very rich Aussies who like to travel in style, just not enough to sell 14 seats on every flight.

Check out a USAirways A330 seat plan.
fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
 
bobcat
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 2:44 am

BR only has 4 classes on 747-400. They are doing
quite well financially this year, making a lot of money.
I was told they are even giving extra pay to emplolyees
to make up for the wage cuts made earlier.

 
DALelite
Posts: 1318
Joined: Thu Jun 01, 2000 7:00 am

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 4:18 am

i assume that passengers are not willing to pay the full price for first class anymore, and airlines are aware of it and changing their cabins into a two class configuration.
i remember when delta did it.. i was not amused, but after flying their buzelite
class i have changed my mind.
recently i have heard that even swiss int. is considering to get rid of their first class cabin. perhaps just a rumor, or only the truth?
DALelite
They loved to fly and it showed..
 
meechy36
Posts: 299
Joined: Fri Nov 02, 2001 10:55 pm

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 6:16 am

Vermeer. we were told that the reason for the conversions was that most of the passengers in first were upgrades and since I work first most of the time I can vouch for that.

We are going to configure the 767-300's to 2 class for lower yeild routes and keep the 777's three class for the high yeild routes. As someone said in a previous post if you are only selling 2 first class seats and leaving 8-10 empty it makes sense to increase the seats in J where we do sell a higher amount of seats for full fare and Y where even at a discount with the additional seats can make more money. I talked to one of the managers the other day about the Hawaii service and was told that ALL 767-300's were going to be converted, I think this is great since the international biz seats are more comfortable than the current first class seats to Hawaii.

The airline will save a lot of money on the catering alone without first class since they usually catered us full even for a couple of people. We were told that the staffing level would remain the same but that remains to be seen.

Mike-BOS
 
MAH4546
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 7:44 am

And we have 4 class airlines like BR and BA. Why do they do this? Do they really make a lot of money this way? We even have KE having a 4 class but Premium First, First, Business and Economy seating.... Now are all these viable?

Four-class service makes BA plenty of money. Not every destinations is four-class.

Miami, a high-yielding destination with plenty of business traffic, gets a 4-class service. Also getting 4-class are other big business traffic destinations such as Toronto, Philadelphia, Boston, Washington, New York City, Newark, San Francisco, Los Angeles, Seattle, Sydney, Johanesburg, Tokyo, and Chicago (maybe some others too).

Denver, an "average" traffic destination, with good yields and a good mix of traffic, get's standard three-class service.

Tampa, a lower yielding destination, still get's three class service, but with Economy, Economy+, and Business, no first class. Orlando and some Caribbean destinations also have this layout.
a.
 
zrs70
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 7:50 am

What's interesting is that Y+ is exactly the same as what C was when it first began. A slightly bigger seat at the front of the Y cabin with Y meal service.

C, today, is better than F was 20 years ago in terms of confort (though not in terms of service).

So, in many ways, airlines with Y, Y+, and C are the same as airlines 20 years ago with Y,C, and F.
17 year airliners.net vet! 2000-2016
 
vermeer
Posts: 433
Joined: Fri May 12, 2000 6:21 am

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 7:59 am

Meechy36,

thanks for the info.
You are right saying that most of thr passengers were upgrades to first. This is beacuse "American" based airlines tend to automatically upgrade their top tier passengers. I don't agree agree with that policy - and it not widespread with EU based carriers.
That is why first class - apart from prestige - are keeping three ( or four) classes.
Let me say that at least 50% of F passengers on LH and AF are full fare ( or discounted first or a combo first one way biz the other). Generally they have between 8 and 16 seats on thier aircrafts and have also very heavy C bookings on intercontinental flights.
LH uses 744's to Honk Kong and Japan with a 99 C configuration, and more often than not is fully booked - paying passengers ( I took a look at the manifests and the booking classes are there)!!!
with such a strong demand it makes sense for them to mantain a superior product.
I don't have to explain you that a real first class is a very different thing from whatever "businessfirst" product.
And it makes you happy to use your miles for some gorgeous splurge every now and then. After all you are spending more: pay a C and "pay" in miles.
Furthermore, a First class free ticket requires a very high mumber of miles if it is originated from Europe, making it tempting yet difficult to achieve.
 
Airbus Lover
Topic Author
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Joined: Mon Apr 10, 2000 10:29 pm

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 4:42 pm

Well thanks for the input...

If an airline decides to drop first on some routes and improve their overall C product, will that be better? and that they may add a Y+ class which nowadays are getting more and more popular amongst Y travellers who can not afford C but Y+ is nice..?

I do understand that it is mostly American airlines that automatically upgrade their top tier flyers.. which I think is a good way of keeping those passengers 'loyal' But doing that too much might simply mean that almost half of the F cabin is 'discounted'.

I was surprised to see that LH actually had such good C demand. well at least in Asia I would say, most companies only allow Y travel for their employees and most medium sized business owners only travel in J. J demand is not very huge like what Vermeer said for LH... F demand I would say in this part of the world is limited, only those very well-to-do people travelling in style would fly in F, e.g. the boss of a public company ... Some fly in F to impress their business aquintances
 
teva
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Joined: Thu Feb 01, 2001 12:31 am

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 8:34 pm

What I don t like with the airlines dropping F, is that they have a tendency to call their business class a business-first.
But when you fly this, you realize that you have a business class seat and service, that you pay for the price of a first.
I have flown F with SR and Emirates, and then the TWA "business-first"(this flight was in 2001). I can tell you that for me, it was even below the average business class. Only the price was high.
A real first is good for both the airlines and the people willing to pay for it.
A business first is good only for the pockets of the airlines. for the customer, it is roberry.
Teva
Ecoute les orgues, Elles jouent pour toi...C'est le requiem pour un con
 
crazyboi
Posts: 151
Joined: Mon Feb 19, 2001 9:15 am

RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 8:56 pm

Airbus Lover,

Good topic. But I think that it might be better to post your topic subject as a question rather than a statement in the future. It just makes it a little easier to understand what people are writing about when scanning the topic lists.

Cheers.
This is the time. And this is the record of the time.
 
Airbus Lover
Topic Author
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RE: Airlines Losing Money On 3 Class Equipment

Tue Oct 22, 2002 9:38 pm

Crazyboi>

I did realise that I forgot to put a "?" in the topic line which might help a lot .. Sorry and thanks ...
 
flyyul
Posts: 4405
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RE: Airlines Losing Money On 3 Class Equipment

Wed Oct 23, 2002 11:31 am

Yep,

Montreal gets that famous 4 classer.... There is nothing in Y, Delta MD88's offer more Y than BA B777 4 classer's.

Mark
 
Airbus Lover
Topic Author
Posts: 3163
Joined: Mon Apr 10, 2000 10:29 pm

RE: Airlines Losing Money On 3 Class Equipment

Wed Oct 23, 2002 1:56 pm

So it seems that this varies from airline to airline and different market have significant difference in demand...

4 classers are making money for BA... Would a 4 class service benefit current 3 class (F/C/Y)?

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