SE210Caravelle
Topic Author
Posts: 256
Joined: Tue Dec 28, 2004 1:01 pm

First Class Profitablity And Mission

Tue Oct 04, 2005 7:17 am

First class is featured on many airlines - BA, SQ, LH, AF, UA, AA, QF to name just a few - that also have a business class. My question to you guys is how profitable is first class and why is it featured on many airlines?

I understand that first class is designed to offer premier luxury on board the aircraft but how profitable can this be as I understand 85% of the passengers who are flying first don't actually buy an F ticket and are just up grading? Such a class also has a limited number of seats but yet costs the airlines a large sum of money in order to fully service those seats.

Wouldn't it be more benificial to more costumers and more profitable to the airline if they had a very comfortable business class and then a comfortable economy like NZ, VS?

Thanks,

S E 2 1 0
 
dtwclipper
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RE: First Class Profitablity And Mission

Tue Oct 04, 2005 7:23 am

Quoting SE210Caravelle (Thread starter):
I understand that first class is designed to offer premier luxury on board the aircraft but how profitable can this be as I understand 85% of the passengers who are flying first don't actually buy an F ticket and are just up grading? Such a class also has a limited number of seats but yet costs the airlines a large sum of money in order to fully service those seats.

First Class is the bread and butter of international airlines. They make a fortune on their premium products!

I question your 85% free/ugrade figure for international travel...can you give us a source.
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SE210Caravelle
Topic Author
Posts: 256
Joined: Tue Dec 28, 2004 1:01 pm

RE: First Class Profitablity And Mission

Tue Oct 04, 2005 7:31 am

Quoting Dtwclipper (Reply 1):

I question your 85% free/ugrade figure for international travel...can you give us a source.

No it was a hyberbole to try and make my piont to how profitable F class can actually be? I have no actuall statisticks and was just wondering the premis of having a first class cabin.

But what are the advanteges to having a 3 class configuration over a 2 class one? If first class is so profitable why don't some airlines have one?

Thanks,

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1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: First Class Profitablity And Mission

Tue Oct 04, 2005 7:41 am

Quoting SE210Caravelle (Reply 2):
No it was a hyberbole to try and make my piont to how profitable F class can actually be? I have no actuall statisticks and was just wondering the premis of having a first class cabin

Don't take this the wrong way, but how can you use "hyperbole" in a sentence that has such bad spelling?

If you want to be a professional pilot you are going to have to work on that before you finish high school.


Premis = Premise
Statisticks = Statistics
Actuall = Actual

The business and first class sections of an airline are profitable. It they were not, they would not be there.

Most business fares are 3x to 5x higher than coach and F class is 5x to 10x higher, with even 50% paid fares in those classes of service, the airlines are increasing yield significantly.


[Edited 2005-10-04 00:53:32]
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commavia
Posts: 9802
Joined: Mon Apr 25, 2005 2:30 am

RE: First Class Profitablity And Mission

Tue Oct 04, 2005 7:47 am

Quoting SE210Caravelle (Thread starter):
My question to you guys is how profitable is first class and why is it featured on many airlines?

Very -- if it is in the right places, at the right airlines. AA can apparently fill F profitably on JFK-LHR, and so it has F on its 777s. DL could apparently not fill F on its ATL-LGW flights, and so it got rid of F on its aircraft.

Quoting SE210Caravelle (Thread starter):
as I understand 85% of the passengers who are flying first don't actually buy an F ticket and are just up grading?

That is simply not the case, at least not generally at airlines.

If an airline fills 85% of its F seats with upgrades, that airline won't be in business for long. Maybe on a flight here, or a flight there -- but if an airline can't actually sell most of its F seats, than it should get rid of F. With some airlines -- AA, UA, BA, etc., and some markets -- LHR, CDG (sometimes), NRT, etc., F can easily be filled.

Quoting SE210Caravelle (Thread starter):
Wouldn't it be more benificial to more costumers and more profitable to the airline if they had a very comfortable business class and then a comfortable economy like NZ, VS?

In some cases, yes. You are seeing this with specific airlines, and specific markets, but not all. As I said, there are some places -- LHR, Japan, etc. -- where First Class is still highly profitable.
 
roseflyer
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Joined: Fri Feb 13, 2004 9:34 am

RE: First Class Profitablity And Mission

Tue Oct 04, 2005 10:28 am

International first class is out of reach for all but the extremely wealthy and top businessmen. Not many airlines can make it work. Business class keeps getting better, which is taking away some first class passengers that no longer want to spend $10,000 (which is a pretty standard first class fare on many flights). AA and UA benefit from flying to two of the highest yielding markets in LHR and NRT. Not every airline can offer first class because there just plain aren't enough people out there with that type of money. But AA, UA, SQ, BA, LH, QF, CX and others can make a profit out of it since they have hubs in strong business markets with the clientele that can pay for it. If everyone offered first class on international flights, then no one would profit. But with some airlines and select routes having it allows it to work. UA probably loses some money by having a first class cabin on certain routes since they are one if not the only airline in the world that has first class on ALL international flights (excluding those within North America/Caribbean), but overall it probably earns loyalty from the upper echelon of American society because of it.

One thing about upgrading that is overlooked is the fact that it brings a lot of loyalty. There may be a lot of people that buy business and upgrade on UA or AA, but this still is good for the airline. These people buy upgradeable fares in business class which are still pretty high. Also their loyalty is important because the types of people upgrading into first class are still your prominent businessmen and wealthy that are very good to have loyal to your airline. There are definitely some out there that can pay whatever whenever so that they can get the best routing and service, but these upgraders are important too. DL, CO, NW and US probably lose some of their clientele because of this.

PS: Go easy on the guy since spell checker isn't fully functional.
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