VC10er
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How Does Swiss Make Money In Business?

Sat Nov 26, 2011 4:38 am

I have been flying LX from JFK to GVA sometimes. I am flabbergasted over their business class where their 2-4-2 configuration included 4 people and 4 blonde wood desks. Nobody next to you ever! So that's only 4 pax from one side of an A330 to the other AND they are not more expensive than CO was or UA or now (2 UA flights) with much higher density and not ever empty. So how does LX do it? and while I haven't found a way into their beautiful new First Class it seems as if real estate was not an issue either. So can someone tell me the trick?
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BMI727
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 5:06 am

Quoting VC10er (Thread starter):
. I am flabbergasted over their business class where their 2-4-2 configuration included 4 people and 4 blonde wood desks.

They stagger the rows and move them closer together longitudinally. Underneath those desks are the feet of the people behind you. Similar to what Delta, Emirates, and some others do in their business class cabins.
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VC10er
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 5:22 am

Quoting BMI727 (Reply 1):

Yes- I realize that the feet under my desk are of those of the pax behind me but for a an airline configured with first class too, don't they still have many less pax than a 2 cabin CO/UA?
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AeroWesty
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 5:36 am

Quoting VC10er (Thread starter):
So can someone tell me the trick?

They make it up in volume by levying baggage fees on the unsuspecting in Coach.     
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roseflyer
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 5:39 am

Quoting VC10er (Reply 2):
Yes- I realize that the feet under my desk are of those of the pax behind me but for a an airline configured with first class too, don't they still have many less pax than a 2 cabin CO/UA?

It's the same seating density of Emirates A380, DL 767, BA all planes (rather than stagger people, BA has them flipped direction), etc. The principle is having a narrower seat than the traditional setup. The creative designs mean that foot width is less than shoulder width, so they can fit more seats accross which covers for the longer seat pitch.

Yes Swiss is a lower seating density airline like LH and BA are. It's their market. They have a larger percentage of travelers that pay first and business class. KL and AF are the opposite as they have a higher density of economy seats. It's all about markets. Airlines have to compete on cost of business class, so actual space used up on the plane is relatively similar. Swiss just has a more creative configuration and actually has more seats on their A330s than their corporate cousin LH, which means that LH should be changing their seats ASAP (fortunately flat business seats are finally coming to LH in a couple months).
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haynflyer
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 6:23 am

Also remember that an occupied seat is not always earning revenue. Maybe Swiss does not allow FF redemption up front? Just a guess.
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daron4000
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 7:16 am

Simple:

European and Asian airlines protect the integrity of their premium class cabins, unlike the US carriers you are used to flying. Their FF programs do not allow for cheap upgrades (SWU's, EVIP's etc.) when they reach a certain elite threshold and mileage upgrades are a lot more expensive to come by. As a result, the number of people you see in the premium cabins are much more likely to have paid a true business class fare to sit there. In contrast, the premium cabins on US airlines are mostly filled to the brim but you have no idea how many of those belong to paid traffic vs. upgraders and non-revs. If Swiss can have the same footprint as UA/CO in business but with less seats, as long as the people occupying those seats are paying business class prices for the seats, they will be profitable. And you are right, the ticket prices are roughly the same, which is why those paying top dollar are more likely to choose LX, leaving the bottom feeders for the likes of UA, AA etc.
 
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 10:14 am

Quoting VC10er (Thread starter):
I am flabbergasted over their business class where their 2-4-2 configuration included 4 people and 4 blonde wood desks.

It's not 2-4-2, nor 1-2-1. Their configuration is (alternating) 1-2-2 / 1-2-1 as you can see here: http://www.swiss.com/web/EN/fly_swis...ircraft/Pages/airbus_a330_300.aspx . The seat is the Contour Vantage ( http://www.contour.aero/businessclass/vantage )

An identical seat and configuration can be found an AY's new aircraft. Also AZ is using a staggered configuration, albeit a different one, on the A330-200s.

The seat pitch is 'only' 60". In a regular (non-staggered) configuration, 60" is not enough for a full-flat seat; at least 73" is required in a normal configuration.

Now compared to other full-flat configurations, in 300" between the 2 front doors of the 333/343, you can either choose:
4 rows, 2-2-2 at 75" pitch = 24 seats
5 rows, alternating 2-2-1/1-2-1 at 60" pitch = 23 seats

(depending on galley configuration, more seats are possible; AY has 32 seats)

So when it comes to floor space and density, Swiss' configuration is very similar to the alternatives.

Quoting VC10er (Thread starter):
CO was or UA or now (2 UA flights) with much higher density and not ever empty

UA's new international business class has a 77" seat pitch. The density is very similar with LX.
 
vegas005
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 11:51 am

Swiss pricing is consistently 30 to 60 percent higher than the American carriers. In addition it only takes 2 paying first class passengers to swing the profit margin heavily.
 
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 5:08 pm

Quoting Joost (Reply 7):

I was kind of joking when I said the LX configuration was 2-4-2 but only 4 pax and 4 desks. Rather than 2-4-2 with 8 pax across.


I sort of get the comparisons but you see half the heads of people sticking up in a full LX C class than you do on a full CO BF. Trust me, LX is remarkable in business and almost feels like F given the fact that the best part of F (to me) is sitting alone with a lot of space to spread out.

Now, I booked late, I always do just 1 to 3 days in advance given how my job works, the last 2 times I flew LX, LX was CHEAPER than CO!

The ONLY seat better than LX business to GVA is seat 1K on UA in First on a 767. However, the double miles plus fare bonus on UA is very attractive.
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ghifty
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 7:25 pm

Quoting Joost (Reply 7):
It's not 2-4-2, nor 1-2-1. Their configuration is (alternating) 1-2-2 / 1-2-1 as you can see here: http://www.swiss.com/web/EN/fly_swis...ircraft/Pages/airbus_a330_300.aspx . The seat is the Contour Vantage ( http://www.contour.aero/businessclass/vantage )

This is the same as DL's 764 BusinessElite?
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laca773
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RE: How Does Swiss Make Money In Business?

Sat Nov 26, 2011 7:39 pm

Quoting VC10er (Reply 9):

The ONLY seat better than LX business to GVA is seat 1K on UA in First on a 767. However, the double miles plus fare bonus on UA is very attractive.

But UA's catering and service is not very attractive compared to LX by far. I will say CO's catering is miles better than UA's but don't know if it's been decided who's catering and menus they will decide on staying with when everything is fully intergrated. It will be very interesting to see how this works out.
 
SAA738
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RE: How Does Swiss Make Money In Business?

Sun Nov 27, 2011 12:53 am

It's a very strange alternating 1-2-1 and 2-2-1 config on their A340's. If you sit in the one only seat your far from the window and if you sit in a double seat you have to disturb your neighbour when you want to get up. As you can see from the photo below when the seats recline 180 degrees part of the seat goes under the side of the seat in front of it, I think it's quite clever :


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Photo © Daniel P Fretwell

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dlphoenix
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RE: How Does Swiss Make Money In Business?

Sun Nov 27, 2011 2:54 am

Quoting daron4000 (Reply 6):
Simple:

European and Asian airlines protect the integrity of their premium class cabins, unlike the US carriers you are used to flying. Their FF programs do not allow for cheap upgrades (SWU's, EVIP's etc.) when they reach a certain elite threshold and mileage upgrades are a lot more expensive to come by. As a result, the number of people you see in the premium cabins are much more likely to have paid a true business class fare to sit there. In contrast, the premium cabins on US airlines are mostly filled to the brim but you have no idea how many of those belong to paid traffic vs. upgraders and non-revs. If Swiss can have the same footprint as UA/CO in business but with less seats, as long as the people occupying those seats are paying business class prices for the seats, they will be profitable. And you are right, the ticket prices are roughly the same, which is why those paying top dollar are more likely to choose LX, leaving the bottom feeders for the likes of UA, AA etc.

I beg to differ.
- Since 2001 US airlines reduced the J inventory and with it the number of award and upgrade seats. I have flown quite a few flights recently where the upgrade cleared list comprised of two passengers.
- European airlines face less competition. A US business has 4 airlines to chose from for global travel contracts, in most European countries there is only one. It is not a coincidence that AF/KL and LH were the last big airlines to introduce a flat bed J product (AF has yet to announce theirs AFAIK, KL did so two weeks ago).

Having said that, the soft product on US airlines leaves some room for improvement. IMHO the reason is lack of proven return on investment. If your customers prefer your J because of the hard product why spend money to teach your FAs about wine?

DLP
 
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aerorobnz
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RE: How Does Swiss Make Money In Business?

Sun Nov 27, 2011 3:32 am

The secret is to be making money before you even get to the expensive seats, so that any that are used are a bonus to the profit margin rather than the reason for operating. There are a number of ways to do this.
Flown to 120 Airports in 44 Countries on 73 Operators. Visited 55 Countries and counting. Wanderlust is like Syphilis, once you have the itch it's too late for treatment.
 
B777LRF
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RE: How Does Swiss Make Money In Business?

Sun Nov 27, 2011 10:08 am

Quoting dlphoenix (Reply 13):
- European airlines face less competition. A US business has 4 airlines to chose from for global travel contracts, in most European countries there is only one.

I beg to differ. Just like not all US airports offer international connections to where you are going, neither does a lot of European. From my home I can either take the train to FRA and connect there. Or I can fly out of my regional airport to any of the major European hubs and connect there. Apart from being able to take a highspeed train, isn´t it more or less the same as the US?

Finally, a US company may sign a contract with a European airline, same as an EU company may sign with a US ditto.
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RE: How Does Swiss Make Money In Business?

Sun Nov 27, 2011 11:55 pm

Quoting daron4000 (Reply 6):
If Swiss can have the same footprint as UA/CO in business but with less seats, as long as the people occupying those seats are paying business class prices for the seats, they will be profitable. And you are right, the ticket prices are roughly the same, which is why those paying top dollar are more likely to choose LX, leaving the bottom feeders for the likes of UA, AA etc.

As someone else mentioned, there is no such thing on LX (or other European carriers) as free upgrades based on elite frequent flyer status. Apart from some frequent flyer redemption tickets, passengers in the premium classes are paying to sit there. That´s true on both longhaul and shorthaul flights.

I was on an LX A320 GVA-ZRH Saturday morning. It was configured with 8 rows in J class (48 Y seats with the middle seat left empty, meaning 32 J seats available). It was almost full (2 or 3 empty seats). Based on destinations of the connections at ZRH that appear on the drop-down monitors before arrival showing gate numbers etc., I would guess that 90% of the 30 or so J passengers on that A320 were connecting to longhaul LX flights. That´s a lot of revenue.
 
dlphoenix
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 1:12 am

Quoting B777LRF (Reply 15):
I beg to differ. Just like not all US airports offer international connections to where you are going, neither does a lot of European. From my home I can either take the train to FRA and connect there. Or I can fly out of my regional airport to any of the major European hubs and connect there. Apart from being able to take a highspeed train, isn´t it more or less the same as the US?

This is correct for an individual that is booking his next vacation, less so for a company trying to negotiate a volume based deal for global travel.
LH is the only logical contract for A company in Hamburg, Dortmund or Hanover who has business in Europe, the Americas and Asia, same for AF for a company in Lyon or Bordeaux.

Quoting B777LRF (Reply 15):
Finally, a US company may sign a contract with a European airline, same as an EU company may sign with a US ditto.

Their is no legal reason for a US company to sign contracts with foreign carriers, but that will leave a void in domestic travel.

DLP
 
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 1:38 am

Quoting laca773 (Reply 11):

No UA nor CO are quite LX. Although I always felt UA F service was quite good on their Pacific routes. Even in J among US carriers.

The food on LX has gotten better with their seats. Prior to that LX J food was very average.

As for the new UNITED they will be getting CO catering. That is good as UA food was filling but not that good. CO is much better. It's really UA FIRST seats that are wonderful, as i have said in other posts...UA first with CO food and service will be a great premium seat in the sky and will be, for now America's best premium service when complete. INHAEO!

But, the new CO BF seat is fine, not bad at all except for the tiny foot rest. But one point I am getting from this thread is that LX has C seat that is more like an F seat than UA or CO's BF seat- but LX does NOT loose head count either in order to achieve what is very close to each pax never having someone next to you (except one row on an A340) so why didn't CO go with something like that vs a standard lie flat business? Because UA will always draw US costumers with it's generous GS & 1k Mileage Plus program?

And as for that part of this topic if I flew 225,000 full fare paid miles on SWISS I get a shiny card but no special services or free anything? I did the same this year on UA alone and I will be showered with thank you perks!
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MillwallSean
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 2:19 am

Quoting dlphoenix (Reply 17):
This is correct for an individual that is booking his next vacation, less so for a company trying to negotiate a volume based deal for global travel.
LH is the only logical contract for A company in Hamburg, Dortmund or Hanover who has business in Europe, the Americas and Asia, same for AF for a company in Lyon or Bordeaux.

In the case of Lyon both the two largest companies HQ:d there have Star alliance contracts. Great example...
Also if a company is HQ:ed in Minnesota isnt DL the only viable alternative using the same logic? or for that sake a company HQ:ed in Georgia.

I dont see much difference in the American market to the European, the European have more second tier alternatives than the American market. Competition is greater in Europe since we see more players.

But European airlines dont offer upgrades. Thats a huge difference and thus they tend to command higher yields on their flights. LX is one of the best at this.

I have never understood why American airlines offers free upgrades. Sure if youre the person that signs the travel contract for a top 100 company but apart from then it just doesnt make sense to me to offer free upgrades.
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 2:34 am

Quoting MillwallSean (Reply 19):
I have never understood why American airlines offers free upgrades. Sure if youre the person that signs the travel contract for a top 100 company but apart from then it just doesnt make sense to me to offer free upgrades.

To keep me from shopping around for a slightly cheaper fare on another airline. They get my loyalty--and all my flying dollars. Small price to pay on their part for a big return.
 
aviateur
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 3:02 am

Quoting aerorobnz (Reply 14):
The secret is to be making money before you even get to the expensive seats, so that any that are used are a bonus to the profit margin rather than the reason for operating. There are a number of ways to do this.

This is one of the most intriguing posts I've ever come across on this website.

Whatever these "ways" are, they ought to have saved countless routes from losses and eventual cancellation. Can you share?


PS
Patrick Smith is an airline pilot, air travel columnist and author
 
VC10er
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 3:26 am

American airlines do it for one reason only: money.

I work for a huge (70,000 people) spread all over the word with 2 headquarters: London and NYC. Our preferred carriers are British and Virgin. However, since we are also spread around the USA and from any of our offices across multiple divisions we get a 30% discount on all flights originating in the USA- and it's our choice domestically or internationally. So I get 30% off UNITED or TAM or SINGAPORE etc. So if I have AA, DL, US and UA as a choice to go anywhere. If I choose LX over CO to Geneva, fine. But if I earn GS on UA I will happily suffer in a very nice UNITED BUSINESS CLASS SEAT and choose to use my upgrades if I wish to upgrade. To Singapore I can choose the EWR non stop to SIN or choose to hop over to SIN with a stop on UA in First class by using an upgrade, and earn a boatload of miles and move towards GS the next year. I can't upgrade on DL or US and the ANGLED BUSINESS on AA is just unacceptable. Unfortunately if I fly from GIG to FRA I have to pay a real life full fare business class: once I spent $10,000 one way on VARIG!

But I spend well over $100,000 a year on just UNITED and they dont want me to go to DL or AA or LX or JJ. So UA gives me 6 to 8 systemwide upgrades- nice. Many opportunities to get into First and that keeps me spending BIG MONEY on UA. And, basically for some who flies 3 times a month - I never have to sit in economy and i LOVE UA First Class and the new business too. Sounds nice huh! But I am never home with my family either.

So back to the topic: the $4000 I spent 1 way on LX as did everyone else in C did, makes their spacious Business...profitable.
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aerorobnz
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RE: How Does Swiss Make Money In Business?

Mon Nov 28, 2011 5:09 am

Quoting aviateur (Reply 21):
Whatever these "ways" are, they ought to have saved countless routes from losses and eventual cancellation. Can you share?

If business class was the only aspect of commercial aviation that made money for airlines then we would have all-business planes everywhere, and carriers like maxJet and the like would still be with us. It is most definitely a contributing factor in flight profits but it has got as far as it can for generating huge profit margins per sold seat. Many airlines today realise that there are less space/weight/cost intensive methods of ensuring that each fare/seat is generating as much money as it can without having to compete for the thin end of the wedge. You will notice many airlines are focusing more on reinventing/increasing economy/premium economy in order to make more off all seats onboard (particularly in these hard times). In fact certain carriers make more on Premium Economy per seat than they do Business after product development costs and the unoccupied seats are taken into account.

I have known of flights that make money without even taking into account a single business class seat. The Business seats they sold were bonus money - not the reason for sending the plane there.. Fill a cargo hold with the right kind of perishable/high value cargo, and consistently deliver it as and when required and you can turn a profit before any passenger based revenue is taken into account. In-hold cargo is keeping carriers in profit all over the world.
Flown to 120 Airports in 44 Countries on 73 Operators. Visited 55 Countries and counting. Wanderlust is like Syphilis, once you have the itch it's too late for treatment.
 
aviateur
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RE: How Does Swiss Make Money In Business?

Tue Nov 29, 2011 3:07 am

Quoting aerorobnz (Reply 23):
have known of flights that make money without even taking into account a single business class seat. The Business seats they sold were bonus money - not the reason for sending the plane there.. Fill a cargo hold with the right kind of perishable/high value cargo, and consistently deliver it as and when required and you can turn a profit before any passenger based revenue is taken into account. In-hold cargo is keeping carriers in profit all over the world.

The reason I ask is that I've seen airlines slash routes that were always overbooked in economy but tended to be empty in First or Biz class, claiming they made no money. So are you saying it's cargo?


PS
Patrick Smith is an airline pilot, air travel columnist and author