How Airlines Make Money: The Economics of Business Class 

AirBus, Dassault and AirFrance: Please, hold our BAGUETTE 🥖🥐

Top tier comment

Lmaoooo was coming to say this

Lol

Was about to post something similar

It's "thrice". Trice means something else. Don't make me say this thwice!

@@vinterskugge907 thanks. I got lucky and trice can also fit in the comment

I do acknowledge the similarities here, but following the recent news from AA, Delta and others about the acceleration in premium cabins we thought there was enough new ground to cover since Wendover's 2017 video. We also focused far more on the economic principles at play here and the business behind these decisions, where Wendover spend much more time on the history of airline classes and how we ended up in the place we are today. I felt that given both of those things there was space to come back to this topic from a 2023 more economics centered perspective, but having just rewatched Wendover's still excellent video for the first time in years I can absolutely see the comparison - Jack

I think you're joking. 😂 Regardless, this topic is interesting and topical enough to be covered by several channels. This particular video is informative, well presented and covers the subject in it's own way. I honestly think Wendover would approve!

@@TLDRbusiness I have nothing but respect for both of you. Just teasing.

Wendover doesn't have a monopoly on plane economic videos

​@@ItsTheBoomboxIt more or less does

It’s more like 15 years ago you were forced to buy these upgrades whereas today you have the option. Look at Ryanair, horrible service and quality but cheap - I’m happier with the savings than I am with a legacy airline with good service

I fly dubai to dallas almost 6 times a year. I use points and splurge for business. 100% worth it for the comfort and emirates experience

If economy class costs $100 less than business class for every hour flown, that means that I "earn" $100 per hour for sitting in an uncomfortable seat. That seems like a pretty could deal. I think that most people who fly business class could find better ways to spend their money. Hardly any of them is so rich that he has run out of ways to spend his money.

@@raniahamid2945 But you need to get points from somewhere, usually from spending on other things. It's not free...

If it's BOEING, I ain't coming 🤯

​@@skyscraperfanIt's also why people only ever fly business class on someone else's money

I totally agree with you. When I’m flying business class I know I can stay longer in the lounge and just board the flight when it’s almost ending

Yes no one boards first in business class

I think the TLDR team doesn’t fly business or first class enough. We should help them by finding them more customers.

You really don't know much about aviation do you.

This greatly depends on the layout of the airplane. I've seen economy class passengers put their bags in the overhead bins of business class if they think they can get away with it (since the business class people surely have boarded already, so any empty bins are free real estate, right?). This only happened if the plane was boarded from the very front and everybody had to walk through the business section to get to their seats.

Fewer passengers cost less to transport, so if they rake in the same amount, or more, per square ft , they should happily do so as it comes with a bigger profit margin

yeah that's what didn't make sense to me too. I guess they implied that premium passengers also spend more on ancillary, but didn't show any statistics on that. It seems like the Main Plus was actually the best profit per space.

Yes. And the premium seats lead to more expenses for the cabin crew, food, lounges. The big factor is weight and cargo space. A first class seat takes as much room as 6 regular seats, but the person sitting there just weights 80 kg, instead of 480kg combined and might have 2 checked bags, while the others have at least 6. The airline can sell additional cargo space of 400kg for every first class seat. You also can't fill most widebody airplanes with just economy seats due to weight restrictions. Then there is demand for economy seats, with fewer cheap seats, they can upsell them more closer to the travel date. And of course the prestige from having great business class and first class seats. People pay more for AA flights than for low costs carriers even thought the seats and service in economy are basically the same.

But the number of passengers is limited. So you can't replace a business class seat with three or four economy class seats without getting those additional two or three passengers.

Its more $/sq meter on a plane. If you make a regular economy seat have a few more cm of legroom you can charge 30% more for that same seat.

I am at a stage where I can buy a business class flight and not worry about it but a lot of flights I do don't even offer lie flat seats, just a recliner which is not worth it even for me, some routes don't even offer a business class. I end up just flying economy a lot of the time. First world problems, I know.

@@test-hd9yc Which airlines have your favorite business class?

Even if I was rich, I would hate o feel overcharged. Space is the only really useful benefit of business class, but as the video pointed out, in business class you have to pay even more money per square foot than in economy class. That feels unfair to me. If I buy more of something, I expect to pay a lower price per piece. For me it seems that most people dream of flying business class BECAUSE it is so expensive an most people can't afford it. That is very irrational though. A high price should make a service or product less desirable instead of more. It seems to be the same irrational thinking that makes people buy Prada shoes for $500 a pair, which cost less than $20 to produce. One thing is to be rich enough to be able to buy business class seats. Another thing is to be so rich that you ran out of BETTER things to do with that money. Usually business class costs at least $100 per hour more than economy class. So sitting in the less comfortable seat saves you $100 each hour. That seems like a pretty good deal to me - even if you are wealthy. There are even some billionaires that always travel economy class although they are rich enough to buy the whole airline. An example was the owner of IKEA. He died an an age of 91 with a net worth of more than $50 billion, but he still flew economy. He also drove an old pretty worthless car. That's a role model for me.

@@xXRealXx Cathay Pacific had the best service, Delta One cabin was the most comfortable in terms of product, but the service was meh. I haven't flown first class (like La Premiere and similar so I can't comment on those)

​@@victork6994 If you still have to earn money with your own work, it seems a bad idea to waste it on business class. Business class means spending about $100 per hour extra just to sit more comfortable. I not not see flight time as a "net time". Flying is just a way to get to a place where I finally will do something productive or enjoyable. Time at my actual destination is much more valuable. It makes more sense to invest into that time. Of course if your "problem" is that you have so much money that you don't know how to get rid of it, you can waste it on stuff like that. Personally the minute I arrive at my destination I would regret having taken business class.

It should be noted that some countries (most countries?) consider airline points earned through work-funded trips as taxable income. Leading to a bit of an accounting headache for both the individual and the employer. So a lot of employers require employees to check the "do not earn points" box when ordering tickets.

US airlines aren't subsidized like their Asian or European counterparts.

100% agree. Thank the rich. And also thank the whites, who invented planes.

That is incorrect. As the video informs, the most luxurious seats are not cost effective. Not only this, airlines report higher and higher profits while prices increase, so it is more likely that the airlines are already price gouging the consumer since these luxury seats dont seem to keep prices from inflating every year.

If it's BOEING, I ain't flying 🪽

​@@dVector13You've not taken competition into account here. The premium seats do indeed lower the price you'd have to pay for economy.

That only makes sense if you are so well paid that a little sleep is worth those extra $1000 or so. Otherwise it would be cheaper for the employer to give you one day off.

@@skyscraperfan most of them are pay by the companies, so it’s worth it.

@@skyscraperfan but you are thinking just for the ticket. One night extra out, means one night of food, and one night of hotel, which in large cities again, count for quite some money.

The reason why especially economy class passengers want to board earlier is the limited space in the overhead bins. People prefer to have their bag in the bin directly over their own seat. I access my bad a few times during a flight and if is above your own seat nothing can fall onto another passenger. Also the bag of another passenger can't fall onto you.

Once you are on the plane, you can just relax. Until you board you have to be alert waiting for your turn to board. In first class, they will offer you drinks, while you wait and you can work on your computer or just chill out. There is enough room so you aren't being jostled by other passengers as you would be in coach.

Oh my god … it’s the best being first on. Relax have a drink and lots of space

How many employees are so expensive though that making them arrive a little less tired is worth an extra $1000 or so? That is especially on the way back from the business trip. I usually go on vacation to Asia, which means trip of about ten to twelve hours and I always fly economy. Usually I fly over night and do not even sleep a minute. Still when I arrive I am not tired. Not having moved for so many hours saved to much energy that I start exploring the city right away. Last year I did the fifth longest flight in the world: Auckland to New York City. It was not exhausting at all. Maybe that will change if I am older one day, but so far it is okay.

Which is still safer than being on the road….

Why do you want the « rich » to be unsafe? By the way, most people in business get paid just as much as you, but they have to travel for work a lot.

@@CineZoneYT or maybe I just don’t want air safety to have a massive premium slapped onto it.

@@rheacevert Some people don't want to suffer in tiny seats for 10 hours

If it's BOEING, I aint going 🤯

I'm just a regular Joe that flies a lot for work. Work only pays for main cabin seating, but I use the points/miles from those tickets to pay for the upgrade here and there (or the airline automatically upgrades the seat based on 'status', or how much you spend in airline tickets for the year and/or on a loyalty credit card). If it's an early morning or late night flight, I may like to snooze without unknowingly encroaching into my neighbor's space. Useful when you're flying redeye so you can get to your work site in the morning and have a productive day, and maybe fly back or to another site afterward. It really sucks to spend 12-20+ hours on a plane in a given week, so little things like a wider seat or a hot meal make it a bit more bearable.

It's roughly 46 cheeseburger². Hope that helps

Are we talking double or single here?

@@ZeeengMicro thank you, but I'm not American 🥲is it 1 cheeseburger = 1 sandwich 😂

You have two feet on you, use that to imagine the approximate length.

Divide by 10 for m^2

It gives a sense to me that it is working hard because it is inefficient.

Same here, My portfolio has been going down the drain while I try trading,l just don't know what I do wrong. .

Well...l will advise you should stop trading on your own if you keep losing and start trading with an expert because trading with an expert is the best strategy for newbie..

I think l'm blessed if not I wouldn't have met someone who is as spectacular as expert mrs Janet.. High recommended

Wow, I'm surprised to see Janet mentioned here as well. I didn't know she had been kind to so many people

​Mrs Janet successful stories are everywhere, all over the place.

It depends on many factors, but many times the two-aisle widebody planes will load from the center. If you turn to the right upon entering, you go to the main cabin. If you turn left at the boarding door, you end up in the 'premium' seating area.

Remember that in single-aisle narrowbody aircraft is nothing like first class in the dual-aisle widebody ones. Domestic first class is somewhere between premium economy/business class in terms of what you get.

@@jaymzx0 This. Sometime, first and business also get a dedicated boarding bridge that economy passengers are not allowed to use.

great, however this video does show how airlines make more profit from people like yourself who is willing to pay considerably more for a product (business class) that delivers very little extra value apart from the feeling of "how far I've come" to differentiate myself from what I came from

@@patoises the difference is that my company and status pay for it. To this day, I've only pay once for Premium Economy on a personal international flight. The problem with most people online (& irl) is that they think things should cost them the same or just a little bit over the cost that a corp pays to design, make, market and deliver said "thing/service." Airlines don't have the luxury of Google/Meta of giving you nothing and selling all of your data in return. Companies need to make a profit to exist otherwise there would be no jobs. Lastly, I'm not going to apologize for my last sentence, my family worked very hard (what we call shit jobs) for me to get a good education and in turn now I can provide luxuries for them that they never imagine ever attaining.

​@0ppaiDragon what?!

I can't sleep anyway in a room full of strangers.

They sometimes do it to anticipate ad insertions. I've seen other channels/editors do it as well.

So what, style matters, luxury matters and most importantly time matter. You could do a lot of other work that you'd otherwise not be able to do if you weren't in business class. And even if you arrive at the same time, the entry and exit is not.

I need leg room bro

WRONG The people who paid more for checked luggage arrive 20min or so later.

@@makisekurisu4674 If my company would expect me to work during a ten hour flight, that would actually be a big downside.

Ohhh, I said knife and fork - but I can fully see how you misheard it... I did say it a little odd

Not sure how you hear the word "made" from that lol.

@@TLDRbusiness ​ Please make the first class video for as you said "HOW ARE INSANELY RICH PEOPLE GONNA GET PLACES?"