If Airlines Had Their Way, the Cheap Seats Wouldn't Exist
A quick explainer on airline pricing.
BY Sarah Rense | Mar 21, 2017 | Money & Career
Over 6,000 flights were cancelled across the U.S. as winter storm Stella bore down on the Northeast, leaving travelers scrambling for extra seats—any seats—to their final destinations. So yeah, air travel sucks. The latest educational video from Wendover Productions explaining the economics pricing on airplanes will at least make it more comprehensible.
The rigid airline class system has roots in the early 1950s when airlines started selling tickets for the same flight at different prices. That expanded into the current you-get-what-you-pay-for system: Flying is no longer just about how quickly you get there, but how nicely you get there, with more expensive, luxurious seats clustered at the front of planes.
Class seating works wonders for the airline. Geographically speaking, if roughly 45 precent of a plane seats more expensive ticket holders, those tickets generate a whopping 84 percent of that trip's revenue. Wendover Productions based that on one British Airways nonstop flight from London to Washington, D.C., but explained that the ratio is similar when other factors are pulled into the pricing equation: Two-thirds of revenue almost always comes from the first, business, and premium economy classes.
So yes, this is good for the airlines, but only to an extent. First class is disappearing, mainly because selling tickets for a first class seat is a challenge when it's a lot more expensive than business class but not that much more luxurious. The dream scenario for an airline would be to jam its cabin full of business class seats at business class prices, but no route currently exists that would have enough business class buyers, so the back halves of the planes are still reserved for the cheap seats: economy. Happy expensive travels.