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Highly recommend Wendover's videos on Airline economics, this specific one is about the various classes in Airline seats

https://www.youtube.com/watch?v=BzB5xtGGsTc

It’s the other way around, the business class seats subsidize the cheap economy seats.

https://www.youtube.com/watch?v=BzB5xtGGsTc

I don't understand why they won't run a platform car on the back of the trains and sell tickets as a super-premium class. It'd be the most profitable seats on the train because of what you'd charge for the experience, much like how the few 1st class seats on an jet earns the airline more than the entire economy class.

https://www.youtube.com/watch?v=BzB5xtGGsTc

Sure, the product is basically the same - a ride from Point A to Point B. But if you offer a private dining room, an observation lounge, a steward who attends to just you and 3 other cabins, you can charge way more than an economy seat.

By only focusing on the "Point A to Point B" aspects, they're entering a downward financial spiral.

⬐ klez

In Italy we have a business class which also has small (4 people) private rooms so you can have meetings while traveling. Not exactly what you had in mind, but still an extra over the "point a to point b" aspect.

⬐ chiph

I specifically didn't mention a business class ticket, because except for the Northeast US, there won't be any business travelers because the trip takes too long -- they'll fly.

But in the Northeast, offering a small private office so that some colleagues can work during the otherwise non-productive 4 hour trip from Boston to New York makes a lot of sense.

⬐ klez

I'm not familiar with travel times in the US at all, but aren't there any trips outside of the North-East area (I don't know, North to South California?) that would make sense by train and that are long enough that this small meeting room concept would make sense?

⬐ chiph

What I have heard is that the sweet spot for high-speed rail travel in the US is to place major stations about 300 miles (500 km) apart. So running from Texas to Minnesota up the middle of the country you'd have 6 or 7 major stations. Travelling East-West from New York to Los Angeles, you'd have 11 or 12 major stations.

The only viable (and still not funded) project is the Southeast Corridor project, from Washington DC to Atlanta Georgia. Top speed is likely to be about 110 mph (180 kph). Average speed will be lower because the passenger trains will always be held up by slower freight trains (no dedicated tracks, like the TGV has)

⬐ therealcamino

There are cities within distances where it would make sense in several regions, but the speeds would be terrible because infrastructure is not up to the task (example: 300 miles in 7 hours 45 minutes). The rails don't support high speed service, there is no electrification, and the rails themselves are owned by freight companies. If the time was productive, you might get some small number of people to take it, but the excruciating slowness wouldn't appeal to many people.

⬐ wool_gather

Unfortunately for the cross-country routes they already have pricing -- for the sleeping berths -- that's airline first class level, with service that's nearly indistinguishable from just having a bucket seat. One of the few "perks" was...wait for it...meals in the dining car.

Economy class seats generally speaking will earn the least amount of money to an airline, so this idea would actually likely be the most unprofitable option.

To make it truly profitable, you convert the plane to First class, but then you'll need to fill all those seats.

Wendover Productions had a great video on this a few years ago: https://www.youtube.com/watch?v=BzB5xtGGsTc

⬐ Max-q

Why, then, do the companies only offering one class (South West, Ryan Air) tend to make a profit, while the ones with multi class (KLM, Air France, American Airlines) tend to lose money?

That video is very wrong compared to real life. For the first: it assumes a full plane. My experience is that economy tends to be full, business has a lot of available seats. For the second: it does not account for the cost of running lounges, fast track security and other complimentary services offered to business and first class passengers.

Look at the companies. Filling the plane with economy passengers and offering low service level is what brings profitability.

⬐ iamtheworstdev

I believe Southwest makes its money by catering to business persons that pay more for flexible scheduling and more direct flight options rather than paying more for amenities.

⬐ leetcrew

iirc, southwest's seating policy allows them to turn planes around faster than airlines that assign seats.

Would highly recommend the YouTube video below [0] from Wendover, which went pretty in-depth on the economics of airline classes a while ago, and how first-class was the least profitable for the airlines. :)

[0] https://www.youtube.com/watch?v=BzB5xtGGsTc

⬐ k__

Interesting. I saw a video that explained exactly the opposite.

First class pays for the flight and the rest is filled up so no space goes to waste.

⬐ ashraymalhotra

Can you please link that video? This video made a compelling point on why first class does not pay and I would love to hear the contrarian perspective.

⬐ None

None

⬐ lymphadenopathy

The video states that business class is the most profitable per square foot, and economy is only there to fill up the plane. First was in between

⬐ k__

Ah, yes okay, that's right. Then I had it wrong, sorry!

Here is a relevant and interesting video about airline classes and pricing: https://www.youtube.com/watch?v=BzB5xtGGsTc

Wendover did a great video on just this.

https://www.youtube.com/watch?v=BzB5xtGGsTc

There is also another Wendover one explaining the economics or airlines classes and it talks about specifically why supersonic flights went into oblivion: https://www.youtube.com/watch?v=BzB5xtGGsTc

According to this: https://www.youtube.com/watch?v=BzB5xtGGsTc First/business class seats are where the airlines make all of their money, so Concord would be economically viable today.

⬐ londons_explore

If true, concord alone would be viable, but a combination of concord and regular planes on the same route would lead to all the business passengers taking concord, and the economy ones left in standard planes, which would no longer be viable.

⬐ TeMPOraL

In that case you could raise the price of Concorde tickets to push surplus business customers back to regular planes. But this raises the question, why would you even want to bother with Concorde in the first place?

It only makes sense if you could attract new business class customers, who would take the faster trip but wouldn't take the slower one at all.

⬐ euyyn

Because you take them off the competition.

⬐ mshook

At the same time, when Concorde stopped flying after the accident in 2000, people who used to fly on her, flew on other things, so these passengers weren't lost revenue wise.

⬐ euyyn

A significant share of those customers must have been lost by the two companies that flew the Concorde, as the alternatives to it are commoditized and offered by many other companies.

⬐ lmm

Some people didn't fly at all when they would've flown if a Concorde had been available. And those who did fly on other planes paid significantly less.

⬐ jonknee

That was also the case back when Concord was in service...

⬐ adolph

Wouldn’t a more costly to produce product eliminate the large margin of existing first/business class?

⬐ Fomite

And yet a number of "First/Business Class Only" airlines have failed.

⬐ zone411

But most of them failed because a jump in oil prices in 2006-2014. We're below these levels now.

⬐ Fomite

For the moment. I don't know that I'd want to build a business - and certainly not an aircraft production line - on the assumption that oil will remain this cheap.

⬐ zone411

What airlines often do if they are worried about this is to hedge through oil futures.

⬐ samstave

Yeah but they lack hammocks!

⬐ komali2

There are planes with hammocks? Sign me up

⬐ samstave

https://www.theregister.co.uk/2006/07/07/google_bed_plane/

⬐ darkmighty

While I'm sure most profits/margin come from first/business class, I think that's only viable because the large number of economic class passengers help marginalize the cost per passenger. To give a concrete example, suppose the airline is flying 20 business seats per flight. The cost of those seats to the airline if it had no economy class, and it were forced to allocate an entire plane for them would be immense -- marginal the cost per seat would be (illustration) ~Airplane_Cost/20+Accomodation_Cost. Now suppose a current airline will carry perhaps 200 economy class passengers where it makes 0 profit. The marginal cost of the business class seats to the airline now will be much lower, something like ~Airplane Cost/(200+20)+Accomodation_Cost.

So the airline don't need economy class to make profit, they need them to create economies of scale that bring down their cost for the high margin customers.

⬐ ggg9990

I have been on a 747 that was business class only (Singapore Airlines). But the economy class passengers are definitely required for scale on most flights.

I also recommend some of the videos on this topic (this is fantastic channel overall):

- https://www.youtube.com/watch?v=BzB5xtGGsTc

- https://www.youtube.com/watch?v=069y1MpOkQY

If anyone finds the operation of airlines a fascinating topic, you might like Wendover Productions: https://www.youtube.com/user/Wendoverproductions

How airlines price flights https://www.youtube.com/watch?v=72hlr-E7KA0

The little plane war https://www.youtube.com/watch?v=V1YMPk3XhCc

Why planes don't fly faster https://www.youtube.com/watch?v=n1QEj09Pe6k

The economics of Airline Class https://www.youtube.com/watch?v=BzB5xtGGsTc

How airlines schedule flights https://www.youtube.com/watch?v=dGXahSnA_oA

I just recently found the channel. So much good stuff. (My unrelated favorite is https://www.youtube.com/watch?v=j48Z3W35FI0 How the US government will survive doomsday.)

⬐ anitil

Wendover is truly fantastic. Also a very soothing voice, which I'm sure helps

There's a good Wendover video on airline classes:

https://www.youtube.com/watch?v=BzB5xtGGsTc

And another great one about AmTrak in relation to flight:

https://www.youtube.com/watch?v=fwjwePe-HmA

⬐ nitwit005

Thanks, the Wendover video was quite well done.

Unfortunately, due to the economics of airline class[0], privileged passengers account for about 70% of airline revenue.

0. https://www.youtube.com/watch?v=BzB5xtGGsTc

⬐ RodericDay

This is the case in many industries.

Movie theaters make money off of marked up popcorn and pop, videogames make money off of DLC and in-game purchases, etc.

When your side business starts requiring you to sabotage your main business to ensure people engage with the "side" part, is when things get interesting.

Sometimes it's better to avoid the race to the bottom altogether via regulation, ensuring that anyone who wants any improvements needs to improve things for everybody, or deal with the status quo.

That's the logic many Canadians use for vociferously opposing private schools (and I agree with it).

⬐ paulgb

And economy passengers benefit, too. I flew EWR-HKG round trip for under $700 tax-in a couple weeks ago. I don't think the economics of that flight would work without some passengers paying a whole lot more than that.

⬐ mpweiher

Yes. I know where it's coming from. The airlines can't actually differentiate on the basic transportation service: you're in the same noisy metal tube traveling at exactly the same speed, arriving at the same time.

There is some differentiation on the service you offer, bigger seats, maybe being able to lie flat.

But that's about it, and since that's all there is the airlines just start making shit up.

"Global Services (and generally 1K) members have their food orders taken first"[1]

Really, this is a thing? Just think about how ridiculous it is. And that it obviously has to be codified somewhere in the rule book. Along with all the other silly rules that aren't public. A friend of mine is a frequent traveller, and he told me a lot of the little tricks you have to pull to get good service.

"GS members have their own phone line, [..] the agents are based in the United States and are extremely helpful."[1]

Well, my Lufthansa agent was extremely helpful to "random joe with economy class ticket".

[1] https://thepointsguy.com/2016/04/top-perks-united-global-ser...

⬐ MichaelGG

The food order thing is ridiculous but only because United can't figure out how to take orders before loading the plane. I usually sit in the last row, makes me more comfortable. And around half the time they'll run out of the better entree.

⬐ moftz

If I had the money, why wouldn't I want to fly first class and receive all the perks it entails? Hot towel? Don't mind if I do. Complimentary mimosa? Yes, please. I certainly can understand why some people choose to spend their money on first class tickets. The flight is more comfortable. The airlines wouldn't be able to offer these services to everyone on the plane unless they upped ticket prices. I, along with the majority of air travellers, feel comfortable enough in coach to not pay for all the extra service. I might pay for extra legroom but I understand why I'm paying extra for this service, I'm buying an extra fraction of the seats they weren't able to sell because they extended the legroom for X number of rows (plus additional money because they can).