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Comment by Scoundreller | Hacker News Reader

My response was to the statement that the “cheap seats” are very low margin or money losers.

The airline and first class ticket buyers needs the economy passengers just as much as vice versa.

With the existence of economy-only planes and lack of 1st-class only planes, I’d argue that the “cheap seats” are what makes aviation viable, rather than being a money-loser.

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> With the existence of economy-only planes and lack of 1st-class only planes, I’d argue that the “cheap seats” are what makes aviation viable, rather than being a money-loser.

On a typical flight, the revenue probably follows a Pareto distribution--20% of the passengers (first class) provide 80% of the revenue--but at the paper-thin margins of an airline, you still need the other 20%.

Economy-only flights are usually from economy-only carriers, which trade even thinner margins for not having to worry about the annoyances of catering to first class passengers.

Economy conditions are increasingly terrible because cost-sensitivity and easy-to-verify sources of pain (nonstop vs. layover flights) have a greater effect on consumer behavior than seat size and other creature comforts. With these conditions getting increasingly worse, economy flights become increasingly more cost-effective, and perhaps it becomes increasingly harder to keep the pampered first class passengers on the same airline or even the same plane as the economy passengers.

Also, first-class tickets aren't even at the very top of the market any more than Audi and Lexus are at the top of the automobile market. The top of the market is in charters and private jets. An airline that flies planes only for first class passengers is close enough to a charter airline that they might as well become a charter airline and bypass TSA and the other associated miseries of air travel.

Low-cost carriers have very different businesses too focused on lowering costs. The "low-cost" in the name refers to the carrier's costs, not the customers. They typically have all-economy planes and use a single aircraft model (e.g. easyJet exclusively flies the Airbus A320 family), which dramatically lowers crew and maintenance costs. They also offer little flexibility, have no interline agreements, and have no additional services (meals, etc.).

Yeah; low cost carriers are like IKEA or Walmart or (old) Amazon strategically, they deliver a known quantity at a competitive price and shave their margin out of the cost side rather than growing it on the revenue side. But they are also often low-cost for the customers, particularly the more notorious examples (e.g. Ryanair). Companies whose profitability comes from penny-pinching usually fit best with customers who are themselves penny-pinching.

(Oddly, it occurs to me that European companies do a really good job of settling in the niche of "penny-pinching to the point of being kind of terrible, but such an amazing bargain you can't complain"--IKEA, Ryanair, Aldi, Lidl. Walmart felt bad about being terrible and tried to get a little nicer to compete with Target; Amazon felt bad about being cheap and terrible and decided to chase a membership model and set up a cloud computing business on the side. Maybe it's because America has a deep inborn cultural fiction of not having social classes and companies feel embarrassed about obviously not catering to the quintessential middle class American family?)

lack of 1st-class only planes

There are a few airlines that fly all-premium configurations on certain routes. Singapore does that on the Singapore-Newark route. British Airways does it on London City to New York. SAS used to on the Houston to Stavanger route.

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