Asked on 19 Dec 2019
Hi, i was just wondering if first-class is profitable for airlines? like do they earn a lot of money when people fly first-class? or are they actually making a loss? not really miles-related, but just wondering!
Revenue first class can be very profitable. But business class is probably where most of the profit is made.
Few people outright pay for first class though. Most either redeem miles, or have companies paying for them. Or you have the occasional celebrity who thinks nothing of shelling out a $14000 Suites Class on SQ LHR - SIN return since they make a million a year.
However, if the flight takes off empty in first, that's a potential loss in revenue. So the airlines have really gotten good at pricing it just right to entice people to pay for it instead of redemption.
Nowadays, I would say that First Class is starting to become rare.
I will refer you to this video. It's called The Economics of Airline Class, and it's really good:
Sia used to have difficulties selling it's old first class suites. They tended to fly off at 50% capacity and SIA was barely breaking even in that segment, from what I understand. The continuing of the suites was for it to act as a marketing effort to promote SIA as a luxury airline
Sometimes airlines like Emirates and SQ just want to have an awesome first class product to show off how great flying with them can be. It is meant to be a flagship product that may or may not be profitable by itself.
However, the trickle down effect of people associating these airlines as more luxurious (even though Emirates has a ridiculous 2-3-2 config in business class) and are more willing to pay more to fly with these airlines. In the grand scheme of things, first class is still likely to be profitable. Airlines would scrap it otherwise (as MH and KE have done).
Yes first class is very profitable per seat.
Unfortunately most airline body lose money if they allocate too much first class and couldn't get it filled. So thats a big problem because every empty seat is a big revenue wasted.
Airbus A380 is one of this plane that can have many first class seat empty as it flys... giving airline a big headache.
One of the reasons why A380 didn't sell well....
I believe airlines have a revenue-pricing model that accounts for the no-shows and half-booked first class seats that we see quite often. It should be a complicated model that varies across airlines and flight routes based on their respective demand of these flights and supply of these seats. So overall the flight should still be profitable, based on the make-up of first to business to economy class seats.