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continuation of my last one
why planes don't fly faster I ended up
talking a lot about the Concorde the
supersonic plane but part of the story
it was left untold even though the
Concorde failed even though it wasn't
commercially viable it still had a
profound effect on how we fly today let
me explain economy class is not how
Airlines make money the real money at
least for the traditional airlines is in
premium cabins let's take for example
this British Airways triple7
there are 224 total seats on this plane
and it flies daily between London
Heathrow and Washington Dulles Airport a
round-trip economy class ticket leaving
March 15th and returning on March 22nd
costs at the time of writing eight
hundred and seventy-six dollars that
means that if each one of the 122
economy class seats is filled the entire
back section of the plane will make the
airline round-trip 106 thousand eight
hundred and seventy two dollars
meanwhile the going rate for one of
their premium economy seats is two
thousand six hundred and thirty three
dollars round-trip meaning the entire
cabin will make one hundred and five
thousand three hundred and twenty
dollars already you can see that the
entire 40 seat Premium Economy section
makes British Airways roughly as much as
the entire economy class section going
up to business class there are 48 seats
sold each for six thousand seven hundred
and twenty three dollars making the
airline three hundred and twenty two
thousand seven hundred and four dollars
the fourteen first-class seats are sold
for 8750 knows each or one hundred and
twenty two thousand ten dollars total so
once again the fourteen passengers at
the front of the plane make the airline
more money than the hundred and twenty
two at the back of the plane in total
the three premium cabins Premium Economy
business and first make the airline on
this flight five hundred and fifty
thousand and thirty four dollars that
means that forty five percent of the
passengers account for eighty four
percent of the airline's revenue now I
need to add some caveat
there is no airline on earth that makes
half a million dollars for a six-hour
flight over the Atlantic if they did
they would be swimming in money the
fares for this particular routing are
significantly higher than the average
fare paid for that flight because their
nonstop fares between two high income
high demand cities of course a majority
of passengers on that flight will not be
travelling between London and Washington
they'll have connected if you originate
the ticket in say Stockholm and connect
on to that triple 7 flight to Washington
the economy-class price drops to 392
dollars the Premium Economy to one
thousand one hundred and fifty dollars
the business class to three thousand and
twenty five dollars in the first class
to five thousand five hundred and sixty
four dollars but the proportions are
still roughly the same a vast majority
of the revenue comes from a minority of
passengers this particular British
Airways triple7 is also a very premium
heavy configuration because British
Airways is an airline that focuses a lot
on premium travel but still on average
two-thirds of any airlines revenue comes
from passengers in first business or
Premium Economy Class
but this wasn't always the case in the
beginning of commercial aviation there
weren't really any classes because
everything was premium that's not to say
that planes were very luxurious a 1920s
plane looked like this
but flying was just so expensive that
the experience of flying was the luxury
itself it's kind of like how you don't
see Virgin Galactic selling first
business and economy class seats on
their plan to tourist flights to space
the experience itself is the luxury once
commercial space travel becomes
commonplace will almost certainly see a
classification of the experience but
until a transport method is at a cost
where it's attainable to the normal
person it's all first-class in 1950 a
round-trip coach fare between New York
and London was 675 dollars adjusted for
inflation that $6,800 today roughly the
same price as a first-class ticket on
the same route nowadays it's the exact
same type of passenger flying in both
these seats which changed is who's
flying further back in the plane so the
story of the development of airline
classes really isn't the story of how
air
lines developed more and more luxurious
seats it's how they cut costs to allow
more and more people to fly it's also a
fascinating demonstration of economics
airlines have figured out a way to sell
the same product for different prices to
different people the overall product the
airline is selling is the same no matter
which class are flying a flight from
point A to point B what's different is
the experience within the plane the
first classification of air travel
happened in the 40s and 50s a
significant amount of revenue for
Airlines at the time came from contracts
for airmail routes with the US Postal
Service these flights flew with many
stops often overnight or at odd hours
while the planes mostly carried mail
they still had a passenger section the
first-class fares got you for example on
a nonstop flight between New York and
Chicago while the coach fare might get
you on a male flight that left at 2 a.m.
and stopped in Pittsburgh and Cleveland
on the way to Chicago while the fare was
cheaper and the flight took longer the
experience on board the plane was
largely the same
it wasn't until 1952 that Airlines
started selling the same flights for
different prices one airline for example
sold standard class one-way tickets
between New York and London for three
hundred and ninety five dollars and
tourist class tickets for two hundred
and seventy dollars it was the exact
same flight on the exact same plane the
difference was in the ticket tourist
class tickets had to be purchased in
advance and had no flexibility you had
to fly on the exact flight that tickets
were purchased for as the name suggests
these tickets were primarily for
tourists tourists planned trips far in
advance and don't really need
flexibility so it was no problem for
them to commit to one flight the full
fare tickets were for the other type of
traveler the business person business
travellers first off don't typically pay
for their own tickets they're paid for
by their employer so they individually
don't really care what the ticket costs
business travelers also require
flexibility and generally don't purchase
tickets until the last minute at the
time it was a common practice to just
walk up to the counter an hour before
flight and buy a ticket that's what
these full fare tickets were for through
this system the airline's segmented the
market into two categories based on what
people were willing to pay
over the coming decades this was the
only large classification system in air
travel then between 1969 and 1978 three
things happened
the 747 flew for the first time the
Concorde flew for the first time and
airlines were deregulated in the US the
747 gave airlines this space to
experiment with luxury the Concorde gave
them the reason to and deregulation gave
him the ability to previously all
airlines were heavily regulated in the
US and it was difficult for airlines to
charge the cost they wanted four
different classes but with deregulation
airlines now had full control over their
ticket prices now at the time much of
the difference was still in the ticket
some airlines had introduced first-class
fares with nicer seats but Airlines
realized that they had to start treating
the business people who bought a full
fare coach ticket differently than the
tourists paying a discounted fare more
and more of the business travelers were
just paying the tourist class fare it
began by just physically separating the
passengers the full fare passengers
would be seated up front
while the discounted fare passengers
would be put at the back then some
airlines began blocking out the middle
seat next to the full fare passengers
finally some airlines started to build
cabins with slightly nicer seats and
better amenities but with exceptions
airlines avoided first-class most focus
on capturing that middle tier of
traveler because the concorde was going
to be the first-class plane for the rich
and famous regular planes would be the
business and economy class at least
that's what they thought of course as
you heard about in my last video the
Concorde failed spectacularly Airlines
avoided first class in the 70s and 80s
because of the Concorde but as they
started to catch on to the failure of
supersonic flight select Airlines slowly
reintroduced first class to subsonic
planes but the effect is still seen
today of the dozens of airlines flying
transatlantic only six have a
first-class cabin back in the 60s and
70s the imminent perceived competition
of the concorde really invigorated
Airlines to optimize that middle class
business
but we likely would not have seen it as
early as we did without the looming
disruption to the industry but there's
another trend to explain first class is
going away again let's take a look at
this seat map of 80 odd a 380 each
economy class seen on this plane takes
up 3.77 square feet of floor space the
business class seats take up 10.14
square feet of floor space and the first
class seats take up 35 square feet of
floor space on a flight from Abu Dhabi
to New York economy class tickets are
one thousand two hundred and fifty-three
dollars round-trip business class
tickets are six thousand one hundred and
forty dollars and first-class tickets
are fourteen thousand one hundred and
twenty eight dollars that means that
economy class seats make three hundred
and thirty-two dollars per square foot
business class seats six hundred and
five dollars per square foot and
first-class seats four hundred and three
dollars per square foot the difference
between economy class and business class
is huge it's a cramped seat versus a bed
but the difference between business
class and first-class is just a bit more
room and some better food it's very hard
for airlines to sell first-class for
much more than business class since the
experience is largely the same but the
cost for Airlines to run a first-class
cabin is significantly more if therefore
more and more airlines are taking out
their first-class to just put in more
business class it just makes more money
if an airline could fill a Plane full of
business class passengers it would it's
been tried but pretty much no route has
the premium demand to fill a Plane full
of business class everyone in economy in
the end is just there to fill the plane
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