Lifestyle & Travel

Why The Different Classes on Planes?

Singapore Airlines Cover Photo
3 min read

For those who have taken planes before, you will know that there are 4 main classes on planes: Economy, Premium Economy, Business and First Class. Different classes have different prices, often charged for additional comfort, service and status. So how do they make money by creating these different classes on planes? We will analyse this with a one-way trip from Singapore Changi Airport to London Heathrow Airport.

Here’s a breakdown on some of the numbers we will work with.

Route: Singapore Changi Airport to London Heathrow Airport

Plane: SQ A380-800

Airline ClassEconomyPremium EconomyBusinessFirst
Price of 1 ticket600185052199530
Number of Seats245368612

Economy: $147,000Now assuming the plane is fully booked, here is the revenue breakdown for each class:

Premium Economy: $69,408

Business: $448,834

First: $114,360

Total: $779,602

From here, we can see that the 86 seats from business class already made up close to 60% of the revenue although it only accounts for 23% for of the seat count. Revenue generated from first class is close to that of the economy, even though it only occupy 1/20 of the number of seats in economy class.

Another way to look at it is that the economy class only generate 20% of the revenue even though it takes up 65% of the plane. The other 80% of the revenue comes from just 35% of the seats. In summary, economy class is not how long-distance flights aim to make money from.

Singapore Airlines

Source: Singapore Airlines

Why not just add more first-class seats?

You may be wondering – Since first-class brings in the most revenue per seat, why not just add more seats? The problem with first-class seats, or rather suites is that it takes up a lot of space. You have your own bed, chair and a private room.

On an A380-800, the 12 cabins take up approximately 1 quarter of the lower deck, while the 86 business seats take up the whole of the upper deck. Now if we take each quarter of each deck as 1 section, the first class will bring in $114k per section while business class will bring in $112k per section. Yes, the first class still brings in more revenue. But as a consumer, the difference between business class and first class is not much. Will you be paying $4000 for that extra bit of comfort? Sure, you do not get a bed, but you still enjoy a great level of comfort and service.

Singapore Airlines 2

Source: Singapore Airlines

Why not fill a plane with business class seats only?

Realistically, it is impossible to have enough demand for this type of plane on a regular (or daily) basis. It is hard to fill 172 business seats considering the price point. Empty spaces in planes are revenue not realised. Instead of leaving the seats empty, economy seats are installed. In pure black and white terms, economy passengers are just there to fill up the plane and so airlines can generate whatever revenue they can get.

Singapore Airlines 3

Source: Singapore Airlines

In recent years, there’s a new Premium Economy class. Compared to economy class, it is less crammed, and you enjoy more leg space. So will it replace business class? In our opinion, not anytime soon. The difference in the level of comfort between premium economy and business is still huge. Hopefully, the different classes of planes will improve in the future so that consumers like us have better choices.

 

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