How Airlines Make Money: The Economics of Business Class

Airlines essentially make all of their money from business class passengers. That might sound hyperbolic, but American Airlines says it's true. So we'll unpack the economics of airlines, and explain why business class customers are airline's real targets.

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[dowjones]

We're living in an alternate universe where TLDR makes Airline videos and Wendover makes Finance videos

[wonderplaceholder]

If Wendover is holding TL;DR team hostage to make airplane videos, please blink trice in the next video

[porthose]

Another way to describe this could be: How much discomfort are you willing to endure to get from Dallas to London?

[Maxyy]

TLDR: “ Can I copy your homework?”
Wendover: “Sure, just make sure you change a few things so it isn’t obvious.”
TLDR: No

[TheLokiel]

Some issues with editing there folks.

I disagree with you on one point: you argue that one of the benefits of first class is boarding first. Having flown first class several times in the last few years, I can tell you it’s the opposite: one of the benefits is being able to board last. You just stay in the airport lounge sipping champaign until the last minute to not be crowded in the queue with the other people. The announcements you often hear in the airports for people who are late for a flight? Most of the times it’s for first class passengers who are in the lounge.

[Immudzen]

For business travelers on international flights you also missed a benefit. With those seats you are more likely to be able to sleep/relax on the plane and that means it is quicker to be productive on the arrival end. If I take a business class seat from boston to frankfurt it leaves boston around 6pm, you eat a meal on the flight and sleep and you wake up in the morning in Germany. It is not as good as a full nights sleep but you can be functional for work that day or the day after.

[rsantana]

There is also a lot of money coming from the transport of cargo, below the passengers there is a whole very profitable market destined to the transport of (rather light) goods that need to be delivered fast

[J]

Most people sitting in the business class seats don’t pay from their own pocket. They can even earn points by travelling on business class air tickets to exchange their private travelling tickets. There is no even one disadvantage.

[Goman]

I'd love an in depth breakdown of Airlines' Loyalty Programs - how they make the deals with various companies, where they make their profit, what the tradeoffs are. Sounds like an interesting watch!

[autarchprinceps]

Can somebody explain to me what the benefit of boarding sooner is supposed to be? The plane won't take off until everybody is boarded, so it sounds like waiting in the plane vs waiting in the boarding seat area to me. If anything anybody who is getting airport lounge access would rather stay there and be boarded last, instead of boarding first, no?

[ieuancare]

"For an extra £150 you can get a 'main' cabin where you get a lot of the same shit you got 15 years ago as part of your ticket"

[strafrag]

Hi. I'm a retired airline marketing guy. You totally neglected to include the passengers who are on upgrades and using their miles to pay for these upgrades, not to mention the people who are on totally free tkts earned thru miles. This brings your totals for each cabin down by thousands in revenue. Yes, the number of these reward seats are low, but the revenue is still much lower.

[getnohappy]

Honestly, my wealth goal is just to be able to buy a business class flights and not have to worry about it ^^

[FuZZbaLLbee]

When people in economy despise how much money is paid for luxury seats, they can still think that without those, their ticket would be more expensive.

[КонстантинПономаренко-яя]

Premium seats earn 60% of money while taking 60% of space. Not really a huge benefit.

[hockysa]

2:20 the slowness to load is artificially created. it gives the user a sense that the search is "working hard" to find available options.

[MarcPagan]

"Why are seats so small in coach you asked?
Because customers want them that way."

Bob Crandall
Former American Airlines CEO

He was more than correct -
Ex
During the 90s,
over 95% of first class passengers at United Airlines were using points.
Either for an upgrade, or for completely free first class ticket.

[nettyswobb]

I'm someone who sometimes travels on Business class for work, and for me it's almost essential for long flights. I previously wondered why companies would pay for business class and not prefer to save money by sending people via economy. However, when you're expected to work and be productive ASAP after you arrive, when you're tired, sleep deprived, mentally drained and jet lagged, you're ability to be productive will significantly drop. When on holiday you can have a day or two to rest and acclimatise and rest, you can't do that on a work trip. Having business class will allow you to stay comfortable and well rested, to allow you to actually do your job well when you arrive.

[bentriggs]

A loyalty programme video would be interesting. I’m sure a lot of people have a rough idea of how it works but few could properly articulate it

[heikachan]

Please, in the future, can you include metric measurement if you present data? I really don't know if 4^2 feet is a lot or not