So if first class is empty, and economy class is packed, who is paying for the flight? If 1/3 of the aircraft is dedicated to first class, are they paying 1/3 of the total cost? If not, aren't economy-class passengers effectively subsidizing first class?
On individual flights this no doubt happens, one class being full the other empty[1]. But if first-class travel is down across the board, and prices are not adjusted accordingly, we might be in a situation where the poor are indeed subsidizing the rich.
[1] Let's not kid ourselves. Economy cabins are always packed.
By all accounts I've previously heard from people in the airline industy, you have the economics completely backwards. The bulk of the profits come from premium classes, while economy is totally unprofitable but serves to provide the economies of scale for a larger flight.
Premium economy seems to be the best compromise for this situation that the market has come up with. There's still economy to stay competitive against other airlines for passengers who want to pay bottom dollar, but provide a bit more comfort and amenities without being too exorbitantly expensive. Passenger gets treated a little better, and the airlines make a bit of margin.
I've heard that too, but in a couple different ways. I have heard that economy is low-margin because of the increased market competition. In a saturated market with limited potential for new customers, premium options are also a rare area for growth. That makes sense to me. But I have also heard that, per square-foot, economy cabins bring in more total money.
I think it depends on your perspective. On a daily basis any ticket above economy is a win, a more profitable ticket to be sold. On a larger scale, when airlines are determining how much space to allocate to various classes, economy does seem to be where the bulk of money comes from.
It doesn't really matter how much money economy brings in at the top line, if there's little to nothing to be made on the bottom line. An entire plane of economy only at market fares is not worthwhile for an airline to operate on a per flight basis. Possibly worthwhile to operate in some situations just to keep their fleet in use, but likely not.
If this weren't the case, more airlines would operate flights like that. There isn't any conspiracy between airlines to minimize plane space for economy seats. The reality is that currently, the premium classes subsidize economy and not the other way around like you originally suggested.
Typically the premium classes subsidize economy where people taking personal trips in particular tend to shop for the lowest price. Business class seating (many airplanes don’t have first) do tend to be full because if there’s available space passengers with status tend to be upgraded or they use miles/co-pay to upgrade.
The article opens talking about first class to Dubai, which is an entirely different animal.
If you look at a United 777 [1], they don't even have a first class and nowhere near a third of the aircraft is "Polaris business class". Most domestic flights are like this, business class (or premium class or whatever they call the upgrade from economy plus) is usually full too because they bump people, people use miles to upgrade, or they offer cheap last minute upgrades.
Economy cabins aren't always packed - there's probably about to be a raft of replies disputing this. I say with ten confidence of someone that has seen many tens of economy class flights, domestic and international, so empty I could claim a whole row and lie down to sleep.
They are not always packed. It depends on the route. I've been flying DXB-KUL too many times and I end up with two empty seats next to me. Free first class.
On individual flights this no doubt happens, one class being full the other empty[1]. But if first-class travel is down across the board, and prices are not adjusted accordingly, we might be in a situation where the poor are indeed subsidizing the rich.
[1] Let's not kid ourselves. Economy cabins are always packed.