Originally Posted by
Shareholder
My sample goes well beyond the FT crowd. And "Bottom Feeders" are actually good for AC, or any airline. They represent a loyal group of customers who can be relied upon to purchase several thousand dollars worth of seats each year with consistency and regularity. Although they purchase the lowest upgrade eligible fare, when they are upgraded they create an additional economy seat that can be sold a second time, often at a higher price because the lowest inventory has long gone. They only take up a business or first class seat when that seat is determined by the airline to otherwise go out empty. The marginal cost of food and alcohol is minimal and more than made up by being able to resell the original economy seat. Similarly any costs related to lounge use is also recouped by the resale of the original economy seat. So "Bottom Feeders" are actually beneficial to the airlines, not a liability.
Bravo ^
I'm surprised that most FTers don't understand the simple economics of airlines.
They make the money from the bottom feeders, filling otherwise empty seats no matter what class they are seated in. Otherwise they would have booming business only market shares, when really it's the low cost model that is thriving.
Anyone who claims that the business class traveller supports the profits of the airline has not looked at the cumulative revenue of economy vs business (Yes, there will be some airlines that are unique, but not AC). Airlines love economy revenue. They love seat sale revenue. It creates revenue bubbles, on demand, that very much contribute to the year end revenue totals.
On another note, related to the Original Post:
One thing that frequent fliers don't understand is that loyal frequent flyers are 1 demographic that WILL PAY MORE for the seat (statistically proven). So all these cries from flyers about, Why should I pay more? Can't you see I'm loyal? are not falling on deaf ears. In fact it's the opposite.
Most elite members WILL pay more and are in the trap that is set by laying the loyalty program in place. And, I am one of them too... caught in the trap. My friends laugh at me when they hear that I will pay 50% more to fly UA/AC.