Originally Posted by
TRAVELSIG
Y+ has been asked for by Lufthansa customers including through the very events set up by Flytertalk, the HON circle, the SEN events, etc for more than 15 years and while it is nice it finally coming (~30 years after Eva launched the product) I doubt (admittedly without any data) it will even make 2% difference on the P&L in 2016 much less 2015.
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Or NEK?
I am convinced that the introduction of Premium Economy will have significant impact on the profit & loss statement. Especially on all routes with the A 380 where there is an *assumed* overcapacity of Y seats.
On that plane 84 seats of Y are replaced by 52 seats of Y+ thus requiring an average Y+ fare (with an assumed similiar load factor) which is approx. 61 % than the avarage Y fare with the same fare restrictions.
The already bookable fares for Y+ suggest that Lufty will reach this goal. ^
There is an additional effect: Taking out some capacity of standard Y will stop the immense pressure on special fares just to fill the large birds.
Although I have no resilient numbers I am convinced that this effect is weighing more than 2 % of revenue of the long-haul sectors.
But the Y+ startegy will only work if Lufty doesn't add a large bunch of capacity on long-haul routes. Therefore it will be critical for success if Lufty really starts his long-haul, low-cost "WINGS" operations.
This would have the result in wiping out a large part of the customer base in many routes. The need for a completely new (smaller) fleet for Lufty's mainline long-haul business would arise.
What NEK is concerned:
This is a typical example of a person not having a solid knowledge of business administration implementing a very simle and reasonable sounding measure. Just cut the costs per seat and all is fine. No calculations about customer behaviour, willingness to pay fares or perceived product value.
The example of the A 321 makes it pretty clear as I stated elsewhere: The capacity increase of 184 seats to 200 seats is a cost-saving of 8 percent or so.
But by this you are risking the exorbitant revenues derived from the Business Class fares. As long as the "C" class fare is more then 1,5-fold the average Y fare plus a reasonable surcharge for flexibility these are your core customers.
A competitive advantage of 8 percent compared to the previous product is zeroed out if even one single passenger doesn't buy your business class product anymore. So you have to offer a real Business Class on all short-haul planes.
In Y class it's the same as increasing the capacity on the long-haul sector: What should you do with that additional 16 (or if you use the full set of 205 seats and having one more FA the additional 21 seats):
Outside the peak travel times in Summer, Easter Holidays and the demand before Christmas you have to fork out with special fares.
That further decreases your revenue potential. That said I assume that you could make more profit with a 172 seater A321 (as a comfortable alternative) than the 200/205 high-density layout.