sxf24

I can't say I liked it either, but I'm not going to pay more to fly a 9 abreast configuration unless its an Asian airline.

jordyn

My thesis is that people will pay more for a better product, including in coach. Each of the three examples prove this point.

Because that is inane. This is economics 101: supply and demand are not completely independent variables. I could start an airline that charges $5,000 per seat on LGA->PIT segments, no exceptions. One day, someone will foolishly pay me that much because they really need to get to PIT. So my yield will be $13 (nearly 100 times AA, woohoo!), but of course I'll go out of business in about two weeks because that's probably the only seat I'll sell.

It was overly simplistic, I'll concede. And now that we've agreed that PRASM is a good measure, are we in agreement that JetBlue must be commanding a premium over AA in coach? (And if you don't think AA's premium cabins are adding more than 4% to the revenue mix, they really better rip those things out since they're giving up way more than 4% in capacity by having them.)

You must be a politician offline with that sort of spin. The revenue that airlines gets from seat miles comes from people paying them money. The only way to improve PRASM is to get people to pay more money or for more people to pay you the same money. In either case, higher PRASM means higher demand.

Herb687

History has not necessarily proven that thesis wrong. The implementation of AA's MRTC strategy was half-assed. While the seats came out and legroom expanded, the pricing and yield management crowd didn't do anything differently. It was basically business as usual in RM ("When in doubt, match.")

MRTC did not get a fair test as executed by AA.

Given that Economy Plus at UA has come and stayed over a long period of time now (and COdbaUA management which has a general bias towards junking anything PMUA actually decided to install E+ in the PMCO fleet), I would say that is evidence that some people are willing to pay for a more spacious product. DL's management team by most measures is solid and their decision also speaks to the perceived profitability of a more spacious product.



I haven't flown WN in years but the new Y seats on AA's 737s are rubbish. Pitch went down to an uncomfortable level but we got "reticulating" recline and color-changing mood lighting. Big freakin' deal; the legroom still sucks.

justforfun

Another example of AA just following the leader and not being ahead of the pack. They should have gone with 3-5-3. Just think how much extra revenue that would have brought in.

sxf24

No, your thesis was that people will pay more for a better coach product. The dynamics between premium and economy cabins are completely different and it makes absolutely no sense to try and extrapolate improved returns from the investment in C/J seats and Y yields.

I didn't realize your thesis also incorporated the stimulation of higher yielding demand by investing in a better coach product...

I absolutely and unequivocally disagree that JetBlue is commanding a premium over AA in coach because it offers a better coach product.

Ah, if you get people to pay more money, it is called increasing your yields. The entire point in investing in a better cabin with more personal space (i.e. less dense) is to get a higher yield, not higher demand.

sxf24

There's a reason RM didn't do anything differently: they couldn't. Pricing a ticket $5 higher, even if you get 5" more legroom, decimates demand.

There is absolutely space in the market for a small section of premium economy. There is not space in the market to operate an entire plane full of a better/premium economy (outside of a handful of routes).

jordyn

No one needs to simulate anything to understand the basics of the supply and demand curves. I'm glad that you completely ignored both my example as well as the MIT explanation of why yield is a poor tool to make comparisons across airlines because hopefully it will make clear to other readers that you either completely misunder

Well, they have a better coach product and they are earning more than AA in coach, so Occam's razor says you're wrong, but some people don't believe in evolution either so evidence can really only do so much.

If you can make your cabin more full at the same prices that's just as good, no? As in my example of the $5K LGA->PIT fare, having really high yields and low loads doesn't equate to good business.

Anyway, this discussion is now bordering on the absurd. Several people have pointed out that you're wrong and fixated on a bad example which several counterexamples refute. If you want to continue to believe that people's willingness to pay is driven only by costs and not at all by the product...well, you'd fit right in with the AA executive team. Maybe they're hiring. In any case, absent some new data, I don't see the point in continuing the exchange.

sxf24

I'm confused now. Are you trying to insult my grasp of economics, or explain how AA can generate higher PRASM and yields by keeping the 777 at 9 abreast?

You speculate that JetBlue is earning more than AA in coach.

The problem with your logic is that AA and the other domestic network carriers have very little opportunity to increase their load factors unless they can add more seats to their planes. Therefore, they focus on raising their yields.

And yes, I believe that demand for coach travel is largely driven by cost. If you don't believe that, you'd fit right in with the executive team of hundreds of failed airlines.

I'm glad we both agree there's no point in continuing the exchange.

dennypayne

This is why I almost *always* pick a window seat - I HATE being constantly bumped by people - even on a mid-day flight, much less when I'm trying to sleep. (I'm 6'4" also).

hbtr

No, but the fact that a few people have found it tolerable doesn't sway me in the least. I would really welcome a math equation that shows 10 people across won't be more crowded than 9.

I get that different things are important to different people. I know my wife - who is of small stature - wouldn't even notice the difference. And if I were traveling with her, sitting a little closer together in 3-4-3 might almost be tolerable. But traveling on my own (or with anyone other than my wife), which is most of the time, I simply DON'T want to bump up against the people next to me and I think most people feel the same way about the potential for that getting even worse in 3-4-3.

KD5MDK

I was wondering about 2-5-3.

doctorjosh

I, for one, would pay more for a better product (and more legroom). If a crappy airline with a crappy product was offering dirt cheap fares (or even "free" seats...not including taxes, of course), I still wouldn't buy it.

gegarrenton

Jesus tapdancing Christ. You guys keep throwing around the word "people" like it's a monolith. Some people will pay a premium, the vast majority won't. MRTC and E+ are not even remotely the same thing, hence comparisons are ridiculous. A few will pay a premium for a better experience, the majority buy cheapest fare, period. Hence, MRTC = Fail, and E+ = Win.

Oi.

jordyn

E+ is not exactly a tiny portion of United's cabins. On United's 777's, to do the direct comparison here, in some configurations there's significantly more E+ than regular economy and in the "worst" configuration there's nearly a 50/50 E+/E- split

By comparison, AA is proposing that the vast majority of people will be perfectly happy in a denser configuration than United's E- and that only about 10% of the economy seats will be about as good as E+.

So, based on United's experience, it seems like there's value in providing a premium product to rather more than a "few" people.

gegarrenton

<facepalm>