Is Economy Class Going EXTINCT?!

0:00 [Music] Why would an airline choose to fit fewer seats in an airplane rather than more? In an industry where every square meter of cabin space is a financial calculation, it seems very strange to launch a new product that takes up more space and weight whilst also seating fewer people. And yet, that's exactly what Air France has done with its new La Premiere suite. Instead of squeezing in a few extra rows, the French flag carrier has gone the opposite way, giving each first class passengers even more space, more privacy, and more attention than ever before. And they're not alone in doing this either. Across the world, airlines are now making similar bets. Whether it's Air France in Europe, Emirates in the Gulf, or Delta

0:46 in the United States, there's a growing shift away from high density economy seating towards premiumheavy configurations like business class, first class, and even these new super business suites. And the airlines are doing this during a time of global uncertainty. Fuel prices, inflation, and unstable demand patterns would typically push airlines to play it safe, maximizing capacity. But instead, they're now putting their chips on a smaller number of higher paying passengers. So, what's behind this trend? Is it temporary or can be expected to last? And if air travel becomes more luxurious than ever, what does all this mean for passengers who can't afford it?

1:33 Well, let's start by looking at the basic economy behind all of this. Now, obviously, airlines don't make money from empty space. They do that by selling seats. So, why would anyone rip out 50 economy seats just to install a few more business classs pods? Well, the answer is quite simple. As always, it's because those seats make a lot more money. A key point to remember here is that the airline industry doesn't generally make very huge profits. In fact, even in a good year, most airlines only earn a few cents for every dollar they bring in. So, in 2024, for example, the global average operating profit margin was just 6.4, barely enough to keep investors happy and the fleets

2:20 flying. When margins are that thin, the big profit doesn't come from economy class. Instead, they come from the front of the plane. And I'm not talking about the pilots here either, even though some of my colleagues might object. Anyway, before the pandemic, premium passengers, meaning business and first class travelers, only made up about 5% of the international travelers. But according to industry analysts, those 5% brought in about 20% of the airlines revenue globally. And on longhaul international routes, that number jumped even higher to nearly 30%. So even though the majority of passengers are traveling in economy, it's that small group of people up front that makes the biggest financial

3:06 difference. In other words, this whole strategy of building out premiumheavy cabins is about survival and long-term profits. Basically, sell fewer seats, but sell them for a lot more. And in a business where shaving a few dollars off the cost per seat can make or break the year, for many airlines, the lucky few that can afford these seats might just be the difference between being in the black or in the red. But the airlines aren't just trying to sell you a fancy seat here. They're actually selling an entire experience. From the moment they walk into the terminal, premium passengers are being courted with private check-in counters, dedicated security lines, exclusive launches, and even personal escort to the gate. And on board, that same luxury

3:55 then continues with li flat beds, multicourse meals, curated amenities, and even flowers in the toilets. For carriers like Delta, United, Air France, or Emirates, it's now not just about getting you from A to B. It's about creating a seamless, high-end journey experience that justifies that hefty price tag. And it is hefty. A typical longhaul business class seat can cost anywhere from three to six times more than an economy ticket on the same flight, and sometimes even more depending on the route. And in first class, the multiple can rise as high as 10 or even 15 times, which might sound great for the airline, but it is not quite that simple. You see, these seats

4:43 doesn't just cost more for the passenger, they are also costing a lot more for the airline. A modern business class seat, especially in the lie flat all access variety, can cost as much as$1 to $350,000 per unit. So, if you multiply that by 30 to 40 seats in a typical widebody layout, you're looking at millions in cabin investments alone before the plane even leaves the gate. And unlike economy seats, which are relatively low maintenance, business class seats are full of moving parts. They use electric motors to move, who can fail, and they do. Plus, there is also dividers between the seats who might jam as well as many other things. And a passenger who have

5:29 paid for these seats won't accept a substandard experience. Also, the entertainment systems fitted to these seats often have complex controls and multiple touchcreens that need constant software support. All of which adds to the total maintenance bill. Plus, they're likely harder to clean, too. Then there's the soft product, the actual passenger experience on board. In economy, on a longhaul flight, you might get a basic meal and a beverage. And on shorter flights, you probably won't even get that. But in business class, passengers expect a fullervice restaurant style dining experience with a aart menu, plus designer amenity kits, premium alcohol, and sometimes even full beds with

6:15 mattress toppers and a complimentary pajamas. None of that is cheap. And it's not just the food and the kit who cost money. It's the people who work there, too. Business and first class cabins are very labor intensive. They require more flight attendants per passenger. And those flight attendants are also typically more experienced, which means they have higher salaries. In many airline unions, crew members bid for premium routes with the most senior staff often winning. So for the airline, this means that they're using the most expensive people to serve their most demanding customers. That's of course part of the experience. Passengers expect top tier service when they've paid thousands per seat. But

7:01 like I said, this cost has to be factored into that equation. Still, even with those caveats, the economics of premium travel do definitely work, but only when done right. So what does that mean then? Well, it turns out that the airlines need to put a lot of thought into how they deploy these services. And when my team researched this, we quickly noticed that not all stories about premium travel gets told the same way. In fact, the tone and angle of a source can vary dramatically depending on who is writing it. And that's where today's sponsor, Ground News, was super helpful. And you can see what I mean by following along at ground.news/mentor.

7:47 When we searched for la premiier suite on ground news, remember that's the new Air France premium product. This specific story with over 30 articles came up. And at a quick glance, we can see that 40% are covered by media conglomerates and none comes from independent news. Which could mean that the way that the story is framed can vary a lot depending on where you read it. Let's make a comparison. The left-leaning Lemon headlines the story as Air France launches a new first class to capture the growth of wealthy leisure travelers using a neutral business focused tone. Whilst the right leaning Lef Figaro takes a more eye-catching approach with Air France renovates its first class to seduce rich tourists

8:35 using more emotional provocative language highlighting luxury and inviting a stronger reaction. So ground news is a really powerful research tool that gives way more context than a single article ever could. And now there's even a costume mentor feed with all of the aviation, Boeing, and tech stories that I cover. So if you are tired of sensationalist headlines, I highly recommend you to check them out. And you can do so by scanning this QR code or visit ground.news/mentor. That will give you 40% off the same plan that I use. That's just $5 per month. But hurry because that deal is only available for a limited time. Thank you, Ground News. Now back to the story. So

9:20 when airlines do things right, a fully booked business class cabin can bring in more revenue than the rest of the airplane combined. And when you factor in the loyalty angle, the credit card partnerships, the frequent flyer programs, the launch access and elite tiers, premium passengers punch well above their weight in profitability. That's why airlines are willing to make this gamble. Yeah, the seats are expensive. Yes, the food and service cost them more. But if you can actually fill those seats and keep those passengers coming back, well then the payoff is well worth it. Especially in a world where leisure travelers are now willing to splurge, and business travelers are slowly returning with

10:06 sometimes fewer budget constraints than they had before. This shift towards premiumheavy cabins isn't just about luxury. It's about resilience. In a postcoid world where airlines can't always count on packed economy cabins, they're instead doubling down on the passengers who pay the most. Now, while the business logic of premium cabins might be universal, the way that airlines approach it depends a lot on where in the world you're flying, or at least it used to. Let's start with the Gulf carriers. Emirates, Qatar Airways, Etihaden, soon Riyad, for example. These airlines didn't just offer premium service as an extra. They actually built their whole identities around it. So

10:51 from the very beginning, luxury was part of their strategy. Supported by deep pocketed governments and thanks to their strategic position, the Gulf Airlines turned their home airports into global transfer hubs. And the way they lured in passengers wasn't with low prices. Instead, it was with marble showers at 40,000 ft. Take Emirates Airbus A380s for example. Most of these are fitted with 90 premium seats, 14 in private firstass suites and 76 in business, plus a full lounge bar, meaning that the entire upstairs section is premium. At the time they came about, this was the kind of product that passengers traveling with American or European airlines could only dream about. And the

11:38 message from the Gulf was clear. Premium passengers weren't just welcome, they were cherished and sought after. Now, the same also went for Asia's top carriers. Singapore Airlines, Cathy Pacific, Japan Airlines, and ANA have long been synonymous with meticulous service and ultra premium cabins. Japan Airlines's new Airbus A351000, for example, features a new massive suite in first class. And for the first time on a Japanese airline, sliding doors in business class. Basically, wherever there's a strong business travel demand, the airlines are now working hard on attracting people willing to pay extra for exclusivity. And this isn't a completely new thing either. Airlines like Eva Air in Taiwan have been

12:24 offering premium economy for as far back as in the 1990s, while others in the region only caught on decades later. And then there's Air France who have now leaned hard into that same premium philosophy. Their La Premier suite was already impressive before and with their newest iteration they have taken things even further. Just four seats per row in first class in a Boing trip 7 with each seat stretching across five windows giving each first class passenger more space more privacy and more attention than ever before. That's not just premium, that's deliberately exclusive. So that's how premium seating evolved in

13:10 the Gulf and in Asia before eventually coming over to Europe. But what about the United States then? Well, throughout the 2000s and early 2010s, American carriers were basically just trying to survive in the post 911 world. Years of bankruptcies, mergers, and restructuring meant that investing in luxury cabins really wasn't a priority. So, International First Class soon practically vanished. American Airlines was the last hold out. But even they eventually started retiring true first class in favor of larger business cabins. Delta 1 and United Polaris became the new standard. decent flatbed business products, but nothing to rival the opulence of Qatar's Q suite or a

13:57 Singapore suite. Even today, US domestic first class is essentially just a wider seat with free drinks. You definitely won't find sliding doors or caviar service on a flight from, for example, Atlanta to Chicago. European legacy carriers like British Airways and Lufansa went somewhere in between. They did maintain international first class, but usually in small numbers, eight to maybe 14 seats reserved only for key business routes. And on the economy side, many European carriers actually increased density. British Airways, for example, went from 9 to 10 a breast seating on some of their Boeing trip 7s. And intra European business class often means little more than an economy seat

14:44 with the middle seat empty. Now, I know that this isn't an applesto apples comparison. The Gulf carriers almost exclusively fly long haul where comfort matters more. US carriers have massive domestic networks where passengers are less likely to pay for luxury. So, the market shaped the product. But here is where things get interesting. You see, over the last few years, we've seen a kind of convergence. Airlines are now learning from each other and the once clear lines between Gulf extravagance, Asian excellence, and Western pragmatism are now blurring. Even in the US, things have now started changing dramatically. Not long ago,

15:30 American carriers lagged well behind their European and Asian rivals in terms of premium cabin quality. But today, the picture is starting to look a little bit different. Take United for example. In the past few years, they have embarked on a massive fleet retrofit program under what they call the United Next Plan. Virtually every widebody aircraft in their fleet have been upgraded with new Polaris business class seats, including liflat all access suites that are larger and more private than anything that the airline has had before. And crucially, they're also consistent. So whether you're flying from New York to London or San Francisco to Tokyo, you're likely going to encounter the same product.

16:15 United also set the bar with its Polaris lounges dedicated to longhaul business class passengers. And these are now offering high-end dining, showers, and a true pre-flight luxury experience. And then there is Delta. They introduced the Delta 1 suite complete with sliding doors which was a first for a US airline. A clear signal that they wanted to play in the same league as Air France or Qatar Airways and it worked. But Delta didn't stop there. Their premium select cabin is Delta's take on premium economy which is a world apart from domestic extra leg room seats. These seats instead offer wider recliners with extra pitch. more

17:01 recline, upgraded meals, and dedicated cabin service, bridging gap between the front and the back of the plane. And I actually personally think that these seats are probably the best bang for your buck that you can get right now. Most recently, Delta's also announced a suite of ground services tailored to Delta 1 customers, including separate check-in counters and exclusive Delta 1 launches starting at key international hubs. And that's a move clearly aimed at competing with United's Polaris ground experience. In short, it seems like US Airlines have finally realized that comfort really sells. And in an era where premium demand is rising, products like Delta 1 and Premium Select aren't just nice to

17:47 have. As Delta CEO recently put it, they now have more people willing to pay for premium seats than they have premium seats. Meanwhile, the Gulf giants are also adjusting. Emirates only recently added premium economy, a nod to the growing market for mid-tier luxury. And Qatar Airways are so confident about their Q Suite business class seats that they don't even bother with first class anymore on most of their aircraft. And why is that? Well, because a truly great business class turns out to be good enough for most high-end travelers. and they also are more profitable per square meter than the over-the-top first class suites are. Now, I have had the pleasure

18:32 of traveling with my wife in these Q Suites myself, and I have to say that even though it is very expensive, it turns the trip from a necessary nuisance into one of the real highlights of any vacation. She's coming with your champagne, honey. I was playing with the seat. But what about in Europe then? What's happening there? Well, we've touched on it a little bit, but Lufansa CEO Castton Spore confessed that after years of trying to shrink their first class footprint, 2023 was the first year my team has told me that we need to grow first class. So, today premium cabins are really turning into a competition. Whether it's Airfront running a La Premiier equipped trip 7 on one of its

19:20 multiple daily flights to New York, but strangely only one out of all of them, or Singapore Airlines tailoring their seat mix depending on the rout's demand profile, cabin configurations have now become a kind of economic chessboard. And I think that it's really really key for you to understand that what's now going on is that airlines aren't just designing and fitting luxury cabins on the fly. They're also assigning them tactically. A Boeing 77 configured with La Premiier and a large business class section is likely to operate mainly to destinations like New York or Tokyo where high yield corporate travelers and affluent leisure passengers justifies that layout. But if France doesn't take that same jet and

20:06 then fly it to the Caribbean, those leisure heavy routes typically instead get aircraft with far more economy seats and smaller premium cabins optimized for volume over luxury. This deployment strategy means that the same airline can tailor its product and its profitability to fit the demand of each market. the same plane type is being used but throughout a completely different business case depending on the route. Now for the airline this could create some interesting problems. If there for example would be a need for a sudden aircraft change and the replacement aircraft doesn't have that same cabin well then the airline will be up for some really really unhappy premium travelers and those kind of

20:53 reschedulings do happen. Trust me. But such practicalities aside, it looks like the global aviation industry has now come to a shared conclusion. If you're going to fly fewer passengers, you'd better make sure that each one of them are worth more. The airlines are now betting that luxury will pay. Not just in customer satisfaction, but also in cold hard revenue. And judging by the trends that we're seeing right now around the world, it looks like they might be right, which they better be because the money that airlines are pouring into business class pods and apartment style suites are really, really long-term investments. You see, cabin layouts aren't something

21:39 that airlines can change on a whim. Deciding how many rows of business class to install or whether to even offer first class at all requires years of advanced planning, design approvals, certification, manufacturing timelines, and maintenance coordination. It's likely one of the most consequential decisions an airline actually makes. And when a carrier locks in a configuration, they're essentially placing a bet on what passenger demand will look like 5 to 10 years from now. Let's take Lufansza's new Allegis cabin refresh as an example. That one took $2.7 billion to do, and that was a commitment to revamp their entire longhaul fleet, which didn't happen

22:26 overnight. Instead, it took a very long time to do. Actually, the airlines that could afford it accelerated cabin retrofits during the pandemic, using that unwanted downtime to upgrade their planes interiors. And for those who could do that, that investment is now paying off big time. Because by the time passengers returned in force, which they did, the airlines that had bet on comfort were ready to capture that surge in demand, especially from leisure travelers willing to splurge after years of being stuck on the ground. But this transformation is also creating another unexpected problem, not in the sky, but on the ground. Lounge overcrowding and loyalty program strains are now very real

23:12 signals of the premium boom. For example, Delta recently admitted that its lounges were overwhelmed, not by people sneaking in, but by paying premium passengers and credit card elites. That demand is forcing carriers to rethink the cost structure of their entire premium ecosystem, making launch access more expensive and redesigning their loyalty tiers, which obviously doesn't please everyone. And then there's also yet another twist here. You see, traditional business travel hasn't disappeared. It has just taken on a slightly different form. Companies might be sending fewer mid-level managers around the world thanks to things like Zoom and Google Meet, but they are still sending

23:57 executives over for major deals or conferences. And when they do, they are flying in style. Plus, we now have way more people doing blended travel, mixing business and leisure on longer trips, which basically means that we have a new type of high value customer, one that wants more space, more privacy, and is often willing to pay even more than they did before. So, when you now see Air France expanding La Premiier or Delta building dedicated Delta 1 launches, it's not about one flashy product. It's actually part of a long game. The airlines are betting that tomorrow's travelers, whether they are celebrating a personal milestone or closing a deal, will keep paying more for a better

24:44 experience. Unfortunately though, for people flying in economy, that declining number of economy seats, especially on long haul jets, means that more passengers are now looking to book fewer available seats. And that means that prices for economy seats are trending upwards, too. That might help push some passengers toward business or premium economy. But it also means that if you have a longhaul journey that you've been planning for years, maybe you should consider doing it sooner rather than later. But I would love to hear what you think about all of this. Do you think airlines are making a mistake in betting so big on premium travelers? Or are you planning your own business class flight in the future? Let me know in the comments here below. This, by the way,

25:31 is exactly the kind of thing that Ben and I discuss in our podcast, Captain Speaking, which I hope that you have checked out. It's completely unscripted and raw. And I really, really love doing it. Now, if you want to see my next new video before everyone else, possibly even today, or if you want to join my next Zoom Hangout, well then scan this QR code or go to patreon.com/join/mentorpilot. I would love to see you there. Have an absolutely fantastic day wherever you are and I'll see you next time. Bye-bye. Py, come say bye. Say bye.