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Comment by hhw | Hacker News Reader

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.

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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.

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