I'm running a regional airline on Gatow based in Sao Paulo Guarulhos Airport.
I would like to know if a business class cabin would be profitable, or if I should just stick with a good economy cabin?
it depends from the Network, the IL & the Airports you´re flying to. I founded an only Business/First Class Airline as a test with only 8 Boeing 777-200 flying only to main Airports in USA & Europe. It works really well.
I would like to know if a business class cabin would be profitable, or if I should just stick with a good economy cabin?
You can also opt to provide Business and Economy Class :excl: .
Maybe a few economy seats just incase my plan fails :P
Yes! My experience shows that demand declines with a higher amount of Business Class. One of my 789 experiences is that flights with high demand for Business Class are full as long as the Business Class is not so big. It was and it is rather difficult and expensive to discover the perfect solution/arrangement suitable for most markets served by aircraft X. It is much safer for me to offer a Business Class for 12 to 20 guests. More than 20 seats result in a decline.
It is much easier for me to fill a 137-seat MD-80 in a C12Y125-configuration compared to C30Y107. I also tried to copy the all-Business Midwest Express-style but this was a fiasco. Even the C40Y87-configuration (once used by Swissair) was not a real success. You see: try and error!
I've got quiet good experiences in providing a larger number of business seats and also started to fly three CR7 to test an only C-Class aircraft, which in terms of profitability was very good. Anyway, I think it is not that easy to extend this to a larger network. Further, as I am aiming for volume, that's not a very sound strategy.
There are a few things in the wider orbit around that issue. First, if you go for volume, C-class is competing with Y in terms of available slots. Second, passenger flow, especially in a larger network, including several hubs and IL-agreements, is different between Y an C, i.e. transfers and demand is different. Thus, if you either end up with a standard ratio for C:Y and have to deal with some unfilled C-class seats or you configure different floor plans in regard to the C-class demand for different routes - than you end up with a lot of micro-management. Lastly, I the C-class network is from my point of view more vulnerable competition wise, and influenced by one route alternatives, especially if the C-class volume is linked to the Y-class volume, which might come close to what MD-80 is saying.
However, considering all these issues, C-class today gained massive profitability through the new seats. So it's at least worth to think about a strategy to realise that.
One of my 789 experiences
You are flying the 789 already? Didn´t know Sparrow Air was a preferred Boeing customer with early access to new types. Or are you actually secretly using their test flights to rake in some cash on the side? ;)
Excluding average-/med-/low-sized aircraft, I operate 52 widebodies (21 747s and 31 787s) all equipped exclussively with business class (to be accurate, a few of them have a small number of F seats).
In the days of really high AGEX they would all be full... Now they are not (even though on average they bring in profit... at least in general) and I may drop some of them.
But the point is that I have a LH intercontinental route operated four times a day with wide bodies (2 747 + 2 787) that are each equipped exclusively with C seats and that have an overall load factor above 90%. Though this requires hard work...
...In this respect, to counter the slot availability issue, I propose that you consider distinctly setting up all Y-class / all C-class hubs. Regarding the latter, I currently have two C-class hubs and used to have a third one (which I've dropped in the light of decreasing AGEX / increasing competition).
But remember, maintaining an all-C hub requires significantly much more work than an all-Y/mixed hub... but the financial results might make it worth!
Cheers.
Though this requires hard work...
I can only imagine your hard work to make such a business running that well!
...and also started to fly three CR7 to test an only C-Class aircraft, which in terms of profitability was very good. Anyway, I think it is not that easy to extend this to a larger network.
Interesting! My trials showed that a few routes would justify the scheduling of dedicated C-Class only too but due to operational reasons, nearly all my aircraft are scheduled to make their duties to several markets and different routes. A Business Class-only aircraft could work on a domestic trunk route but not on a next flight into a provincial town.
Well seperating C-class from Y-class hubs is a very good method to counter not only the slot, but also the passenger flow issue. From a realistic view point it looks a bit awkward, but in an AS world it just fits into some limitations. So yes, I am sure it is worth to give it a try.
In terms of demand, I have good experiences at least down to 4-bar and some 3-bar airports. So It might depend, where you draw the line of 'provincal town'.
From a realistic view point it looks a bit awkward
Hmmm... I'm starting to think setting up an all C-hub could actually be a realistic idea in real life too. At least if some major carrier would form some PPP with a local authority to build an all-C-class small "luxury" airport (together with conference center / spa etc.)
OTOH it still dazzles me how come none of the LCCs (e.g. U2, W6 or FR in Europe) have decided to invest in building (green field) "low-cost airports" (think along the lines of a 'railway station'-type building + runway & ATC) and set huge (exclusive) bases there... I'm sure they could operate them more efficiently than the inherently inefficient public sector authorities. But maybe we'll see that in the future...
Hmmm... I'm starting to think setting up an all C-hub could actually be a realistic idea in real life too. At least if some major carrier would form some PPP with a local authority to build an all-C-class small "luxury" airport (together with conference center / spa etc.)
OTOH it still dazzles me how come none of the LCCs (e.g. U2, W6 or FR in Europe) have decided to invest in building (green field) "low-cost airports" (think along the lines of a 'railway station'-type building + runway & ATC) and set huge (exclusive) bases there... I'm sure they could operate them more efficiently than the inherently inefficient public sector authorities. But maybe we'll see that in the future...
Maybe in the past, and maybe in some countries. In the USA, just from a security standpoint, an airport that acts as a "huge (exclusive) base" for an airline with a bus or railway type station is almost an impossibility. I could see it if they used small jets like Hawkers or small ERJs.
... I'm sure they could operate them (airports) more efficiently than the inherently inefficient public sector authorities. But maybe we'll see that in the future...
Hi,
Heathrow (LHR), Schiphol (AMS), Zaventem (BRU) and Frankfurt (FRA) airport are operated by private companies. Perhaps you can tell us which European airports are so inefficiently operated by public authorities, and what you think is so much better organised in the privately operated airports ;-)
Jan