A cushy view from the front
While most flyers cope with limited legroom and a dwindling list of amenities, the space at the front of the plane is only getting nicer. What was once a slightly wider chair and nicer flight attendant may now be a seat behind a privacy wall that doubles as a bed and comes with a curated selection of skin products.
It’s economics. Business-class seats are a huge driver of airline revenue. And from the beginning, the not-quite first-class seats have provided airlines new ways to create loyal customers and then reward them for their allegiance.
Buckle up and stretch out your legs, we’re going to fly through this.
By the digits
12%: Share of airline passengers who are business travelers
2x: How much more profitable business travelers are for airlines
80%: Share of American Airline’s revenue that comes from customers who are either members of its frequent-flyer program or purchasing “premium content”
$38,000: Price of a one-way, first-class suite ticket between New York and Abu Dhabi in 2016. It included a three-room suite with a living room, double bed, and private bathroom with shower, but will likely never fly again
+7 kg (15 lbs): Average weight of business travelers compared to the average leisure traveler
Explain it like I’m 5!
Premium seating is big business for airlines
The core customer in the sky has long tended to be a business traveler making their way to a conference or a big meeting, not the occasional vacationer. And at its investor day in March, American Airlines made clear it was not deviating from its tried-and-true formula of catering to these customers.
The carrier noted that a whopping 80% of its revenue comes from customers who are either members of its frequent-flyer program, AAdvantage (which it pegged at more than one in four U.S. air passengers), or purchasing “premium content.”
It makes sense. Business customers, often “premium” customers, are more likely to buy flights with little notice and will pay much higher fares in the process without blinking.
Fun fact
On early commercial flights circa the 1930s, all passengers on the twin-engine Douglas DC-3 could recline on a bed, though only the rich could afford to fly.
Brief history
1940s: To meet the demand for cheaper fares, airlines create different classes that reserve the best levels of comfort and service for those willing to pay the most. Most airlines begin offering two classes, but some have four: deluxe (or upper first) class, first, tourist, and economy.
Late 1950s: The typical cabin layout that exists on most commercial airplanes today is established, mainly on the Boeing 707 and Douglas DC-8, which remain two of the most popular airline models into the 1970s.
1978: The U.S. deregulates the airline industry, allowing carriers to compete on the basis of different cabins and ticket prices for the first time.
1979: In response to skyrocketing first-class fares, Qantas launches what many consider the first-ever “Business Class” — though others give credit to British Airways, which called its class between economy and first “Club Class” in 1978. That same year, Pan Am also reveals its “Clipper Class.”
2000: British Airways is the first airline to offer fully flat beds in business class, setting a new standard for comfort.
2007: Jet Airways becomes the first airline to provide in-flight “suites,” but business-class “pods” soon become the norm.
It’s not all about business (class)
It may not feel like it if you’re in business, but flights are getting cheaper, which is good news for consumers — but bad news for some industry players.
So-called “legacy” airlines like Delta Air Lines and American Airlines have started charging cheaper fares and muscling in on territory that used to be held more securely by the likes of Spirit Airlines and Southwest Airlines.
The U.S. Bureau of Labor Statistics tracks air fares as part of the basket of goods making up its consumer price index inflation gauge, and that measure says that fare growth has been negative for more than a year, a streak going back to April 2023. Demand for business trips (or lack thereof it) is a big reason why airlines like Delta and American are lowering prices.
Quotable
“We spent a lot of time listening to our agencies and our corporate customers and we hear their feedback. We’re taking some immediate actions to respond and adapt to this. And over the coming weeks, we’ll be working to ensure that we’re optimizing for our customers and American as we move forward.” — CEO Robert Isom at a Bernstein conference in May
American ended up firing its chief commercial officer Vasu Raja the same month. The primary reason was a Bain report that confirmed what many in the industry had been whispering about: He had been alienating business-class travelers.
Watch this
Flying first class? Of course not! Company policy.
A boardroom of smarmy backstabbing Brits get their comeuppance for trying to sabotage their New York-based colleague in this classic British Airways ad from 1987.
Poll
How important is flying comfortably to you?
- Comfort is my middle name
- I will go without expensive lattes for a month to avoid economy
- Don’t care, just get me there
We won’t judge — we’re just curious!
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Today’s email was originally written by Justin Sablich and David Yanofsky, with updates from Melvin Backman and Morgan Haefner.