Does Providing More Passenger Space Bring in Higher Revenues? – LCCs vs Legacy Airlines

The debate between passenger space and total revenues has been raging ever since the dawn of economy class.  The trade-off is simple:  can an airline find passengers willing to pay more for a larger seat, or is it better to carry more passengers at lower fares in the same space?  It becomes a matter of real estate.  Beyond just seat size, an airline may choose to outfit their available flying real estate with galleys, additional lavatories, wardrobes, or even piano bars.  This week’s question: what brings in more revenues, more space or more passengers?

Interestingly enough, the answer is inconclusive.  Based on the airlines selected with available data, LCCs are both the best, and the worst at generating revenues per space.  Southwest again leads the pack with their all economy configurations, yet far from the tightest seat pitch.  At the opposite end, we find the ULCCs with as low as 28 inch pitch, a result some can claim as expected.

Then we have Allegiant and Gol, both ULCCs, and both performing very well.  Gol can be credited with an opposite summer season boosting their revenues against the northern hemisphere’s slower summer, yet their ability to generate revenues per flying real estate is especially impressive considering their very rocky recent history.  Allegiant, on the other hand, does provide additional space for a portion of their cabin, and only goes as low as 30 inches in their main section.

Are passengers willing to pay more for a larger seat?  Yes and no.  It seems passengers are far more selective of factors beyond seat pitch and width in deciding how much they are willing to pay, namely where the aircraft is flying.  Makes sense, and suggests the age-old argument of whether more space per passenger or more passengers per space will continue.

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Courtney Miller

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