Thursday, January 22, 2015

The Art Of Seat Wars

Japan Airlines is about to engage the customer in the "Art Of Seat Wars". Its 787-9 could hold easily 375 paying customers, but instead it chooses to artfully seat only 195 paying customers. One could ask, "how can that be and make money?".

Let's go into the study of seat wars a bit. If a max carrier of a 787-9 hauls 375 compliant tourist, business and fugitives from here to there, the ticket may cost $500 dollars one way. However, if you only load 195 passengers the cost of that same travel spot should go up accordingly per seat. The ticket should now become $962 US instead of $500. This would equal the total theoretical revenue of the 375 seat sold out airplane.

Since Japan Airline will not pay for the weight in travel as with 375 customers, nor does it buy additional fuel as needed for that weight. The 195 customers use less services than 375 customers use when eating, snacking, and sleeping on long trips. Japan Airlines can estimate its way towards an average ticket price into a relevant range of a great experience.

Consider the Motel-6 motto of: “We will leave the light for you", for $39.99". The proverbial 375 seat 787-9 will leave the Light on for you.  Japan Airline is going for the Hilton Crowd for $118.99 sleep-over, or should I say Seat-over. What do you get on Japan Airlines' move to travel treatments? Forty-four full flatbed business class Sky Suites. Premium Economy for thirty-five, and One hundred and sixteen economy that extend beyond traditional economy in a better 2-4-2 across set-up. This is juxtaposed against the nine across 375 economy seater in hockey arena seating.

The point, is Japan Airlines have gone to great lengths analyzing the business model for 195 seats. The mixture of business, premium and economy seat prices. Combined with fuel not burned or servicing costs of customers, Japan Airlines has reduced the risk of filling 375 seats for its "Premium" routes. I believe this to be a pilot hole drilled before the A350 arrives. I only see the A350 as a market tap into Europe, as it will be a pleasing European sentiment when flying the A350 to Frankfurt or London.

Premium routes are those high demand routes with little or no competition from others. Japan Airlines will, and now can assign the 787-9-195 seater maximizing the efficiency in operation and offering a reasonable price for its customers. A $700 dollar range ticket price for flying 12 hours in a spacious configuration is its target market. If you fly halfway around the world, you may as well go in the seat and space that is suited for twelve hours of travel.