Making every square inch count

If you want to be a mil­lion­aire, start with a bil­lion dol­lars and launch a new air­line. So says Sir Richard Bran­son, recount­ing his expe­ri­ence of set­ting up Vir­gin Atlantic.

Tak­ing air­craft pur­chase costs as an exam­ple, even the rel­a­tive­ly small Air­bus A320 has an aver­age list price of £63 mil­lion, while the new­ly launched A350-900 is £199 mil­lion and the A380-800 £279 mil­lion.

Clear­ly these birds are expen­sive to buy and oper­ate, so the rev­enue-gen­er­at­ing poten­tial of every inch of cab­in space needs to be care­ful­ly con­sid­ered, espe­cial­ly with regard to fit­ting the opti­mum num­ber of seats – a fac­tor that is absolute­ly crit­i­cal to an airline’s rev­enues and sur­vival.

There are air­line teams ded­i­cat­ed to direct­ing and eval­u­at­ing cab­in con­fig­u­ra­tions, which draw upon a wide range of skills, includ­ing math­e­mat­ics, eco­nom­ics and fore­cast­ing pas­sen­ger trends. Their work is some­thing of an art and involves many com­plex cal­cu­la­tions, but some basic key fac­tors can help give a sense of how it all works.

In air­line par­lance, each seat on an air­craft fly­ing one mile rep­re­sents an avail­able seat mile (ASM) and each pay­ing pas­sen­ger fly­ing one mile rep­re­sents a rev­enue pas­sen­ger mile (RPM). Divid­ing RPM by ASM gives the load fac­tor, which indi­cates how full an airline’s planes are, and divid­ing tick­et rev­enues by RPM estab­lish­es the yield (even a full plane isn’t prof­itable if the fares paid are too cheap). Mul­ti­ply­ing that yield by the load fac­tor gives the rev­enue per ASM (RASM), which shows how much mon­ey each seat is earn­ing the air­line. The final key cal­cu­la­tion is the cost per ASM (CASM), arrived at by divid­ing total air­line oper­at­ing expens­es by ASM.

With load fac­tors of around 66 per cent required for many air­lines to break even on a flight, each extra seat filled rep­re­sents prof­it

Accord­ing to the Inter­na­tion­al Air Trans­port Asso­ci­a­tion, in 2014 the aver­age air­line load fac­tor was 79.2 per cent. A high fig­ure, but that extra 20.8 per cent rep­re­sents a lot of unre­alised poten­tial rev­enue. After all, with load fac­tors of around 66 per cent required for many air­lines to break even on a flight, each extra seat filled rep­re­sents prof­it. So how can air­lines squeeze more seats into their cab­ins?

Air­lines with busi­ness and first class want as many pas­sen­gers as pos­si­ble fly­ing in those lucra­tive cab­ins. Their plush seats may take up more cab­in space than those in econ­o­my, but with tick­et prices up to five-times high­er on long-haul routes, they gen­er­ate a high RASM.

Long-haul busi­ness class is a par­tic­u­lar­ly inter­est­ing sec­tor at the moment, with myr­i­ad new designs appear­ing every year, fea­tur­ing flat-bed func­tions, large HD TVs, some even with a foot­stool that dou­bles as a seat so a com­pan­ion can join you for din­ner. Lux­u­ry is one thing, but the real­ly clever part of the designs is their space effi­cien­cy – remem­ber, the more seats they have avail­able to fill, the more prof­it an air­line can make.

Per­haps the best exam­ple of a space-effi­cient seat design is British Air­ways’ Club World, which was a land­mark moment for the air­line – and for com­mer­cial avi­a­tion – when it launched in 2000, as it was first busi­ness-class seat that could con­vert into a ful­ly flat bed. The dis­tinc­tive for­ward-aft con­fig­u­ra­tion, some­times called “yin yang” due to its shape when viewed from over­head, was devised by the Tan­ger­ine design con­sul­tan­cy in Lon­don to max­imise pas­sen­ger com­fort and cab­in den­si­ty.

Oth­er air­lines have intro­duced their own solu­tions to reach­ing the ulti­mate com­pro­mise of pas­sen­ger and fis­cal appeal, such as Vir­gin Atlantic with its Upper Class Suite, while many oth­ers choose the more “off the shelf” seats offered by air­line seat man­u­fac­tur­ers, which are still inno­v­a­tive and space effi­cient.

Illus­tra­tion show­ing British Air­ways ying-yang beds

Orig­i­nal con­cept draw­ing of British Air­ways ‘ying-yang’beds

Such is the effi­cien­cy of mod­ern busi­ness-class seats that many air­lines are find­ing their con­sis­tent­ly high load fac­tors and RASMs more attrac­tive than those of first class, and are phas­ing out first class from some routes, while some are drop­ping it com­plete­ly. As car­ri­ers vie for busi­ness-class cus­tom, the prod­uct is evolv­ing into “super busi­ness”, great exam­ples of which can be found on Qatar Air­ways, Eti­had Air­ways and Sin­ga­pore Air­lines. How­ev­er, as busi­ness class has increased in lux­u­ry, for air­lines still keen to cater for the top tier of fly­ers, first class has also had to move for­ward accord­ing­ly.

At the oth­er end of the scale, in the­o­ry, cab­in con­fig­u­ra­tion should be sim­pler for the “pack ‘em in, sell ‘em cheap” low-cost car­ri­ers, who need the max­i­mum num­ber of econ­o­my seats on board to get a return on those low air­fares. But with­out advances in the cab­in-space effi­cien­cy of econ­o­my seats, these car­ri­ers can soon reach a plateau in cab­in capac­i­ty.

Some seat man­u­fac­tur­ers are lever­ag­ing the thin and strong prop­er­ties of com­pos­ite mate­ri­als to make the seat­backs of econ­o­my seats more sculpt­ed, in order to carve out as much knee-room as pos­si­ble. By cre­at­ing that space, the space between seat rows can in turn be reduced, mean­ing that addi­tion­al rows of seats can be squeezed into the cab­in with­out, air­lines claim, loss of com­fort. Even lava­to­ry walls are being sculpt­ed to cre­ate space for anoth­er row of seats – every square inch of cab­in space real­ly is eval­u­at­ed for its poten­tial to make mon­ey.

How­ev­er, there are fur­ther com­pli­ca­tions when pack­ing in extra pas­sen­gers, includ­ing safe­ty reg­u­la­tions such as the US Fed­er­al Avi­a­tion Administration’s require­ment that flights must have a min­i­mum of one flight atten­dant per 50 seats and all pas­sen­gers must be able to evac­u­ate the air­craft in 90 sec­onds or less using only half the exits.

Many new and inno­v­a­tive air­craft seats are intro­duced every year, all built around the key con­sid­er­a­tions of how they can be attrac­tive to pas­sen­gers and prof­itable for air­lines. Look around you on your next flight to see how strong the load fac­tor is. If you’re in econ­o­my and the load fac­tor is weak, then who knows, you might even be upgrad­ed to busi­ness class. Just don’t let the thought of the low RASM put you off the cham­pagne.