Home » The airline’s trick to make you spend more – Mac Schwerin

The airline’s trick to make you spend more – Mac Schwerin

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The airline’s trick to make you spend more – Mac Schwerin

June 25, 2022 9:01 am

You have just received an unexpected sum of money. What’s the first thing you would spend money on? If your choice is a luxury vacation, how would you leave? Americans are at the top of the list of consumers interested in private travel, so here’s a clue. Many of us would rather forgo the commercial flight experience, but the chances of chartering a private plane are as good as winning the lottery for anyone not in the richest 1 percent of the population. However, this does not mean that commercial flights lack their own ruthless class system.

As in the case of life on land, social mobility in the skies is guaranteed by money and a series of secondary considerations such as “loyalty”, which still mean money. Most of us stay on the bottom step, which means we travel in the main cabin, which is about 70 percent of the seats on a Boeing 737. And the airlines go out of their way to remind us. Our inferior position is sanctioned with every call for boarding areas, which classify passengers with all the sensitivity of an assembly line. Every overflowing hatbox laughs at us as we sadly transition past first class or business class. Occasionally some of us manage to use our company credit card for a little comfort, but when traveling on our own pocket we are more likely to face the grim reality of the economy 28F seat.

Or maybe, just maybe, you can dig into your pockets a little better and pull out the last few coins to move to a slightly more attractive neighborhood: the premium economy. While not guaranteeing the luxury of a business seat, the premium (which has different names depending on the airline) offers a range of comforts: a few more inches of legroom, a hygiene kit with Malin + Goetz products or a chef-inspired meal with craft beer are just some of the perks offered by the various airlines. In recent years, a sub-category of passengers has emerged enthusiastic about being able to access the slightly more refined service of the premium economy. “One of the trends that everyone is talking about in the air transport sector today, especially after the pandemic, is a greater willingness on the part of leisure travelers to buy a seat in the premium economy,” Rob Britton, associate professor at Georgetown told me. university and former CEO of American Airlines. Business travel, usually the biggest source of income for airlines, plummeted in 2020, and today these companies look to rampant millennials as a lifeline. “Couples in their mid-thirties who go to Paris are filling in the gaps.”

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Like a host
In the mid-2000s, when a major aircraft manufacturer was designing a new model, he was studying the cost per square centimeter of real estate in the most expensive markets in the world: New York, Paris, London. Then he considered the cost per square centimeter on planes. There was no comparison, Uzma Khan, a professor of marketing at the University of Miami, told me. “From an airline’s point of view, what’s the most expensive thing they can offer you? The equivalent of real estate in flight “. In this respect, the airlines function as a kind of landlord, calculating how much it costs to transport every single passenger from one seat to another and adding a healthy price supplement.

Historically, front seats subsidized everything else, as travelers in Bain, Deloitte, or Baker McKenzie suits would surely have bought the most expensive business class tickets. However, the airlines had very tight margins. And in 2008, rising fuel costs and falling demand led airlines to disconnect standard amenities from economy tickets in order to keep prices competitive. Over time they have made up for it not only by selling credit card miles, corporate contracts and luggage space, but also by using the premium economy to sell a faint hint of luxury to vacationers like Kelsey Masters, a New York-based project manager. .

Once again airlines have carved out a new social class from the habit of flying, as with first class and business class

By his own admission, Masters is terrified of flying but makes frequent trips abroad to visit family and friends. He described his shopping habits to me with a weary acceptance that characterizes what he generally thinks of air travel during the pandemic: “To hell with it. Sixty dollars for an upgrade? Do they give me more legroom and a free soda and can I be a little quieter? It seems to me a very good thing at the moment ”. Instead of wasting his time planning the trip, he tries to buy the cheapest ticket as soon as possible and then let the circumstances of the day of the trip guide his decisions regarding promotions. Heavy elements of airport stress, the journey itself, or even the erratic nights sleep on the sofa bed in a friend’s living room “cause me to reconsider the opportunity cost of a dollar.”

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The premium economy has become an important revenue driver for airlines which, according to the aerospace market research center Counterpoint market intelligence, plan to triple the reserve of premium seats by 2025. However, travelers like Masters were originally not the target. principal. Britton explained that the premium economy was not created to convince dynamic people to cross the boundaries between flight classes; airlines had designed them to appeal to the battered egos of former business members when the corporate world seriously began to limit itself and cut employee travel budgets. In a recent report, business consultant Jay Sorensen noted that for these airlines “apparently the discovery of a new type of high-end leisure traveler” was a nice surprise. It represented a small miracle: once again airlines made a new social class out of the habit of flying, as they did with first and business class. And they were able to do so in part due to a phenomenon known as the “pain of payment”.

Calculated discomfort
According to Professor Khan, people often experience “real physical pain” when they pay for something. But humans can have a very short memory. If airlines create sufficient distance between the initial purchase of the ticket and the ability to upgrade, passengers are more likely to think of the upgrade as a cost of its own. “A lot of upgrades happen because you are at the airport, or are checking in, and you are given the opportunity to do so. You don’t even remember how much exactly you paid for the flight when you booked it, so that pain is gone, ”explains Khan. Basically we do not take into account the total because we have already internalized the initial expense.

At the time of travel, an extra 43 euros or so to upgrade a short-haul flight – albeit slightly – doesn’t seem so terrible, especially if the threat of suffering in economy looms. In 2014, competition law expert Tim Wu coined the term “calculated discomfort” to describe basic economy class conditions, stating that airlines purposely offer substandard service to force customers to pay for services that were previously free, such as seat selection, checked baggage or itinerary changes. “It’s just a matter of physical discomfort that translates into an emotional debt,” explains Wesley Kang, co-founder of Nimble Made, an online clothing brand, who often travels by plane both for leisure and to visit relatives. “The less you move, the less you have to settle down, the less indelicate you will be towards the person sitting next to you”.

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There is, of course, another widespread opinion about the premium economy, namely that it is just a poorly disguised attempt to induce passengers to pay more for an experience that is only slightly better. Those who think so mercilessly underline the glitz and exaggeration with which the premium economy is advertised. An upper-class seat after all won’t get you to your destination faster or safer. In many ways, research confirms this line of thinking. Khan refers to several studies conducted to establish the extent to which space determines the overall travel experience of passengers. An aircraft builder asked focus groups to try out different seat configurations within its prototype, offering in some cases a little more legroom and in others a little more elbow room. “It had no effect on customer satisfaction,” Khan said. “People only feel the difference if you offer an extra five or six centimeters at eye level, because it’s the perception of space that really matters.”

It could be argued that the rise of the premium economy was predictable from a cultural point of view. The pampered rampant millennials who travel by plane and demand “more beautiful” places adhere to the image of ambitious and enterprising types who prefer experience to things. Additionally, the convergence of pandemic-induced fatigue, intermittent incomes, and the aforementioned “hell” attitude when it comes to buying small luxuries creates the perfect environment for low-cost satisfaction. Regardless of how aware travelers are about seat upgrade marketing tactics, many still think it’s worth the extra money. And perception is reality. Airlines, it seems, have figured out how to capitalize on all of this.

(Translation by Giusy Muzzopappa)

This article was published on the site of the US monthly The Atlantic.

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