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Hi. I recently read an article about United’s profits from their passengers, and I was surprised that a lot (the numbers weren’t given) of “profitable” passengers flying United, and I assume other airlines (especially B6) were leisure travelers! My thought was that business travelers who aren’t price sensitive would be more profitable than price-concerned leisure travelers. Maybe I’m just uneducated about that, but I’d appreciate your thoughts.
[USER=393]@Rahul[/USER]–do you have a link to the article? Do they define profitability? Is it per ticket? Per person annually? Lifetime?
[USER=79]@Gaurav[/USER] for [USER=393]@Rahul[/USER]: No, I don’t have a link 🙁
The article’s (and supposedly United’s) definition of “profitability” from passengers is basically how much more the passenger spends on the airline (including company-paid trips) than how much the airline spends on the passenger (ex. extra fuel for extra weight, extra food…). That would be my definition of “passenger profitability” for the airline too, in this case.
I don’t have it handy, but pretty sure American had similar stats. Much of their profit (not revenue, just profit) comes from people who only fly the airline once per year.
Makes sense if you think about it — even the “price concerned” leisure traveler will still pay $600+ for an economy ticket to Hawaii over Spring Break, will pay to check bags, will buy a meal, maybe buy a pass to the lounge, probably isn’t crediting miles to a FFP, and will often be doing so for 4+ passengers.
Versus the guy flying ORD-NYC every month on a ~$180 fare, but isn’t paying for bags, is getting upgraded to F, consuming food and alcohol, earning miles that he might actually redeem, etc.
Thanks, Tiffany! That’s very helpful.