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Why low-cost airlines avoid premium cabins despite potential revenue

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Why low-cost airlines avoid premium cabins despite potential revenue
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Simple Flying | Simple Flying

If you've flown on a budget airline, you might have noticed the absence of business class or premium economy cabins. Typically, low-cost carriers focus on economy-class seating, especially on short routes. In markets like the United States and Europe, budget airlines have expanded rapidly with minimal changes to their onboard offerings. Their strategy centers around reducing costs to offer lower ticket prices.

The lack of first or business-class cabins in budget airlines may seem puzzling, given that these classes generate significant revenue for major airlines in America. However, budget airlines like Spirit Airlines and Frontier Airlines operate differently from legacy carriers such as Delta Air Lines and United Airlines.

Legacy carriers use hub-and-spoke models optimized for business travelers who demand high-quality services. "Low-cost carriers with point-to-point networks have an advantage in terms of employees per ASM that allows them to lower cost," notes a report from Northwestern University.

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Budget airlines target leisure travelers seeking affordable fares rather than inflight luxury. As such, passengers flying with these carriers are less interested in business class, leading companies like Spirit and Ryanair to avoid offering premium cabins. This strategy helps keep operational costs low.

Some low-cost airlines have tried operating premium cabins but found limited success. In the U.S., Southwest Airlines, Frontier Airlines, JetBlue, Allegiant Air, Sun Country Airlines, and Avelo Airlines do not offer premium cabins. Spirit Airlines provides "Big Front" seats similar to domestic first-class seats but without separate service levels.

Breeze Airways offers larger seats branded as "first-class" but does not operate a distinct premium cabin. Breeze's Ascent seat includes features like power outlets and free inflight entertainment. Founded by David Neeleman, Breeze aims to provide a higher level of service while targeting underserved markets.

Despite some attempts at offering more comfortable seating options, budget airlines primarily focus on providing lower prices over luxurious experiences. Legacy airlines are increasingly targeting leisure travelers with basic economy tickets as they compete with low-cost carriers.

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