Factors Influencing Aircraft Seat Configuration, or

April 4, 2011
Factors Influencing Aircraft Seat Configuration,
or “How Many Seats are Really in an A380?”
Aviation, Aerospace and Defense
C O N F I D E N T I A L | www.oliverwyman.com
Contents
ƒ How many seats on the A380?
ƒ Factors in deciding the right aircraft seating configuration and what it means for
customers
ƒ Trends and conclusions
© Oliver Wyman www.oliverwyman.com
1
Airbus A380: World’s largest passenger airliner
How many passenger seats are on an A380?
Managing the extra “junk-in-thetrunk”
ƒ 500m2 of cabin space
– The length and the width are
three-quarters the length of a
soccer field
ƒ Airport modification/updates
required to support the aircraft
But how many passengers
can it hold?
Carriers operating the A380:
1
1 First delivery expected May, 2011
© Oliver Wyman www.oliverwyman.com
2
Passenger airline route maps: Where does the A380 fly?
The A380 flies between five different continents and crosses four major oceans
A380 Route map
All routes operated with A380 equipment1, by carrier
As of February 11, 2011
Emirates
Air France
Lufthansa
Singapore
Qantas
Source: PlaneStats.com; gcmap.com
1 All routes currently operated with A380 or scheduled for the near future (as of 11 Feb 2011)
© Oliver Wyman www.oliverwyman.com
3
Seats on the A380: Carriers vary significantly on number of seats
Different seating configurations are available on the A380 and vary by carrier, with a
maximum of 840 seats available in an all economy configuration
Total
Number
of Seats
Airline
407
450
471
503
526
538
840
Korean
Air1
Qantas
Singapore
Airlines
Emirates
Airlines
Lufthansa
Air
France
Air
Austral1
(Planned Config)
Geography ƒ Dense
worldwide
/ Routes
network
ƒ Hubs in N.
East Asia
(Planned Config)
ƒ Extensive
local
network
ƒ Some
worldwide
destinations
ƒ Worldwide
network
ƒ Hub in S.
East Asia
ƒ Worldwide
network
ƒ Hub in
Middle East
ƒ Dense
worldwide
network
ƒ Hubs in
Europe
ƒ Dense
worldwide
network
ƒ Hubs in
Europe
ƒ Regional
network
ƒ Destinations
in France
and Asia
Class Mix
First
Business
Prem. Econ
Economy
First
Delivery
94
12
74% 301
333
61 10
375
7614
60 12
72 14 307
12
32
50
6614
413
40
85% 399
332
313 83% 82%
262 79%
187 61%
74%
A380 B744
A380 B744
ƒ Planned for
May, 2011
ƒ Oct, 2008
ƒ 3rd Operator
A380 A744
ƒ Oct, 2007
ƒ 1st Operator
A380
358
4212
98
8
420
304 85% 80%
B773
ƒ Aug, 2008
ƒ 2nd Operator
9
80
330
16
80
449
71%
83%
234
A380 B744
ƒ Jun, 2010
ƒ 5th Operator
840
301
100%
8
6728
198 66%
A380 B773
ƒ Nov, 2009
ƒ 4th Operator
442
40 18
87%
384
A380 B773
ƒ Estimate
~2014
What drives the huge differences in seats and configurations on the A380?
1 Planned configuration. Aircraft not yet in operation
© Oliver Wyman www.oliverwyman.com
4
Passenger airline business models
Airline business model drive the seat configuration. Carriers operating the A380 currently
operate either an Intercontinental Network or Global Luxury Connector business model
Intercontinental
Network
Global Luxury
Connector
ƒ Full domestic market
penetration
ƒ Luxury service and
product
ƒ Hub-and-spoke network
with multiple hubs
ƒ Long-haul with one
primary hub and select 5th
Freedom routes
ƒ Routes to multiple global
markets
Ultra Low Cost
Geo-Focused Network
Network Extender
ƒ Concentrate operations
in a limited geographic
region
ƒ Primarily extends reach of
partner carriers into
smaller markets
ƒ Limited flights to other
areas
ƒ Operate under co-brand,
code share, or pro-rate
agreements
ƒ Alternative to non-stop
service
Traditional Low Cost
Modern Low Cost
ƒ Aggressively stimulative
pricing
ƒ Point-to-point service
ƒ Point-to-point and network
ƒ High frequency
ƒ “Seat-only” product;
charge extra for other
services (e.g. checked
bags)
ƒ Price-sensitive business
travelers
ƒ Target a mix of business
and leisure travelers
© Oliver Wyman www.oliverwyman.com
ƒ Additional on-board
product frills superior to
competitors
Charter
ƒ Mostly unscheduled
service
ƒ Significant reliance on tour
operators selling vacation
packages
5
Seats on the A380: Different business models apply different seat configurations
Different airline business models select different choices for the optimal number of seats
on the A380 as carriers try to respond to market conditions and customer needs
Total
Number
of Seats
Airline
407
450
471
503
526
538
840
Korean
Air1
Qantas
Singapore
Airlines
Emirates
Airlines
Lufthansa
Air
France
Air
Austral1
(Planned Config)
Business
Model
Intercontinental
Network
Carrier
(Planned Config)
Global Luxury
Connector
ƒ Limited local market –
Business ƒ Premium pricing
primarily caters to “flow”
Rationale ƒ Fewer seats per A/C due
to limited regional
competition
passengers
ƒ “Luxury brand” to
differentiate from regional
competitors
Intercontinental
Network
Carrier
ƒ Highly competitive
European market
ƒ Greater number of
seats to increase
revenue potential
GeoFocused
Network
ƒ Branching
into intercontinental
network
model
1 Planned configuration. Aircraft not yet in operation
© Oliver Wyman www.oliverwyman.com
6
Seats on other A/C: Similar variation in seats across all aircraft
Differences in seat numbers are driven by the same factors as the A380, including
business model, geographic and competitive considerations
500
Seats per Aircraft
Delta
Airlines
Emirates
Continental
Airlines
Hawaiian
Airlines
United
Airlines
Qantas
British
Airways
Singapore
Airlines
American
Airlines
200
B767-3ER
B767-400
Air France
Lufthansa
A330-200
A330-300
B777
B747-400
Average of most recent configurations: BA B747-400, EK A330, EK B777; LH B747-400; QF B747-400; QF A330-200
© Oliver Wyman www.oliverwyman.com
7
Contents
ƒ How many seats on the A380?
ƒ Factors in deciding the right aircraft seating configuration and what it means for
customers
ƒ Trends and conclusions
© Oliver Wyman www.oliverwyman.com
8
Seats on an A/C: Balancing inputs and creating the ideal offering
Class mix and seat density are primary carrier levers used to differentiate offerings on
similar aircraft types, and create a targeted product offering…
Airline: Product Levers
Carrier: Business Model Inputs/Drivers
ss
ine el
s
Bu od
M
ƒ How many premium seats
should be on each aircraft?
ƒ How large should first class be?
Geo
cons graphic
ider
ation
s
Ro
ƒ All economy configuration?
Seating
Configuration
s
etitor
Comp cts
produ
s
ute
1) Class Mix
t
ge t
r
Ta rke
ma
2) Seat Density
ƒ How much space should each
passenger have?
ƒ Should there be Premium
economy?
ƒ High-density Economy class?
© Oliver Wyman www.oliverwyman.com
9
Seats on an A/C: What does this mean for you, the passenger?
…but that can mean the difference between a great or not so ideal travel experience,
depending on which path the carrier chooses to take
Passenger experience can range from this…
Carrier Levers of Product
Differentiation
1) Class Mix
2) Seat Density
© Oliver Wyman www.oliverwyman.com
…to this
10
A380: Class Mix & Seat Density
Seat density by
class
ƒ Overall seat
density is a
function of seat
density by class
ƒ While Qantas
may appear to
have the lowest
seat density, that
does not tell the
whole story
Less
0% Premium Seats
Class Mix
More
~25% Premium Seats
What does this mean for the A380?
Operators of the A380 are choosing a larger premium cabin with relatively low seat
density. Air Austral is a clear outlier, and is in line with trends across the industry
Low
0.85 seats/m2
Seat Density
High
1.76 seats/m2
Later adopters of the A380, Air France and Lufthansa, have higher density
configurations, potentially reacting to the economics of operating the A380
Note: Qantas Economy seat density includes Premium Economy product
© Oliver Wyman www.oliverwyman.com
11
What does this mean for the A380?
A380 operators have very different strategies by class, with the Global Luxury
Connectors electing to have higher premium seat densities
A380: Class Mix & Seat Density by Cabin
Business
Economy
Less
Premium
Class Mix
More
Premium
First
Low
0.0 seats/m2
Seat Density
High
0.25 seats/m2
Low
0.4 seats/m2
Seat Density
High
0.7 seats/m2
Low
1.4 seats/m2
Seat Density
High
1.76 seats/m2
ƒ The Global Luxury Connectors (Emirates & Singapore) have higher seat densities in First and
relatively lower seat densities in Business and Economy
ƒ Intercontinental Network Carriers such as Lufthansa and Air France place an emphasis on lower
cabin seat density in First and relatively higher seat density in Economy
Note: Korean Airlines not included in cabin breakdown because no detailed seat plan exists
© Oliver Wyman www.oliverwyman.com
12
Class mix: Premium vs. standard seating configurations
Carriers sometimes go with both a high and low-end option, varying the seating
depending on the market / route, flight timing or target audience…
757-200
Premium configuration
110 seats
757-200
Standard configuration
182 seats
Premium vs. Standard
First
(∆12)
24
seats
12
seats
Business
(∆2)
50
seats
26
seats
Economy
Plus
(∆22)
ƒ Premium configuration:
– Increased First and Business
class seats
– Mini-business model of
“Premium Product”
– Special routes or flight timing
ƒ Standard configuration:
– Maximizes number of seats
– General product
– Used for most parts of network
108
seats
72
seats
Economy
(∆108)
© Oliver Wyman www.oliverwyman.com
13
Class mix: Premium vs. standard by carrier
…but in general, carriers pursue one strategy which is then reflected across most of
their network
Economy
Premium Economy
Business
First
B777-200 fleet: Seating configuration
Pct.
Premium
More
Does not include all carrier configurations1
57%
United Airlines
45%
British Airways
22%
Emirates Airlines
24%
Air India
22%
Air France
Premium 20%
Seats
American Airlines
117
Less
Cathay Pacific
14%
Alitalia
14%
Singapore Airlines
15%
Korean Airlines
40
48 14 229
49
236
49
197
37
190
18 303
243
45
42
258
336
300
38 266
228
28 8 248
212
100
ƒ More economy seats better
suited for high-capacity, targeting
cost conscious customers
276
291
50
ƒ Large premium cabins cater to
business and high-net-worth
passengers and routes /
markets
258
50
226
0
Premium vs. Standard
carriers
49 4 264
211
18% Continental Airlines
13%
40 8 269
104
127
Premium
150
200
250
300
350
400
1 When multiple configurations available, only latest configuration shown
© Oliver Wyman www.oliverwyman.com
14
Seat density: How much space does each seat take?
Within a single carrier, seat density can see a large variance depending on the aircraft
type and its mission profile…
Aircraft
Type
Number
of
Seats
Total
Cabin
Area
Mission
Type
Seat
Density
(seat/m2)
CRJ200
50
27.0m2
Shorthaul
1.85
A320
138
139.0m2
Medium
Range
0.99
777-200
252
394.9m2
LongHaul
0.64
7474001
321
430.7m2
LongHaul
0.74
A/C Fleet Sample
A higher share of wide-body aircraft can reduce a fleet’s average seat density
Note: Sample of United Airlines A/C fleet represented
1 Lower deck only
© Oliver Wyman www.oliverwyman.com
15
Seat density: How many seats fit on a plane?
…but a more consistent variance can be seen between carriers across entire fleets,
reflecting carrier business models
First
Business
Composite wide body seat density
Premium
economy
Average seat configuration across fleet (normalised to 100m2 of cabin space)
Economy
140
120
1
Number of Seats
100
3
80
3
18
5
15
11
2
11
13
2
3
2
13
2
18
16
14
0
1
16
15
1
10
1
16
1
12
14
Seat density by business
model
ƒ Intercontinental Network carriers
such as Lufthansa (LH), British
Airways (BA), and United (UA)
have relatively low seat densities
14
60
9
27
84
40
71
67
55
79
77
79
87
89
89
94
89
94
100
46
20
ƒ Global Luxury Connectors like
Emirates (EK) and Qatar (QR)
have much higher seat densities
as driven by their economy cabin
strategy and high fraction of widebody aircraft
0
BA LX UA VS 9W SQ LH AF CX CO QF QR TG EK MU
Total Seats
82
88
94
95
96
97
97
97 103 105 105 106 106 111 114
Source: Back Aviation Solutions/Lundkvist Fleet Database as of Jan 29, 2008; Boeing and Airbus websites. OW analysis
Note: First is defined as front cabin on three cabin aircraft. Business is defined as front cabin on two cabin aircraft or middle cabin on three cabin aircraft
Note: BA = British Airways; LX = SWISS; UA = United; VS = Virgin Atlantic; 9W = Jet Airways; SQ = Singapore Airlines; LH = Lufthansa; AF = Air France; CX = Cathay Pacific;
CO = Continental; QF = Qantas; TG = Thai Airways; EK = Emirates; MU = China Eastern Airlines
© Oliver Wyman www.oliverwyman.com
16
Seat density: Comparison of US carriers
US carriers vary in their business models and relative seat densities, with up to a 66%
difference in seat size between the highest and lowest premium cabins
Seat density in 757-200 aircraft
Meters of cabin space per seat
Cabin space per seat (m2)
5
US Airways
United
Continental
American
Delta
4
ƒ US Airways has consistently higher
seat space for both cabins to
differentiate its product against
competitors
2
2.7
2.4
2.4
1
ƒ Delta’s dense premium seating area
allows it to sell additional seats in the
premium cabin
ƒ United Airlines’ Economy Plus on the
P.S. product offers more space in
economy
+66%
3
Comments
+34%
2.3
1.6
0.9
1.0
US
UA1
0.8
0.8
0.8
CO
AA
DL
0
US
UA1
CO
AA
DL
First/Business
Economy
With large variations in seating areas, how do you know what will maximize your revenue?
Source: Boeing documentation for aircraft areas and seatguru.com
1 Reflects UAL’s 757-200 p.s. product
© Oliver Wyman www.oliverwyman.com
17
Seat density: Most importantly, what does this mean for revenue?
For US domestic economy travel, carriers with higher seat densities have been able to
capture higher overall revenues per square meter of cabin space
Average revenue per passenger in Economy
cabin is similar across carriers…
…however lower seat density results in a
negative impact on revenue versus
competitors
Average revenue per passenger1
Average revenue per sq meter of cabin space
Domestic Travel
Domestic Travel
US Airways
United
Continental
American
Delta
$300
$250
-2%
$300
$200
$150
$150
$100
195
190
194
$100
$50
$50
$-
$-
Seat Density
(# of seats/m2)
+3%
245
246
277
217
Economy Cabin
Low
+6%
-11%
252
222
+2%
$250
$200
208
Revenue Impact
vs. Airline Avg.
Economy Cabin
High
Low
Seat Density
High
(# of seats/m2)
1 US DOT Form 41 data, Q3-2010
2 Based on 757-200 seat map
© Oliver Wyman www.oliverwyman.com
18
Contents
ƒ How many seats on the A380?
ƒ Factors in deciding the right aircraft seating configuration and what it means for
customers
ƒ Trends and conclusions
© Oliver Wyman www.oliverwyman.com
19
Global trends in seating configuration
Because of the promise of higher revenues, most carriers are moving towards higher
density seating configurations, some even considering removing seats!
…with proposals for
even further shrinkage
In 1978 roomy
seats were common…
33 in.
…but they have shrunk
by avg of 3” over time…
31 in.
Past
25 in.
30 in.
Present
Future?
Boeing 787-800 Seating Configurations
8-seats Across
Boeing recommended config
© Oliver Wyman www.oliverwyman.com
9-seats Across
Most common carrier config
20
Key take-aways & implications
ƒ Not surprisingly, high-density seating is able to generate higher revenues than
standard configurations on similar aircraft types - this is true in all cabins,
including First class
ƒ As a result, carriers continue to configure aircraft with more seats, trading off
customer comfort for higher revenues
ƒ The A380 is still new and only operated by a few carriers, but we have already
seen a trend of increasing seat-density in the few short years the aircraft has
been available
The big question is:
Do passengers even notice?
© Oliver Wyman www.oliverwyman.com
21
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22