Three years ago, I read a piece of news that Singapore Airlines (SIA) updated their A340-500’s cabinet. The new cabinet has only 100 Business Class seats. The traditional Air Bus A 340-500 usually can take about 200-300 passengers once. For example, an A340-500 in the Emirates has 258 seats which include: 12 seats for First Class, 24 seats for Business Class, and 204 seats for economic class. Why does the A340-500 have only 100 Business Class seats? I think the manager take this strategy for several reasons.
First, many Airlines develop the strategy of cost leadership, such as Southwest Airlines, Westjet, and Air Asia. Those companies are getting more and more market share. Airlines cannot offer both high-level service and low ticket price for their passengers because it will reduce the profit for the companies. Singapore Airlines has 5 A340-500 planes, and all of them fly between Singapore and New York without stopping. Those two cities are global economic centers, and many managers need to fly between those two cities. Most of them desire to get to destination quickly and receive high-level customer service. They have low price demand of elasticity.
Also, the price of business class seat is usually twice as much as that of economic class. Due to the economic crisis, some people with lower income may give up some travel plans, or buy some cheaper tickets with stopping. Those people have high price demand of elasticity. Some flights may have some idle seats. As a result, Singapore Airlines may give up the market of Economic Class, and focus on the Business Class.
Although business class seats may bring a large amount of profits for SIA, company cannot ignore the substitute for communication. More and more people have been using e-business to communicate with each other, which means they do not need to travel from one place to another to attend a meeting.