Two professors from Northwestern University attempt to determine “the value of space during a pandemic” by looking at the revenue premium earned by Delta Air Lines for blocked middle seats. They put it at $23:
- Delta Air Lines did not sell the middle seat in 2020 during the COVID-19 pandemic.
- Its principal rivals sold all seats starting in July 2020.
- Delta raised its fares by 15%.
- Passengers paid $23 to prevent a stranger from sitting next to them.
- Delta had to operate more flights, so this was not a profit-enhancing strategy.
I don’t think this analysis holds, though.
- Southwest Airlines has historically been the largest carrier of domestic airline traffic. They didn’t lift their capacity restrictions to fill middle seats until December 2020. Also Delta has a hub in Seattle, and Alaska Airlines didn’t start selling middle seats until 2021 (and continued blocking middle seats in extra legroom coach sections through May 2021). It doesn’t seem correct to say Delta’s “principal rivals sold all seats starting in July 2020.”
- In selling approximately one third fewer seats on its flights, Delta didn’t need to offer as many lower fares. They simply lopped off the cheapest tickets that are necessary to fill marginal seats. That drove higher average fares, but it’s not the same as “people choosing to pay more to fly Delta” – there were people paying higher fares on American and United too, but their averages were dragged down by those lowest fares.
- I’m not sure a revenue premium would speak to anything Covid-related in any case, how much space a passenger has is a prime determinant of satisfaction.
- It’s difficult to unbundle what customers are buying without looking at routes where airlines compete head-to-head with similar schedules. During the pandemic it wouldn’t have made sense to fly Delta on a connecting route over American or United non-stop, even with Delta blocking middle seats, since it means more time in the airport without HEPA air filtration and downward air flow. (And by the way though United didn’t block middle seats they’ve been unique in running aircraft APUs during boarding and deplaning to take advantage of air filtration the entire time passengers are on board).
- It’s worth knowing that anyone who wishes can buy an empty seat next to them on the major U.S. carriers for an extra charge, though this is not regularly advertised. Some international airlines offer this as an upcharge through the booking path.
- Claiming having to operate more flights “was not a profit-enhancing strategy” isn’t quite right either.
- Airlines already had the planes and gates. And as a condition of three rounds of federal subsidies were not allowed to lay off employees except for in the months of October and November 2020 (though they found creative ways of doing so).
- Adding flights, then, really just meant covering the incremental cost of fuel. As a result in June of last year American Airlines calculated their break even load factor at 9%
- Indeed Southwest Airlines believes that middle seat blocking cost them almost nothing until fall 2020 (hence the timing of when they stopped)
(HT: Marginal Revolution)
all good points – I hope Delta keeps the penalty free cancellations that has been a game changer going from $600 to change 3 people on Skymiles reservations to $0. Before I basically could not book on Delta – now I do all the time.
I always want extra space!!
I almost always pay extra to fly in row 6 (bulkhead) on AS my primary carrier. I appreciate the extra leg space, no one directly in front of me, ability to use the forward lavatory, pre boarding, designated bin space and free drinks. I will often pay upwards of $100 per segment for myself my wife and daughter. Also a great use for my airline incidental credits on 3 or 4 of our AX cards.
I have flew Southwest last year for the first time. I only chose this carrier because they were the only NONSTOP option and because they were blocking middle seats. Have taken 2 trips this summer. Both times we purchased extra coach seats when the aircraft did not offer a First Class option. Otherwise, we have paid for First. Definitely want more space!!! We do not want to sit next to anyone we do not know!
I’ve been flying exclusively paid F during the pandemic, of course that is if I have to fly at all.
My own value for extra space specifically due to Covid=Zero. I’m vaccinated, and Covid is far from the top of my concerns.
All good counterpoints, Gary
Few airlines had load factors above 60% until March 2021 so Delta’s seat blocking on a system level didn’t spill passengers except on the fullest flights.
Operating a larger network than if they “fit” all of their passengers on fewer flights also allowed them to defend their network against growth of low cost carriers better than American and United which both saw significant competitive capacity growth.
And, finally, Delta is undoubtedly combining its much higher operational reliability with its seat blocking which did result in higher percentages of business traffic compared to other airlines to win even more business traffic. Delta had a domestic average fare premium to to its competitors and that advantage will very likely grow as business travel returns.
Started booking three seats for the two of us when the plane configuration is not 2 by before the pandemic. I do wish it was easier to do online without the aid of an agent.
During the seat blocking by Delta,. I exclusively booked on Delta. I did pay more, but not having a seat mate was worth it to me.