What’s one extra seat worth?

The economics of seating configurations

When comparing aircraft, the value of one extra seat is a crucial factor for airlines. Airplanes often have different seating configurations as the number of seats is a customized parameter derived from the airline strategy, the aircraft capability and the manufacturer’s product strategies (along with range and economics).

In theory, the value of a seat equals the Net Present Value of (Yield x Load factor x Average stage length x Number of cycles per year). Each of these parameters determines the value of a seat and is affected by various elements, such as:

- Cabin class. For legacy carriers, a business class seat is usually equivalent to four economy class seats. And on average, one tonne of freight is equivalent to five economy class seats.
- Yields. The average yield and the yield of the last seat sold can vary greatly.
- Revenue management. Airlines with relatively high load factors and strong yields will put a higher value on additional seats, whereas airlines with lower load factors will have a tendency to heavily discount last seats sold. This can result in the same seat in the same aircraft of two different airlines ranging in value up to 10 times higher.
- Load factors. The average load factor at a network level can change widely depending on scheduling, connections and some other key factors.
- Aircraft utilization. The aircraft utilization has a direct relationship with the daily utilization and the seat value.
- Competition. A fierce competition places limitations to how much additional seats are worth.

There is no simple and obvious method to value seats. What matters is that the revenue generated by additional seats is higher than the cost of these seats. All of these elements need to be well understood by airlines, especially when comparing aircraft.

For more information contact:
Philippe Gossard
Head of Revenue and Fleet Solutions, Marketing
philippe.gossard@airbus.com