Survey Says That Passengers Want Empty Middle Seats

New data shows that passengers want to see middle seats empty — and are willing to pay for it. According to a survey completed by Atmosphere Research, passengers are willing to pay 16-17% more on average to fly on an airline that blocks the middle seat.

Out of America's so-called "big three," Delta is the only airline that continues to block the middle seats, as well as every-other seat in the domestic first class cabin, effectively capping capacity on its planes at 60%. The strategy seems to be working well for them.   Two key accounting metrics show why this is having positive results for the airline.

Available seat miles (ASMs), represent how many available seats an airline flew on its planes over how many miles. If one airline operates a route with a 200-seat plane, and another airline operates the same route with a 300-seater, the latter will have 50% more ASMs.

Passenger Revenue per Available Seat Mile. PRASM measures how much revenue an airline makes from passengers — including fares, add-ons like baggage fees, and in-flight purchases — averaged out over all the ASMs the airline operated during that time period. It's essentially a measure of an airline's financial efficiency.

Since Delta is capping its flights at 60% filled seats, it is not earning revenue for 40% of their ASMs, So, setting aside variables like operating expenses and fares, Delta's PRASM should be 40% below that of another airline, like United, which is performing similarly.

However, Delta's second quarter PRASM was 6.40 cents, just 15% below United's 7.60 cents. The slimness of that gap suggests that Delta is earning a revenue premium, charging higher fares on average than United, according to Henry Harteveldt, a principal and co-founder at Atmosphere Research, a travel industry research firm.

Delta has said it's not charging passengers more to make up for that missing capacity, but the airline has historically charged more in general thanks to its reputation for things like on-time performance and relatively generous seat pitch. Therefore, Delta has simply continued to charge what it was charging before.

"It's fair for airlines to compete on product and try where they can to leverage a premium from their customers, if they feel they're delivering a better product and the customer agrees with them," Harteveldt said.

The twist is that now, travelers are looking at how airline handles the risk of COVID-19 along with traditional aspects of the flying experience. "The conversation has shifted," Harteveldt said. "It's not that on-time performance doesn't matter, but consumers’ value physical distancing right now more than they do on-time performance."

Ed Bastian, Delta's CEO, said that the airline was successfully managing its supply and capacity, which benefited pricing and yields. "So indirectly that is coming through in price. But that's not the objective," he said. He added that the Delta's latest customer surveys found that the blocked middle seat was the top reason passengers were choosing the airline.

Delta has said it will continue to block middle seats through at least September.

https://www.businessinsider.com/airlines-middle-seat-social-distance-coronavirus-delta-2020-8