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Hawaiian Airlines Takes An Innovative Leap Ahead Of The Competition

Summary

While highly profitable when sold, the majority of travelers in business class seats tend to be there due to an upgrade.

Hawaiian Airlines has introduced a system allowing economy class passengers to bid for unsold first class seats.

This bid system is likely to improve revenues for Hawaiian by ensuring that all first class seats generate revenue, while also encouraging genuine business class passengers to purchase business class.

Img 1: Hawaiian Airlines Business Class Product

Img 1: Hawaiian Airlines Business Class Product

One of the major problems in the airline industry has been the problem of premium classes such as first and business. They are a highly profitable product when they sell, however when they don't the cost from offering the service begins to add up and it can be a substantial headwind to profits. Delta (NYSE:DAL) for instance, an airline with a huge customer base of international high value business travelers and an excellent product, only manages to sell 57% of their business class seats. Airlines like Delta have strived to improve the paid load factor of their business/first class, however Hawaiian (NASDAQ:HA) has taken an innovative step I have thought airlines should have considered a long time ago.

Img 2: Delta Paid First Class Load Factor

Hawaiian Airlines recently announced that it will begin allowing passengers to bid for its unsold business class seats. The major problem with first and business class cabins, particularly in markets like Hawaii, is that there is little paid...


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