$1.2 billion a year on one route – its not all poverty for airlines: Top Ten

British Airways
British Airways Negus 747 Aircraft Taken: 21st March 2019 Picture by: Stuart Bailey

They really exist. Single routes that are so frequent and so in demand that they trigger revenue of up to US$1.2 billion a year.

Aided by what amounts to legalised cartels in Immunised Joint Ventures, certain airlines sit on some of the most in-demand and profitable routes – and they’re not always the busiest in terms of passenger volume.

Money is made not in basic economy but in business and first class.

A real long haul First Class is a product few airlines now operate. It says a great deal that 54% of the worlds First Class seats fly into and out of just one airport; London Heathrow.

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So it’s no surprise the No.1 slot for worlds most valuable revenue route goes to British Airways London Heathrow to JFK. It brought in over US$1.2 billion in revenue in the year to end of March 2019 – the most of any single route in the world. Most of that is powered by business class travellers.

It explains for example why Virgin Atlantic is putting its first two new A350-1000’s on the route as they compete directly with BA on the same pairing. New product, especially business class – is essential in attracting customers, along with the tier points and mileage loyalty schemes that business class travellers will pull apart and moan about, as much as they do the differences in cotton bed linen on one airline to another, and the quality of theSauvignon Blanc.

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The world second most profitable single route is Qantas’ Sydney-Melbourne, accounting for a staggering US$861 million in one year. And its only a 90 minute flight, but with some of the highest fares based on demand.

Third most profitable and the reason BA are using their A350-1000 launch on the route: Emirates DXB to Heathrow, running just below $800m per year. Its highly competitive and BA haven’t surrendered yet, though Virgin Atlantic have. It’s one of the worlds busiest First Class routes.

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Follow that with Singapore Airlines from – you guessed it, Heathrow to Singapore at $736m, again with high utilisation of First and Business class.

Next on the list goes to United from their hub at San Francisco to Newark, New Jersey, the third of New York cities main gateways. That pulled in $689 million. There are 199 flights a week between the two airports across all airlines, the vast majority with United, the rest mostly Alaska. United operates almost exclusively 757-200’s on the route.

American Airlines LAX-JFK route is its most valuable by some margin –  bringing in $662 million, and an extraordinarily high level of business class uptake. The A321’s work this route with their much liked business seating and what seems to pass as first class on US domestic airlines.

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Qatar Airways is next from – again – London Heathrow to Doha at $640 million, then Cathay Pacific from – yes, Heathrow to Hong Kong at $605 million.

The bottom two in the top ten – Singapore Airlines Sydney to Singapore at $550 million and Air Canada Vancouver to Toronto at £542 million.

These airlines have also become extraordinarily adept at  making sure they sell their seat rather than allow upgrades and rewards.

One of the devices used to prevent people getting upgrades at check-in is the online auction. Customers in economy or premium economy for example, can bid for an upgrade – these are normally scaled at rates that just about become cheaper if you’re prepared to risk not bidding high, but are often close to retail prices if you’d have booked it from the start. These are seen as a margin protector, and they rarely have any benefits above and beyond stopping you getting an upgrade. They might benefit you on an off-peak or out of season flight. If the seats are genuinely empty, the airline wins, if their business seats are close to full, and you make a high bid to get one, the airline wins.

Tweaks to reward programmes and seat availability control make scoring a high end upgrade progressively more difficult. Especially if you’re not in the top tier of the airlines preferred customers.

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Tactics to prevent selling business seats at a loss or  giving them away are making sure hourly revenues stay high. British airways is taking in $27,159 per hour of flying on the JFK run – that’s enough to keep a 744 in the air and profitable even though they have the highest running costs of any current airliner. At those rates when using a 787 or 777, profit margins are soaring. In an industry that’s notorious for wafer thin profits per seat, its a crucial revenue stream.

Airlines won’t give these routes up. They’ve used every trick in the rule book and some beyond to get the authorities to protect them and their revenue streams. The Immunised Joint Venture is the most effective from London to New York, with two principle ones covering far too much of the market (around 90%), to be even slightly acceptable, yet they get away with it none the less.

The argument is that without protecting margins they can’t operate, so they’d stop – making it sound more like a public service. To a point that is true. If there were no JV’s sooner or later one airline after another will squeeze out the smaller ones and the result would  be a duopoly – a bit like having two Joint Ventures across the Atlantic from Heathrow with two airlines each, rather than just two airlines.