Upgrade to First Class? Use $1 Per Minute Formula
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whelan at The Wall Street Journal in New York. Next time you consider economy versus first class on a flight, our middle seat columnist Scott McCartney says a dollar per minute in the air might give you an idea if the upgrade to the plush leather seats is really worth it. We'll talk to him in a moment. First, these money and market stories you should know. A good bit of economic news. Orders for long-lasting factory goods, what some people call durable goods, are Like refrigerators and lawnmowers rose 2.7 percent in March. That's the fastest pace in seven months and well ahead of expectations. And it suggests that demand picked up after a slow start to the year. Also, orders for motor vehicles rose 2.1 percent in March.
And that has some economists feeling that business investment might not be slowing as quickly as was feared. although most expect business investment growth to weaken further over this year. And the strong labor market is not causing high school students to delay or skip college. Labor Department says the share of recent high school graduates who enrolled in college rebounded to 69 percent last year. That's up from 67 percent. The labor department saying the share of women enrolling in college remained the same year to year, while the share of men increased. But over the decades, the share of men attending college and entering the workforce has declined. Economists point to many factors, including disability insurance, to immigration, to the opioid crisis.
We've all been there. We board a plane and walk by all the lucky folks in the plush first class and business class seats on our way to the aisle seat in row 51 in the wild tundra land known as Coach.
What is the $1 per minute rule for deciding whether to upgrade airplane seats?
The passengers in first class have the life, But does that extra bit of comfort make personal financial sense?
What recent economic and market headlines set the context for this discussion?
Wall Street Journal middle seat columnist Scott McCartney has been running the numbers, and he's on the line with us. So, Scott, let's start with the plain numbers. On average, the cost of a premium seat has gone up, while economy seat costs have actually gotten cheaper.
Yes, that's right, JR. The gap between coach and first class or business class for international flights has actually expanded. And that is because we've seen somewhat of a reduction in economy class ticket prices on average. That doesn't include the add-on fees. But we've also seen premium class tickets go up in price. And basically, there's more demand. As you note, Coach is unattractive to a lot of people, and airlines aren't handing out upgrades like they used to. And so people are willing to pay, and airlines are finding creative ways to to get them to pay for first class and certainly for business class on international trips.
And as you write in your column, this becomes a game of square inches, especially in the economy seats.
Yeah, it's really interesting. We started out looking at exactly the question of how much more do you need to pay to get comfort on an airplane? And we did that by looking at average ticket prices compared to two years ago. And then we took it a step further and said, well, you know, what if we looked at this as we do real estate, where people you looked at the price per square inch. And that's really what matters. There's a limited number of square inches in an airplane cabin. And how airlines divide it up gets really interesting. And so if you look at domestic coach first class, for example, you get about 50% more space than you do in economy. But you're going to pay three times as much. So on a per square inch basis, you're actually paying double.
It costs twice as much per square inch to get into first class. as it does in coach when you buy a ticket. And interestingly, the same formula held for international trips with business class. With the lie flat beds, you get a whole lot more space. You can get three times as much space as you get in coach on a per square inch basis, but you pay six times as much on average. And so guess what? Per square inch, the cost is double what you pay in coach.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:05–1:54
2
What is the $1 per minute rule for deciding whether to upgrade airplane seats?
1:54–2:00
3
What recent economic and market headlines set the context for this discussion?
2:00–10:22
4
How have average premium and economy ticket prices changed recently?
10:22–10:26
Speakers
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