Cabin Layout, Seat Density, and Passenger Segmentation in Air Transport: Implications for Prices, Ancillary Revenues, and Efficiency

TL;DR

This paper examines how aircraft cabin layout and seat density impact airline ticket pricing, passenger segmentation, and ancillary revenues, using econometric analysis of microdata to reveal operational and market influences.

Contribution

It introduces a novel econometric approach to analyze seat density effects on prices and explores innovative cabin concepts affecting density and comfort.

Findings

Higher seat density correlates with lower ticket prices.

Passengers with expensive tickets are often assigned middle seats when no seat selection fee is charged.

Economies of scale and operational efficiency are linked to increased aircraft size.

Abstract

This study investigates how the layout and density of seats in aircraft cabins influence the pricing of airline tickets on domestic flights. The analysis is based on microdata from boarding passes linked to face-to-face interviews with passengers, allowing us to relate the price paid to the location on the aircraft seat map, as well as market characteristics and flight operations. Econometric models were estimated using the Post-Double-Selection LASSO (PDS-LASSO) procedure, which selects numerous controls for unobservable factors linked to commercial and operational aspects, thus enabling better identification of the effect of variables such as advance purchase, reason for travel, fuel price, market structure, and load factor, among others. The results suggest that a higher density of seat rows is associated with lower prices, reflecting economies of scale with the increase in aircraft size and gains in operational efficiency. An unexpected result was also obtained: in situations where there was no seat selection fee, passengers with more expensive tickets were often allocated middle seats due to purchasing at short notice, when the side alternatives were no longer available. This behavior helps explain the economic logic behind one of the main ancillary revenues of airlines. In addition to quantitative analysis, the study incorporates an exploratory approach to innovative cabin concepts and their possible effects on density and comfort on board.