OAG’s new report reveals the city pairs that make airlines the most money
OAG has just released its annual list (https://www.oag.com/blog/billion-dollar-route-jewels-in-the-network ) of the highest earning airline routes. Ranks are based on total revenue per annum.
Top Ten Highest Revenue Routes by Airline, April 2018 – March 2019
British Airways’ service between London Heathrow and New York’s JFK again tops the list and remains the only billion dollar air city pair in the world.
There are lessons to learn from looking at the routes that are identified as aviation’s highest earners.
• Alliances It pays to have partners. With the exception of Emirates all the carriers in the top 10 are members of an Alliance. Oneworld has five (BA, American Airlines, Qantas, Qatar and Cathay Pacific) and Star has four (United, Air Canada and two Singapore Airlines routes). But not all alliances are created equal. SkyTeam – Air France KLM, Delta/Virgin Atlantic – is notable by its absence.
• Long-haul Several of the top 10 are domestic routes – Air Canada’s Vancouver-Toronto, United’s San Francisco to Newark and AA’s Los Angeles to JFK – but only one short-haul domestic route makes the top 10. Melbourne-Sydney is exceeded only by BA’s London-JFK jewel in the crown.
• Business travellers Business customers mean revenue. Every route listed is heavily used by corporate customers, both for point-to-point and connecting traffic. Business customers are much more likely to generate more revenue per seat whether because of time of booking, likelihood of ticket changes and booking class. It is the reason British Airways’ JFK route generates more than half a billion pounds more than second place Qantas’s Melbourne-Sydney. Its aircraft on this route are configured for about 30% of the seats to be at the front of the plane. Virgin, which also flies LHR-JFK, is nowhere on this list not only because of less frequency but because only about 10-15% of its seats are in Upper Class.
• Locations The destinations are not only well-known business destinations; many of them are also key global hubs. It is not “London” in five of the top 10 city pairs; it is specifically LHR – Heathrow. The specific airport matters not only because Heathrow is an important destination in itself but it is also a hub with many important UK and European short-haul and international long-haul destinations on every continent.
Does any of this matter? Well, yes. Low-cost carriers have habitually been seen as challengers successfully snatching market share from traditional airlines. On some routes they might but the real money is in routes that not only go to business destinations but also provide easy connections. That kind of convenience is more likely to happen if you’re travelling on a network carrier which is a member of an alliance and going to an airport which is replete with other destinations.
As OAG’s figures this week show, the airlines know what high revenue business customers want. Buyers should remember, for better or worse, that their actual demand for routes, airports and connections is what ultimately drives the corporate rates they will command.