Why Is Business Class Sometimes Cheaper Than Economy?

Every so often I get an email from a reader confused about how business class on a flight could be cheaper than economy, and asking if it’s an error. For obvious reasons, it seems backwards. For example, take the below flight between Puerto Plata and Frankfurt on Condor, where business class is $729, while premium class is $749:

Economy-Cheaper-Than-Business

This is only one example, though it’s something I notice pretty commonly on domestic flights as well, where first class is cheaper than economy. So, what causes first/business class to sometimes be cheaper than economy?

The simple answer is that this is due to how complicated inventory and revenue management at airlines is.

The slightly more complicated (or perhaps expanded) answer is that airlines are on a never-ending quest to try to segregate their consumer base as much as possible based on consumers’ behavior. They do this by having dozens of fare classes, and often filing dozens of fares in a market. The system is so complicated that it sometimes creates situations where business class ends up being cheaper than economy. If you have a plane with 200 people on it, it’s entirely possible that every single passenger paid a different fare to be on that flight.

Typically there are two factors that determine how much you pay for your flight.

The first is what fares an airline has filed in the market you’re flying. Without getting into too much detail, here are just some of the fares that American files between Chicago and Dallas (this is based on your origin and destination airport for an itinerary, rather than the individual segment):

American-Fares

What determines the fare you get is how far in advance you’re booking, when you’re traveling, whether you’re traveling roundtrip or one-way, whether you have a Sunday night minimum stay, etc. The lowest economy fare in the market is $62 one-way, while the most expensive is $901 one-way.

The other thing that determines the fare you get is what booking classes the airline publishes for a particular flight (which you’ll see in the “Booking Class” column in the above chart). So not only does your itinerary have to be eligible for one of the above fares, but then the individual booking class codes need to be available for that type of fare, which will determine how much you pay. The codes they make available on a flight constantly changes, and is based on the expected demand for the flight. Obviously they want to sell the highest fares possible.

For example, here are the booking classes available for American flights from Chicago to Dallas in a few days (each flight has 16 different booking classes):

AA-Fares

So there are a lot of factors that go into what fares an airline publishes, and also what fare classes an airline makes available on a particular flight.

Using the above example, from Chicago to Dallas, one-way economy fares range from $62 to $901, while one-way first class fares range from $212 to $1,605.

Generally there’s some correlation between demand for economy and first class, meaning that usually you’re not going to be in a situation where only the highest economy fare is available, but the lowest first class fare is also available.

Keep in mind there are some other factors at play as well. For example, a lot of business travelers can only book economy on certain flights, so it could very well be that they have to book economy even when it’s more expensive than first or business class. That would allow a leisure traveler to swoop in and actually score a deal on a premium cabin ticket. There are also corporate contracts at play, where many travelers are paying a negotiated percentage of the full fare ticket cost.

Bottom line

It’s not unusual to find that first or business class fares are cheaper than economy. While it doesn’t really make sense, this is a product of how complicated airline fares are. Airlines are trying to do everything they can to maximize each consumer’s willingness to pay, and at times that leads to oddities like this.

I’ve had a few domestic flights over the years where I booked first class for less than the price of economy, most commonly when economy was almost totally sold out, while first class was wide open.

Comments

  1. I figured that out while mock-booking LEVEL. Their economy fare classes had prices from 149$ to 950$ to OAK, while cheapest PE fares were at 920$. But the highest eco fare has way more benefits.

  2. I visit my family in VLC (flying form LON) twice a year: during the peak summer period and during Christmas week.

    Both of these are times where Easyjet or Ryanair charge north of £200 for a direct flight from LGW (plus bag fee, speedy boarding etc.). BA charges £300+

    For £270 I can take a connecting flight in J, via MAD on an A340 with wifi and flat beds. I also get to use the F lounge in LHR, earn 6500 Avios and 120 TPs.

    It never ceases to amaze me that people just price up the direct option in Y without ever checking what’s possible in J 😉

  3. Jarvis, it is not at all unusual for a first or business class ticket to be cheaper than an economy ticket when that economy ticket is non-stop and the fist/business ticket involves a change of flight. That is particularly true for shorter trips where a change can involve at least a doubling of the total time for the duration of the trip.

    And in fact I will sometimes pay more for an economy non-stop than for a J/F with a stop because of the extra time/stress of a connection.

    Where it matters less is on long haul, where i may change to save money, upgrade my class or even just to break up the journey (something smokers do a lot these days).

    But I think what is being discussed here is the price differential even on the same flight or itinerary

  4. I read and re-read some parts of your article and im still confused (but its not your fault). There are multiple reasons why this happens & not one simple answer. The way I view it is whenever economy is almost sold out and first/business are wide open, they tend to hike up the economy price. Ive taken advantage of flying business when it was cheaper than economy. The key is to always check and re check your options when you’re planning a trip. You never know! 😉

  5. That has happen to me a few times but mainly on short under 2 hour flights. The first/business class seat was either outright cheaper than economy or econ + or the difference in price was insignificant. I flew a few times that way from sfo to las on virgin America.

  6. I’ve only scored once…it was PWM to STT and 1st was a couple hundred less that Y…connected through JFK after landing at LGA. Had to overnight (on points) at JFK but I still think it was worth it!

  7. The Key information that is missing in this article is that usually the “expensive” economy ticket will be very flexible (ie free refunds, date changes, etc), whereas the “cheap” first class will be the most restrictive one. Remember you’re not only purchasing a seat, but you are also receiving all the restrictions/flexibility of the fare your are booking. Of course if you are certain of your dates and there are no chances of cancelling the trip go for F/J.

  8. This happened recently when I was booking a last minute flight from Hyderabad to NYC for one of my employees. We were able to get business one-way for a cheaper price than economy!

  9. My company policy (stupidly) doesnt allow business class travel on flights shorter than 4 hours. So on multiple occasions I’ve paid considerably more to buy a full-fare economy ticket when much cheaper business class tickets were available. I’m not complaining though, because these quick 2-hour flights within Europe earned me more miles than a business class ticket and I usually get upgraded to a business class seat at the gate anyway.

  10. I’ve seen it numerous times and taken advantage of it. Once from Toronto to Austin and another JFK-MSP. Coach last summer was $900 while First was $300.

  11. As a corporate travel agent I see these kinds of fares all the time, but really only when its travel within a month. But I have sold many F class cheaper than J and so on and so forth, so it is always worth playing around with the different cabins online or even better to get your travel agent to waitlist a seat in Y or W is close to full. The other tip is to look on the airline code share partners so at the moment is cheaper to fly AA on BA metal in F then BA (same flight) in J.

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