Let’s say you receive an unexpected financial windfall. What’s the first thing you’re spending money on? If it’s a lavish vacation—how are you getting there? Americans top the list of consumers who say they’re interested in private travel, so there’s a clue. Many of us would prefer to opt out of the commercial-flight experience, but the odds of hailing a private jet are lottery-long for anyone not in the 1 percent. Still, that doesn’t mean that commercial flying is devoid of its own cutthroat class system.
As with life at ground level, social mobility in the sky is secured by money and a slew of secondary considerations, like “loyalty,” that also mean money. The majority of us find ourselves on the bottom rung—the main cabin, which accounts for roughly 70 percent of the seats on a Boeing 737. And airlines don’t let us forget it. Every boarding-zone call registers our lowly station, sorting passengers with all the sensitivity of industrial farm equipment. Every full overhead bin mocks our sad aftward shuffle past first or business class. On occasion, some of us get to ride the company card to relative comfort, but when you’re flying on your own dime, you’re more than likely facing the bald reality of economy seat 28F.
Or maybe, just maybe, you reach a little deeper into your pocket and cough up the bones to relocate to a slightly sexier neighborhood: premium economy. Though not as plush as a business-class berth, premium (which goes by different names depending on the airline) delivers various creature comforts—a few extra inches of legroom, or a toiletry kit with Malin+Goetz products, or a “chef-inspired” meal with craft beer, to name a few perks across carriers. In recent years, an emerging subset of fliers has signaled enthusiasm for premium economy’s marginally more refined service. “One of the trends that everyone in the airline industry is talking about nowadays, especially coming out of the pandemic, is a greater willingness on the part of leisure travelers to buy a premium economy seat,” Rob Britton, an adjunct professor at Georgetown University and a former managing director of American Airlines, told me. Business travel, airlines’ usual bread and butter, fell off a cliff in 2020, and these companies now see a lifeline in Millennial yuppies. “The 35-year-old couples going to Paris are filling the gap.”
In the mid-aughts, when a major aircraft manufacturer was designing a new model, it studied the cost per square-inch of real estate in the most expensive markets: New York, Paris, London. Then it looked at the cost per square-inch on airplanes. There was no comparison, Uzma Khan, a marketing professor at the University of Miami, told me. “From an airline’s perspective, what is the most expensive thing for them to give you? Real estate in the air.” In that regard, airlines operate as a kind of landlord, calculating the expense of hurtling a single passenger from one place to another and adding a healthy upcharge on top.
Historically the seats in the front of the plane subsidized operations, as besuited flyers from the likes of Bain and Deloitte and Baker McKenzie reliably bought more expensive business-class tickets. Still, carriers clung to thin margins. And in 2008, rising fuel costs and sagging demand prompted airlines to decouple standard amenities from economy tickets in order to keep their prices competitive. Over time, they made it up not just by selling credit-card miles, corporate contracts, and cargo, but also by using premium economy to sell the faint whiff of pampering to vacationers like Kelsey Masters, a project manager who lives in New York.
By her own admission, Masters is terrified of flying, but she makes frequent cross-country trips to see friends and family. She described her purchase habits to me with a weary acceptance that characterizes her overall feelings on pandemic air travel: “Screw it. Sixty bucks to upgrade? I get a little more legroom and a free drink, and I can just be a little more calm? That sounds like a really good thing right now.” Rather than splurge in the planning stage, she tries to buy the cheapest fare ahead of time and let the circumstances of the travel day guide her upgrade decisions. Compounding stressors from the airport, the trip itself, or even a few nights of fitful sleep on a friend’s living-room pullout “will make me start to reevaluate the opportunity cost of the dollar,” she said.
Premium economy has become a major revenue driver for the airlines, which, according to Counterpoint Market Intelligence, an aerospace market research company, are projected to triple their inventory of premium seats by 2025. But travelers like Masters weren’t the original target. Britton explained that premium economy wasn’t built to entice strivers across flight-class lines; carriers originally designed it to catch the bruised egos of former business-class members when the corporate world began to earnestly self-audit and downgrade employee travel budgets. A recent report by Jay Sorensen, an industry consultant, noted that “the apparent discovery of a new type of upscale leisure traveler” is a welcome surprise for these airlines. It connoted a small miracle: Airlines had once again wrung a new social class from flying, as they had done with first and business class. And they were able to do it, in part, because of a phenomenon called “pain of payment.”
According to Khan, people often experience “actual, physical pain” upon paying for something. But humans can have short memories. If airlines create enough distance between the initial ticket purchase and the option to upgrade, passengers are more likely to think of the latter as a standalone cost. “A lot of upgrades happen because now you’re either at the airport, or you’re checking in, and they give you an option. You don’t even remember exactly how much you paid for your flight when you were booking it, so that pain is gone,” Khan said. Basically, you don’t consider the total amount because you’ve already internalized the initial amount.
At the point of travel, an extra $45 or so to improve a short-haul flight—however modestly—doesn’t seem so decadent, especially when the threat of suffering through basic economy looms. Back in 2014, the antitrust scholar Tim Wu coined the phrase calculated misery to describe the conditions of basic economy, positing that airlines deliberately provide substandard service to coerce customers into paying for amenities that previously were free—seat selection, checked baggage, and itinerary changes, for instance. “It’s just a matter of physical discomfort translating into an emotional debt,” says Wesley Kang, a co-founder of Nimble Made, an e-commerce clothing brand, who flies frequently for leisure and family visits. “The less you move around, the less you have to adjust, the less inconsiderate you’re being to the person next to you.”
There is, of course, another prevailing opinion about premium economy, which is that it’s simply a ham-fisted attempt to get passengers to pay more for a negligibly better experience. This attitude puts the pomp and puffery of premium economy into sharp relief. A seat upgrade, after all, does not get you to your destination any more quickly or safely. Research bears that line of thinking out to an extent. Khan mentioned several studies that were conducted to determine the extent to which space colored the overall experience for passengers. An aircraft manufacturer brought in focus groups to try different seat configurations on its prototype, sometimes offering more legroom, sometimes more elbow room. “It had zero impact on customer satisfaction,” Khan said. “Where people do feel the difference is if you give them four more inches at the eye level. Because the perception of space is what matters.”
One could posit that the rise of premium economy was culturally foretold. The coveted Millennial-yuppie flier laying their claim to “nicer” seats falls in line with the idea that they’re bold go-getters who seek experiences over things. Plus, the confluence of pandemic exhaustion, discretionary income, and the aforementioned “screw it” attitude toward purchasing small luxuries creates the perfect environment for low-stakes indulgence. Despite what travelers may know about seat-upgrade marketing tactics, many still think the extra spend is worth it. And perception is reality. Airlines, it turns out, have figured out how to bank on that fact.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
