Airfare Insanity
#21
Warning: Thread drift, but better than starting a new thread. Does CAL have a policy on what your checked in luggage looks like? Instead of a suitcase, I plan to use the box that my new microwave came in. Of course, the darn thing has pictures of the darn microwave plastered all over it. Should I wrap the box in plain paper? What about taping it shut all over? And finally, can I tie a string around it so it can be easily picked up?
Last edited by vagabond; 04-03-2009 at 02:55 PM. Reason: forgot something, doggone dementia
#22
hahahahahaha
ok ok, I'm leaving. Jeez, it's just a joke Vagabond. Leggo of my ear.... hey....ouch
#23
There is a reason I am not in airline management. How does UAL justify offering fares SEA to FRA for $231 + taxes/fees = $506? Back in February, I purchased that same ticket from CAL for $666 and received credit for the difference when it lowered the fare to $393. It's a slow day at work today so I enjoy checking around and that's when I saw the UAL fare. Must be getting old because I will never understand airline fare structure.
It's simple. United decided to fly SEA-FRA. To do this, they forked out money to rent planes, hire and train crews, set up a reservation system and all those other things that will make this flight happen. So about 90% of United's costs to operate this flight are fixed. In one respect, they placed a bet that they could make money flying this route.
To cash in on this bet, United looked at it's costs and other competetors fares to decide how much to ask for a ticket. United then modeled how fast tickets sold on this segment, on this date using historical data from the past. Using computers, they track how the actual sales compare to the model. So in this bad economy, sales are laging. So the guys who track this, the yield management department, decide to drop the fare in hopes of increasing sales to get back to the historical sales model. If sales increase, then they will slowly increase prices back to the original price. If sales don't pick up, then they will drop them again. Remember, they are on the hook for the bet and will have to pay most of the cost of the flight, even if it's empty. Add to this, United withheld some of the seats (and some with the best seats on the plane) hoping that they could sell them to someone going from the Far East to FRA. If those seats didn't sell, then they could dump them closer to the flight. They also track how many first class seats are selling. If the front is selling slow, they can overbook more than the usual amount of coach seats, knowing that they can always pull passengers from the back (usually the frequent flyers) and seat them in first. Or better yet, they can sell those seat day of travel for a couple of hundred per seat. Anything to make revenue for that leg. These calculations are being made at least once if not twice a day.
#24
Gets Weekends Off
Joined APC: Jul 2008
Posts: 4,911
It's simple. United decided to fly SEA-FRA. To do this, they forked out money to rent planes, hire and train crews, set up a reservation system and all those other things that will make this flight happen. So about 90% of United's costs to operate this flight are fixed. In one respect, they placed a bet that they could make money flying this route.
To cash in on this bet, United looked at it's costs and other competetors fares to decide how much to ask for a ticket. United then modeled how fast tickets sold on this segment, on this date using historical data from the past. Using computers, they track how the actual sales compare to the model. So in this bad economy, sales are laging. So the guys who track this, the yield management department, decide to drop the fare in hopes of increasing sales to get back to the historical sales model. If sales increase, then they will slowly increase prices back to the original price. If sales don't pick up, then they will drop them again. Remember, they are on the hook for the bet and will have to pay most of the cost of the flight, even if it's empty. Add to this, United withheld some of the seats (and some with the best seats on the plane) hoping that they could sell them to someone going from the Far East to FRA. If those seats didn't sell, then they could dump them closer to the flight. They also track how many first class seats are selling. If the front is selling slow, they can overbook more than the usual amount of coach seats, knowing that they can always pull passengers from the back (usually the frequent flyers) and seat them in first. Or better yet, they can sell those seat day of travel for a couple of hundred per seat. Anything to make revenue for that leg. These calculations are being made at least once if not twice a day.
To cash in on this bet, United looked at it's costs and other competetors fares to decide how much to ask for a ticket. United then modeled how fast tickets sold on this segment, on this date using historical data from the past. Using computers, they track how the actual sales compare to the model. So in this bad economy, sales are laging. So the guys who track this, the yield management department, decide to drop the fare in hopes of increasing sales to get back to the historical sales model. If sales increase, then they will slowly increase prices back to the original price. If sales don't pick up, then they will drop them again. Remember, they are on the hook for the bet and will have to pay most of the cost of the flight, even if it's empty. Add to this, United withheld some of the seats (and some with the best seats on the plane) hoping that they could sell them to someone going from the Far East to FRA. If those seats didn't sell, then they could dump them closer to the flight. They also track how many first class seats are selling. If the front is selling slow, they can overbook more than the usual amount of coach seats, knowing that they can always pull passengers from the back (usually the frequent flyers) and seat them in first. Or better yet, they can sell those seat day of travel for a couple of hundred per seat. Anything to make revenue for that leg. These calculations are being made at least once if not twice a day.
#25
I believe it was developed by Robert Crandall in the early 80's in the form of Sabre (if it wasn't developed by him, he was the first to take the idea to its fullest extent).
People that have to go to Paris are no longer willing to pay $1000 for the seat while the person next to them pays $300. They should charge a set fee for all seats on a given flight.
When's the last time you asked how much the person next to you paid for their seat to Boston - either the city or the band?
Last edited by Sniper; 04-04-2009 at 08:20 AM. Reason: added text
#26
What a dumb way to run a business. If a concert doesn't sell out, do they lower the price? The answer is no. By lowering the price, you degrade the value of the seats. People that have to go to Paris are no longer willing to pay $1000 for the seat while the person next to them pays $300. They should charge a set fee for all seats on a given flight.
Lots of other good info about deregulation and it's aftermath. Sounds like a dry subject, but it's actually a pretty good read.
#27
Gets Weekends Off
Joined APC: Jul 2008
Posts: 4,911
I'd recommend you read a book called "Hard Landing." It gives an excellent history of the development of computer reservation and pricing models and how the airlines that developed them (like American) used them to put airlines that didn't have them (like people's express) out of business.
Lots of other good info about deregulation and it's aftermath. Sounds like a dry subject, but it's actually a pretty good read.
Lots of other good info about deregulation and it's aftermath. Sounds like a dry subject, but it's actually a pretty good read.
#28
Banned
Joined APC: Feb 2008
Position: The Beginnings
Posts: 1,317
I'd recommend you read a book called "Hard Landing." It gives an excellent history of the development of computer reservation and pricing models and how the airlines that developed them (like American) used them to put airlines that didn't have them (like people's express) out of business.
Lots of other good info about deregulation and it's aftermath. Sounds like a dry subject, but it's actually a pretty good read.
Lots of other good info about deregulation and it's aftermath. Sounds like a dry subject, but it's actually a pretty good read.
Excellent book. Most pilots simply have no contextual, broad-based overview of the airline business of the past 70 years. Our views tend to be extremely myopic and focused on our tiny piece of the pie. Buzzwords like "Lorezno", "B-scale", "deregulation", "featherbedding", "alter-ego carrier" and so forth generate a lot of emotion, but for the most part, there isn't any understanding of what they really mean, or where they came from.
- How did Pan Am's acquisition of National doom it to oblivion?
- Why were pilots ready, even eager, to cross a potential Eastern airlines mechanics picket line?
- Which unionized pilot group first agreed to the "B-scale" first, and more importantly, why?
- Why was deregulation of some form utterly unstoppable and inevitable?
- How did "Sabre" and "Apollo" give certain airlines a HUGE advantage, both pre and post deregulation?
- How did the Continental pilots try their hardest to stave off a takeover bid by Lorenzo, and how did the political system fail them?
#29
I've read that book before. I remember Bob Crandall comparing a seat to fruit. The seat spoils after the flight is flown. It is better to get a few dollars for that seat than no dollars. I disagreed with it when I read the book and I disagree with it now. All seats on a flight should be sold at the same price. They should use the computers to figure out what price to sell each ticket on that particular flight, but they should all cost the same. By using the current method, you might get a few extra dollars short-term, but it costs you a lot more long-term. It was very short-term thinking on Crandall's part. All airlines use it. There is a reason, the entire industry almost went bankrupt. This is just one thing I feel the airlines have been doing wrong for many years.
Hotels do it, Cruise ships do it. A whole lot of people smarter than me think it's the right thing to do. There are a lot of reasons for the bankruptcies, but I don't think yield management is one of them.
#30
Beat me to it!
Excellent book. Most pilots simply have no contextual, broad-based overview of the airline business of the past 70 years. Our views tend to be extremely myopic and focused on our tiny piece of the pie. Buzzwords like "Lorezno", "B-scale", "deregulation", "featherbedding", "alter-ego carrier" and so forth generate a lot of emotion, but for the most part, there isn't any understanding of what they really mean, or where they came from.
Excellent book. Most pilots simply have no contextual, broad-based overview of the airline business of the past 70 years. Our views tend to be extremely myopic and focused on our tiny piece of the pie. Buzzwords like "Lorezno", "B-scale", "deregulation", "featherbedding", "alter-ego carrier" and so forth generate a lot of emotion, but for the most part, there isn't any understanding of what they really mean, or where they came from.
- How did Pan Am's acquisition of National doom it to oblivion?
- Why were pilots ready, even eager, to cross a potential Eastern airlines mechanics picket line?
- Which unionized pilot group first agreed to the "B-scale" first, and more importantly, why?
- Why was deregulation of some form utterly unstoppable and inevitable?
- How did "Sabre" and "Apollo" give certain airlines a HUGE advantage, both pre and post deregulation?
- How did the Continental pilots try their hardest to stave off a takeover bid by Lorenzo, and how did the political system fail them?
Thread
Thread Starter
Forum
Replies
Last Post