Stop the Whipsaw

[jskibo]

Lufthansa tried a direct JFK/DUS 737 with 50 seats all business class, single price 10 years ago. Didn't work.

The biggest profitable customer is the "company travel policy." Mine requires a restricted fare coach ticket, cheapest within 2 hours of when I need to leave. Which is why a full-fare coach ticket is frequently almost the same price as a first class seat. An all-premium cabin would be very difficult to market to corporate travel buyers.

From the perspective of a couple large companies I have worked for over the past two decades:

Boeing: Domestic travel below exec level emplyees, cheapest fair available on the route. Exceptions available for flight times that accomodate schedule required. Cheapest is defined as within ~$200 of the lowest available fare before the system flags it as out of policy.
International is First class for any domestic portion and Business class on International Segments.

GE: Domestic and International travel below exec level emplyees, cheapest fair available on the route. Exceptions available for flight times that accomodate schedule required. Cheapest is defined as within ~$200 of the lowest available fare before the system flags it as out of policy. There used to be a 10 hour rule for First class, but that was recently removed.

Over the years I have kept most of my travel to AA to retain my Plat / Exec Plat status to keep the perks. A few trips I have had to move for pricing (Saudi Arabia was $12K on mixed carrier vs $15K on all One World for example). I also wouldn't fly Southwest for business and managed to avoid the "Out of Policy" police.

 

[SeanD]

Ummm, no, not really. About half of the passengers in the back have a fair bit of loyalty. That's why there are loyalty programs that spend boatloads of marketing money on high value customers. And they are pretty valuable - 2% of the customers generally spend about 40% of the revenue the carrier sees, usually on full-fare, last minute tickets. Or corporate agreements that dictate the use of that particular carrier.

The cheap seats sold on Orbitz? The airline pricing people know that they can't sell every seat at a profit. But better to take $200 in revenue than the $0 in revenue they would get leaving the seat empty. The deeply discounted seats still help the bottom line. They let you operate bigger equipment, which is more efficient, and makes more room for mail and air cargo, which is very profitable. Operators that have attempted single class - single price routes have not been successful in the past, business and leisure travel are just inherently different products.

I get what your saying and I dont fully disagree with you. However, lets say a pax is loyal to airline A. Now lets say airline As competitor is suddenly offering cheap tickets from pax home airport to his or hers favorite destinations, without out a connection in A's hub. Airline A always has a connection. My best guess is that pax is going to give airline A's competitor a shot. Why? Because its cheap and more efficient. Not to mention, there really aren't too many incentives holding them to airline A unless your in the minority of the 1 million mile club.
Which marketing campaign is going to be more effective. A campaign offering triple milage points with the shot of an upgrade after 250,000 miles or the campaign offering $80 one way fares?

 

[drunkenbeagle]

From the perspective of a couple large companies I have worked for over the past two decades:
...
I also wouldn't fly Southwest for business and managed to avoid the "Out of Policy" police.

I'm not allowed to fly Southwest for business, but I think that is unique to my employer.

Current employer: $50 window before the system flags taking a different flight (used to be $20). I can get exceptions for schedule, but it usually takes a few days to get permission. It is usually easier to just not work that day and travel / read a book.

Last employer (10 years ago): Business class for flights over 5 hours, biz class for all international. Non-stops were always allowed. They preferred us to be working instead of trying to save a few bucks getting there. I flew across the Atlantic every other week. Biz class was probably worth it, since you could realistically go into the office at 9 after a flight into LHR. In coach I usually needed a nap and a shower afterwards.

 

[drunkenbeagle]

I get what your saying and I dont fully disagree with you. However, lets say a pax is loyal to airline A. Now lets say airline As competitor is suddenly offering cheap tickets from pax home airport to his or hers favorite destinations, without out a connection in A's hub. Airline A always has a connection. My best guess is that pax is going to give airline A's competitor a shot. Why? Because its cheap. Not to mention, there really aren't many incentives holding them to airline A.

Airline A's loyalty program probably means a seat in First (instead of coach) and free checked bags, and free standby on other flights. The miles don't matter much, really.

I don't normally check bags, but the free standby and free upgrades are enough to tip the balance for me.

My company won't generally pay for me to take a different flight when plans change, so it is nice to be able to get on another without paying out of pocket.

Most business markets are served by a dominant carrier anyway. (Tampa is one of the few that isn't)

 

[jskibo]

I get what your saying and I dont fully disagree with you. However, lets say a pax is loyal to airline A. Now lets say airline As competitor is suddenly offering cheap tickets from pax home airport to his or hers favorite destinations, without out a connection in A's hub. Airline A always has a connection. My best guess is that pax is going to give airline A's competitor a shot. Why? Because its cheap. Not to mention, there really aren't many incentives holding them to airline A.
Which marketing campaign is going to be more effective. A campaign offering triple milage points with the shot of an upgrade after 250,000 miles or the campaign offering $80 one way fares?

I pay more to keep it on airline A (or AA in my case). Even if its more connections involved.
I may be unique or in the minority, but for me I don't have to worry about bag fees, I build tons of miles for use when we ship the kids to grandma or take them on vacation. The wife and I have an Admiral's club membership so I want to be departing or arriving in a terminal with the club in it. I generally feel I get treated a bit better and seem to have better luck having someone already rebook me when there's a delay or issue (without having to stand behind 300 other's on that 777 flight).

My wife though has recently split her loyalty after reaching 2 Million on AA and is now working on 1 Million for Delta.

 

[drunkenbeagle]

My wife though has recently split her loyalty after reaching 2 Million on AA and is now working on 1 Million for Delta.

The Platinum Medallion service I've seen has been way way better than what I got as executive plat on AA.

 

[ClearedToThe]

The industry came full circle when gojet pilots starting "liking" the Stop The Whipsaw page on facebook.

 

[jskibo]

The Platinum Medallion service I've seen has been way way better than what I got as executive plat on AA.

You're right. I flew a lot of Delta when I worked in Philly. I didn't have to worry about the silly upgrade segment coupons, almost always got first (Except ATL to SJC for some reason), and was treated well at the outstations and on the phone. Heck, I was on a cheap Orbitz ticket from St. Petersburg Russia through CDG to ATL and they upgraded me to Business The ATL gate agents were by and large the worst service and attitude I have ever received (2001 - 2007 timeframe). I'm normally the "Hey, can you help me here..." kind of guy, not the idiot in a rage becuase they didn't give him first, but almost every agent I ran across was a complete B.... from the word go....

 

[SeanD]

Im sure we can probably all agree that the percentage of loyal customers is far less then the percentage of those who purchased their tickets based on cost.

 

[drunkenbeagle]

Im sure we can probably all agree that the percentage of loyal customers is far less then the percentage of those who purchased their tickets based on cost.

Customers, yes.

Passengers, no.

 

[MikeD]

I'm not allowed to fly Southwest for business, but I think that is unique to my employer.

Curiously, why? For me, there is the govt carrier (currently UAL, it seems; it was AA) that we're supposed to take, unless another fare is equal or cheaper, then we can take that one, just have to make a remark in justifications. I don't really care for UAL; AA I like. But SWA often comes in cheaper even if they're a little more expensive, because I don't have to claim checked baggage fees with them, normally a $50 savings ($25 each way), so often SWA becomes the carrier because I can justify the cost. AA comes in fairly good still too.

 

[drunkenbeagle]

Curiously, why?

No idea why, but one of our executives was a form AMR CEO. That policy may be over anyway, I don't usually travel on SWA routes.

 

[Binet-Simon]

I don't really know what STW plans to do to carry out their objectives. But I think it is worth noting that certain things are illegal and counterproductive, so that STW doesn't go down that route.

Agreed

 

[SlumTodd_Millionaire]

I'm not allowed to fly Southwest for business, but I think that is unique to my employer.

I like your employer.

But not completely unique. I put it in my own company's employee handbook. Not that anyone has to do much business travel for our business, but it makes me feel good to have it in there.

 

[rocketman5150]

Like WacoFan says, a lot of misplaced blame going on here. Don't blame the customer, they pay what mainline dictates they pay. Remember, we are getting the scraps that are left over that they don't want to fly, because they don't have the airplanes small enough to justify the cost, or some bean counter says it's cheaper for a regional to do it.

If you want to put blame on someone, blame the guys who are negotiating the contracts. And not just at one carrier.

There is no "blame" here. The airline charges what the market will bear, which is another way of saying that customers only pay for what they perceive as a good value.