Ridonculous pricing on AC biz class during peak season (China)? Business Rationale?
So I can't talk for other routes, but having studied the fares between Toronto/Vancouver to Beijing/Shanghai for the past two months.
Factoring in that airfares are roughly 20% higher than last year.
Factoring in that Tango and Tango plus fares have a wide difference.
I'm looking at flights for the rest of this week through to Monday 24-Dec. And with a semi-safe assumption that Thursday, Friday, Saturday of this week (20, 21, 22-Dec) are peak demand for the holiday for travellers to China, Biz class seats are 6k to 8k for a one way, and 12k to 15k for a round trip.
But the biz class cabins are all less than 1/3rd full just 4 days out. On Saturday/Sunday infact they are less than 25% full outbound. And R space for upgrades is wide-open!. Peak Season!! Eupgrades or Aeropeso's are able to signup without any premiums even on the direct flights.
I don't care how sharp the pencils may be in yield management, but it's clear by every measure more than a few screws are loose in their alogorithms.... If I were a shareholder, I'd be down right Pi$$ed that they cannot monetize the 75% empty J cabin during peak season, even with LMUs, I'd bet any AC business analyst that they will not be able to reach even 60% utilization in it's J Cabin on these China routes during these peak demand days....even with upgrades.... Does it take a PhD or Richard Branson type business instinct to do the obvious, (e.g. drop the biz class fares to 6k round trip, which is a steal for this time of year, and get double the revenue of their tango/tango plus customers instead of overbooking economy at $3000 and upgrading them for free into Biz....)
Thanks for running our Canadian airline into the ground... guys, what kind of profit will folks see next year? maybe 7% net profit if you're lucky???
For the record, I'll do J this weekend, YYZ-PVG on T+ and confirmed eupgrade, while my wife will do the same route for the standard 125k aeropeso redemption... all booked less than 10 days out. Just lucky, never expected the opportunity.... R space is wide open and clearing immediately for anyone still not yet booked to PEK or PVG.
a semi-safe assumption that Thursday, Friday, Saturday of this week (20, 21, 22-Dec) are peak demand for the holiday for travellers to China,
Peak demand? Are you joking? While it's true that many people like to leave China between the end of December and the end of CNY, this whole idea of China being a big holiday destination is news to me.
AC has had no problem filling the forward cabin to China/HK recently. Also note while there are T+/Latitude/Exec First flight passes to Europe, they only offer Tango to Asia (with the exception that you get 100% status miles), which doesn't even allow for upgrades.
You can book a First Class ticket from MIA to PVG/PEK on UA leaving on Dec 21, 22 or 23 for $3071 all in. So if you can make your way over to MIA, that's a heck of a deal. (Sale ends today but is good until EOS.) Think it works out of DFW too, but I haven't checked.
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The biggest problem with AC is they don't have a loyalty program.
Admittedly, and perhaps not a well written post by myself, and not logical to many...
I agree: during heavy demand, yes, prices ought to be raised, but to magnitudes beyond the competition such that demand by paid J customers drops to Nil?
And if you are not 'achieving' (not just pricing, but actually achieving) the fattest premiums possible during high demand.... then when would they try capture that profit?
Y cabin is packed... most likely with students, and permanent residents who have already set up a life here with jobs that follow the Christmas calendar etc. But 40+ seats open in J on many of those routes... Yes, we're all aware that Chinese New Year is not for another month or two, and I'll be curious to see how the pricing works in 2013 for that 2 week period.
But for this week, rather than gouging the final 5 people who won't even blink when forking over 12k for a round trip in the next few days... how about trying to go for 80% utilization by pricing $1k to $2k lower than the competition?
I would be very curious if the more aggressive revenue mgmt at places like Westjet and Porter were to charged with maximizing revenue on these AC longhauls. Again admittedly, kind of like an apples to oranges comparison...
25 to 30 empty J seats for Canada to Shanghai or Beijing out of 42 available lie-flat pods?
307 seats in Y: Lets say averaged out to $2200/each = $675,000 (not saying this assumed rate is exact)
If AC could sell say 35 seats in J out of 42 for say...$8000/round trip during high demand when others are charging $10k+....= $280,000 extra revenue... a 30% increase if it could be achieved....
But as it stands.... if half of the 10 seats in J are taken by paying folks, they are realizing between $50k and $75k perhaps....rather than approx $280k.
And yeah, I would have no issue with skewering all my assumptions to accept that perhaps the J market for these routes just isn't there yet. But they are among the largest cities in China...
I don't mind being wrong at all.... but large percentage of unsold J during heavy period is not a data point that should be dismissed altogether either.
Quote:
Originally Posted by YEG USER
Sorry, I do not follow your logic...
If the timeframe you're looking at is in fact peak travel season, does it not follow that AC would try to charge as much as possible?
Discounts would likely be offered during a time of low demand to try and fill the plane.
Of course, we're talking about AC's yield management, so why would logic factor into things....
And how do you know exactly that there is 20 or 30 or 40 seats available? Did you call AC Groupe reservations?
Sorry but your numbers seem all wrong here; and please dont come and tell us you counted the seat map as you will be shamed into never inventing these numbers ever again.
The cabin is 25% full; 10 of 40, then there are 40 seats available; you seem all over the map.
AC has had a very high load factor to asia, (somehow), and seem to be making loads of money.
One rant on FT is not going to suddenly open up a bunch of Z fares on these flights...
I don't mind being wrong at all.... but large percentage of unsold J during heavy period is not a data point that should be dismissed altogether either.
Again, the second half of December is NOT a heavy period for business travel to China. With the exception of CNY, I'm hard pressed to think of any periods are lighter.
Peak Y season and peak J season are completely different. It is very soft season for J bookings over the holidays and also in peak summer. Y fares rise to compensate the all off in J bookings. I'm sure AC has some computer talking to it telling it how to price. You can take the low ball approach, but how much are you making marginally if you're selling up form the Y cabin? Very little. They obviously think it is better for them to try to capture 1 or 2 heads paying a lot than a number of marginal upsells. Worst case scenario, they can save on catering, or oversell Y to the last minute at extortionate Y/B fares knowing they will make some top tier's day if they have to op up them.
Those F fares ex-Florida are insane, they earn 2.5x base fare, so probably about 50,000 miles,plus 1.5 EQMs! I'd go for an F excursion if I were Florida based.
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The seat map isn't always correct, is it? For my flight tomorrow to LHR and the return on Thursday, J was less than 20% full last week when I booked - from the seat map. I find it hard to believe that this would be real, and highly doubt it... if it is, then there will be some happy upgraders at the gate. I am happy now with my overpriced paid J, but the turnaround makes it work!
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Quote:
Originally Posted by canadatosiberia
The seat map isn't always correct, is it? For my flight tomorrow to LHR and the return on Thursday, J was less than 20% full last week when I booked - from the seat map. I find it hard to believe that this would be real, and highly doubt it... if it is, then there will be some happy upgraders at the gate. I am happy now with my overpriced paid J, but the turnaround makes it work!
No, the seatmap is only very loosely related to actual J availability. Many J pax do not reserve a particular seat in advance. While not conclusive, looking at J/C/D/Z/R availability is much more useful.
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Quote:
Originally Posted by Jasper2009
No, the seatmap is only very loosely related to actual J availability. Many J pax do not reserve a particular seat in advance. While not conclusive, looking at J/C/D/Z/R availability is much more useful.
Thought so - I still haven't figured out exactly how to do that, and probably won't until I lose the paid J priveleges on overseas flights.
