Originally Posted by
avidflyer
1. If close in inventory control is really the issue then control the inventory...simple. If a flight is getting close to sold out then hold back the award seat....if not let us book as there is no impact.
I think you are misunderstanding what they mean about the inventory control. The issue is that they want to match, as best they can, the revenue from the award ticket (yes, the airline recognizes revenue on award tickets) to the revenue for a cash ticket. Assuming that the close-in tickets are more expensive than advance-purchase tickets, then they will want to recover that premium from the award redemption.
The concern is that people are forgoing purchasing a ticket for cash, instead choosing to book that same ticket with miles, when those miles are worth significantly less. It is not that they are concerned about too many mileage tickets leaving them no inventory to sell. FWIW, this is the same logic that lead DL to introduce the 3-tier chart, CO to no longer offer last-seat availability for general members and to raise their EasyPass rates, and for NW to have not had it in the first place.
The airline's logic is pretty much exactly the same as my own. I wouldn't spend 25k miles for a $200 ticket, but if I need to fly last minute and the cash price is $1000, then that 50k miles starts becoming attractive. The close-in fees are exactly an attempt to reduce these arbitrage opportunities.
The only risk, of course, is that these fees will end up leading to a reduction in loads, but this would assume that a significant portion of the customers booking last-minute award tickets are using them for discretionary travel that will now not be taken. While admitting this is a possibility, I also have no reason to doubt Scoop, or Jeff, or CO Insider when they say that they feel such tickets pose a significant threat to their revenue models.
Originally Posted by
avidflyer
Revenue is not the only way to improve margins. Expenses need to be in-line and they clearly are not. DL should look at its own bloated middle-management ranks to clean up their balance sheet. You can only squeeze the customer so hard..If they are actively cutting flights/capacity then they better be doing the same across the board for expenses or they are doomed.
What makes you think their middle management is bloated? DL's SG&A expenses, as a percentage of revenue seem consistent with others in the industry, including LUV. There is certainly some room to cut (there always is), but I think you are dramatically overstating the amount of fat, and seriously understating the importance of driving revenue growth. Even cost-conscious airlines like Ryannair are constantly searching for revenue enhancement opportunities.