Originally Posted by
bernardd
Utter rubbish. Airline seats are only commodities because the managers of the airlines have encouraged us to think of them in that way.
The gas analogy breaks down very quickly anyway - gas is measureable and conforms to published quality standards an is interchangeable. Airline seats are not - one reason I don't use JetBlue much to the West Coast is because the scheduling is lousy. There are also perceptions of quality. It's the role of the managers to build on those, not keep filling us with the lowest price fallacy, which may only applies to a small sub-set of infrequent travellers.
You've really got stuck on this model. Moses didn't come down the mountain with this model carved in tablets of stone you know.
First, airlines sell seats in at least five ways:
1) they cut significant corporate deals on annual and multi-year basis. These may be discount-sensitive, but they're not driven by comparison shopping in exactly the same way
2) they sell a lot of seats on their own web site, part of which is driven by loyalty, but part also by people flipping between WN, CO, AA etc.
3) some are still sold through travel agents, who don't always offer the cheapest deal, and don't sell WN anyway
4) some probably get close to 10% of their revenue from loyalty schemes, particularly credit cards
5) finally, some seats are sold on sites where price is sensitive, such as Expedia & Orbitz, who also don't sell WN. I don't know what percentage of total revenue this represents but it's not the majority.
So, if the mangers have the revenue tail wagging the dog then, if they're competent, they do something about it, like develop different sales channels.
FWIW I think most of these sites are fundamentally flawed because they don't offer the opportunity to up-sell. Now I come to think of it, despite the number of carriers offering PE products from the US, none of the US sites even offer PE so they're basically an incestuous mess that the US carriers have brought upon themselves and which they just might be wise to junk forthwith.
We can go back and forth all day on this. The facts have been proven, consumers treat airline seats as commodities. And while you might not agree because of your own requirements for travel, you are not the majority.
On your other points.
1. Corporate deals are often O&D specific or are volume driven, which is only a limited set of passengers.
2. Of course they do, and the pricing is still sitting on the shelf in front of them. Whether it's toggling between CO.com and AA.com the price is still transparent in front of them to choose. Doesn't change my assertions.
3. Travel agents can sell WN as long as they use Sabre (which is the vast majority). Outside corporate travel, travel agency sales is tiny.
4. Sure. But most travelers are members of multiple programs and their individual elasticity is nearly impossible to calculate at the time of booking. If UA and CO are the $100 different, and you still get your FF miles. Most will book the cheapest.
Have any ideas for different sales channels?
And why would Orbitz or Expedia offer up sells? They get paid a flat rate by the airlines regardless of the ticket price. They just want you to use their channel rather than going to the individual airlines' website.
Plus you continue to ignore all the other factors I've mentioned. Therefore this is a pointless discussion.