Originally Posted by
FlyingProf
So -- the question is, just how much revenue do these mileage runs represent? On the one hand, most MR are done at the lowest cost possible -- on the other, this means they are filling what otherwise might be empty seats, so the marginal cost of carrying MR passengers is very low.
I'd argue the profit margin on a ticket which represents very low revenue per mile is extremely low and the type of business which the airline least prefers. The inventory for low price tickets is fairly limited and static, and I don't buy the argument that it would "go empty" as these price tickets target the ultra price sensitive, airline preference insensitive, leisure travelers that the inventory for those fare classes would rarely, rarely, ever go unsold.
Compound that with additional costs that an elite status flier would bring (double mileage issuance, payments to lounges on international runs, increased benefits and compensation during IRROPS, and not to mention indirect cost impact of decreased revenue per high level status flier ), I would argue that a 1k doing a mileage run is some of the worst possible business for the airline.
At the end of the day, the essence of the run is the traveler taking advantage of a pricing inefficiency in at such a rate that the benefits > cost. It's a zero sum game, and if the customer is winning, the business is not as profitable.
From an airline perspective, I would be OK with my passengers not mileage running (and inflating the population of higher level elite status) and forgo that incremental top-line boost and miniscule, if at all, bottom line increase.