Here's an example of how yields work.

Suppose you have 400 people who want to go to LHR. 200 of them are willing to pay anything up to $1000 for their ticket. The other 200 will only pay up to $500 for their ticket; they will stay home if the prices are any higher. If AC offered seats at $500 each, all 400 people would buy them. AC would almost fill a 747 and they would get 400 x $500 = $200000 in revenue. But if they flew a 767 and offered seats at $1000 each, they would still get 200 x $1000 = $200000 in revenue and almost fill the 767. The 767 is much cheaper to operate, so AC would be better off with this option.

It gets very complicated because there are dozens of different fares offered on every flight (N,L,Q, etc., and each class sometimes has several different prices) and several different types of planes that can be used between YYZ and LHR (747, 340, 330, 767).

[This message has been edited by StuMcIlwain (edited 04-01-2003).]