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Old Aug 25, 19, 5:45 am
  #34  
Globaliser
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Join Date: Aug 2002
Location: London
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Originally Posted by PlatinumScum View Post
OP here. Apologies for taking so long to come back to this thread. I would like to clarify my original post and respond to a few of the points made above.
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  4. BA is maximizing revenue. Except they're not. People who weren't willing to pay a $1000 fare difference to fly in Club are (very) unlikely to pay $1000 for an airport upgrade. This is born out by my view of the Club World cabin from the first row of WT+, as well as the comments that I've read in the AUP thread.
Of course, I'm sure that you'd be the first person to recognise that your opinion is based on only a minuscule fraction of the information that BA has to base its decisions on. In particular, your view appears to be based on an analysis of the thoughts that people on this one flight might have in relation to only this one flight in isolation, when BA knows that purchasing choices are made on a much wider basis than that. Your point completely omits any consideration of the concept of market discipline, which is a very important part of airline pricing strategies - how do purchasers react over time to the successes and failures of their attempts to get more out of the airline for less money. It also assumes that the person who decides whether or not to pay an additional $1,000 for a Club ticket is the same person who decides whether or not to pay an additional $1,000 for an airport upgrade to Club, when it very often isn't.

To take an ultra-simplified hypothetical example, a person who flies CW four times a year might start off thinking that they'll save $750 on their original ticket because they might get an airport upgrade for $500. But when they find that an airport upgrade is $1,000, they might pay the extra $750 next time. BA might not get the extra $500 the first time and the CW seat might fly empty on the first flight, but BA might then get $750 x 3 extra over the course of the following year.

That's not to say that BA will always get it right. But the one thing of which we can all be confident is that BA has infinitely more data than we do about whether or not the various approaches work, as well as the ability to experiment and carry out A/B testing of different approaches. Remember that this is an industry in which people are said to be happy to sell their grandmothers to get a 3% improvement in some key metric. None of us individually have any idea about whether a particular pricing model might actually generate an incremental improvement of that order. We are certainly not in a position to say that BA is definitely "not" maximising revenue by pricing these upgrades in the way that it is.
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