Originally Posted by
spin88
Way to simple, and misses a lot via the simplicity.
You just proved the same thing that I did.
Originally Posted by
spin88
Again, every part of the plane contributes, and the key passengers are those who will pay more than the average price (i.e. non-discount, usually later purchase business travelers) in all cabins. BUT, and this is what this example is designed to show, even the discount traveler is important. Have too bad of a rep, have some of this traffic skip you, and it will kill the bottom line just as easily.
Did I say otherwise?
Why is this so controversial? Most (not all) individual Y passengers are unprofitable, but they make it up in volume. We're saying the same thing.
UA is betting that they can continue to attract the same amount of traffic, at roughly the same price points, with the revamped MileagePlus program. You disagree. I neither agree nor disagree. Time will tell if they are correct.
Honestly, the basic premise of this question seems flawed to me. I don't want to be United's best customer, at least as far as the Revenue Management people are concerned. I'd prefer to be their worst.
Originally Posted by
JimInOhio
Thank you... that's helpful to understand where you're coming from. What I'm failing to understand, though, is the $125 Y fare. In reality, that Y fare probably varies from $80 to $750 depending on how much each passenger paid as an individual. There's no way that $750 passenger (and many more) are individually unprofitable.
Correct; I kept it simple for the purpose of illustration. Yes, people who are purchasing expensive Y fares -- which are often pricier than discount J -- are individually profitable. But that's a very small number of passengers. That's why I've been trying to say "most Y" passengers are individually unprofitable. Some are, but you can't build an airline around serving only them.