Originally Posted by
_kurt
I know little to nothing of revenue management so I’m asking... isn’t it always a balancing act between the loyalty program driving long-term engagement to the brand vs immediate revenue from cash customers?
Not really. The former plays almost no role in revenue management. "Loyalty program" and "long-term engagement" are not things RM teams think about much at all. There may be some executives at airlines who think in grand marketing BS terms but it is very far from front-of-mind with yield management analysts and those who immediately manage them.
In practice, yield management seeks to optimize the airline's revenue across the network one departure day at a time.
I understand your argument that the current balance is not optimal for *you* but how can you assert with such certainty that it’s not optimal for the airline?
I can say with certainty that if a passenger books away from an airline because a cabin was filled with upgraders, it was sub-optimal
for that day.
There is a core tenet of airline yield management that a cabin should NEVER be closed for sale. If a cabin is closed for sale, then theoretically you turned away a passenger who would have paid at least $1 more than the last one who booked.
I say this as an AA elite who occasionally buys an F fare on UA when AA’s schedule or fare does not meet my needs.
Sure, and if I can't buy an AA F fare because the flight was sold out then I'm either going to go on UA or DL or rent a car or just not go...
Originally Posted by
mvoight
I would tend to agree, but I expect this algorithm is not yet mature enough for seasonal traffic/etc because the number of no shows and cancellations have increased quite a bit since there is no long a charge for changing your trip.
You're overstating just how important the algorithm is. Yield analysts are constantly making manual overrides and fighting the black box.
I've posted elsewhere that one of the core issues in airline revenue management is that you have an incredibly sophisticated black box tasked with optimizing
network revenue. Individual RM teams, however, are evaluated on their
own markets.