The below is from my brother, to whom I sent a link to this thread. He did some in depth work on this topic several years ago.

Updated by The Brother:
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Wow, that's quite a B-board. Makes me really appreciate that I am no longer
a precious-metal-card frequent flyer!

There are some astute people there. Not many people are aware that Covia/Apollo has 331 days in advance hard-wired, much less that the airlines don't bother setting levels for F until a few months before departure.

It's interesting that plutonium-card flyers know more about the system than some res agents, but not surprising since they can focus deeply on a narrow subset of rules whereas the res agents require broad knowledge of a vast system. Presumably all readers of this board recognize the value of being nice to the res agents, who are doing the best they can in a tough job.

The economics of yield management (actually Revenue Management is a better term) for F (which is generally trans-oceanic for UA) are simple: the downside risk of turning away a paying F because seats were booked by freebies is huge; hence it is optimal to reserve large numbers of seats for paying F-class pax, even if the probability of selling those seats is small. Then fill up the cabin with whoever at the last minute. (As an aside, the crazy mix of pax in F makes forecasting F much more challenging than Y unless the data gathering systems are bulletproof, which is rare.)

If the airlines assigned a $ value to the bonus miles they took in (and made it greater than the miniscule marginal cost of carriage), they could include that in the RM algorithms and would likely reserve in F for frequent flyer miles. However, they have to move gingerly in this regard because miles are not taxed as income nor are they carried as liabilities on the airlines' books, and if they assign $ to them then a huge can of worms opens up.

So an interesting question is would people like to have the miles taxed as income but have more seats available? I think we know the answer to that!


[This message has been edited by TravelinWilly (edited 11-22-2000).]