yyznomad

Some of these prices are just stupid. You could've paid that upfront for regular P/C/Z round trip! Makes zero sense.

superangrypenguin

Glass half full glass half empty.

If you think about it, it's not the prices that are stupid. People pay for these fares (which I agree would make them not very bright). But AC would not charge prices like this is no one bought them (especially with J cabins leaving with empty seats).

So someone somewhere is buying these....my guess: executives with a whole wad of cash who work for companies who only pay for Y. (IBM say as one of the companies that do this based on what I read on here). In this case, then the person would pay for those LMU fares.

YOWgary

You can tell me AC revenue management aren't just throwing darts at a dartboard, but I'll never believe you.

yyznomad

Yeah I know, but it's still stupid. If AC was smart, they would know the demographic it is offering the LMU to and adjust the price accordingly. Period.

superangrypenguin

Since it was asked that we try not to talk about LMU fares in the LMU thread and just to try and post the numbers and that's it, I thought I'd start a new thread.

It has been discussed again and again who pays for the LMU fares and why is it priced where it is

I'll copy and paste my guess as to the first question, and then try to guess the answer to the second question.

1). If you think about it, it's not the prices that are stupid. People pay for these fares (which I agree would make them not very bright). But AC would not charge prices like this is no one bought them (especially with J cabins leaving with empty seats).

So someone somewhere is buying these....my guess: executives with a whole wad of cash who work for companies who only pay for Y. (IBM say as one of the companies that do this based on what I read on here). In this case, then the person would pay for those LMU fares.

2) Well AC has said that they want to preserve the integrity of the J cabin pricing. So they want us to eUp or pay up. I don't think AC has the intention to sell every seat possible that they can by way of the LMU program. I think AC full well knows that it's pricing is insane, but if they can "on occassion" sell someone a seat at say $200/hour or something which most of us think is nuts (or higher than that $/hour), they laugh all the way to the bank. E.g. they're after the one off's, but NOT to sell every seat because that would go against their philosophy of the integrity preservation thing.

This would also explain why they haven't done an auctioning thing of these seats. I mean if they don't have the intention to actually sell them, then they will price it at whatever they want, and then will well...sell them, rarely.

MB24

Of course I agree. When I checked in, J=1, so it seems that they were essentially trying to sell LMU at a very slight discount to the last J seat.

DrPete

My guess is they are are using a quite common strategy of pricing things as high as possible to almost sell out.

If they have a lot of unused inventory, the pricing is too high and are not getting maxium total $. Similarly, if they are 100% full the prices are too low, and they could have made more money.

I suspect there are other factors like having space for the occasional very last minute ticket sale at a huge profit that factor in the we simply dont see.

And as you implied, they are also pricing things to what the market will bear which may be way higher than many of us would like, but somebody is apparently paying those prices!

YOWgary

What baffles me is the 500-1000% price fluctuation for the same product day-over-day.

Of course, sometimes markets aren't logical or predictable, but show me another customer-service product with this level of price volatility.

tracon

I don't think many buy these fares. The sole purpose of LMU is to provide the illusion that the seats are expensive. Spend months charging $699 for a transcon LMU. Any every so often charge $399-$499 which someone will probably bite because they think they`re getting a deal.


Are executives really part of a companies Y only policy? Specifically for 8-10 hour overnights? I can't imagine anyone who makes enough to have "wads of cash" would buy an LMU. And those that do are probably re expensing it somehow.
At that level it's just a rejigging of the numbers to provide the illusion of Y travel.

And to support this, a year ago AC sold Z fares to South Africa for $2500.

We should also have a thread on LMU on other airlines so we have something to compare to.

superangrypenguin

Yes, they are. (I'll tie this back into LMU discussions in the next paragraph. People have reported talking to IBM execs on a Tango fare (last week IIRC) on here. All the IBMers I've met all fly in Y. Our own company is the same way. Execs all in Y, and it has been like this since our founding many decades ago. J is only allowed on flights over 8 hours if one can reasonably explain they will do these flights more than 4 x a year with approval from the area president. (so in reality this never happens b/c people don't request approval).

So, this being the case of two very large IT firms and them being very profitable, then this is the only time I think that people will buy these fares. Company expenses Y, person pays up to J for a LMU.

I myself did this as an intern when I wasn't a FF. I expensed a tango fare as an intern, and then at the time I bought up to J. Every time for the X # of trips across Canada. (I lost count, but <10). Were they more reasonable at the time, yes. About $100/hour for the LMU.

I cannot think of other reasons why one would buy a LMU. As discussed, LMU's are priced at a ridiculous $ simply because LMU + price of ticket > price of cheapest J at time of booking. So logically, price of ticket has to be expensed, otherwise why would you buy the LMU?

As far as the comment (tracon) about a LMU being $699 and then the odd $399 and people buying them because it's a deal - how would the non frequent flier know that they are getting a deal? They wouldn't. We all would...and we would buy it at $399 (as an example) b/c we know it's cheaper.

To Dr Pete's point, no, I disagree. If they are pricing it to almost sell out, then we wouldn't be able to eupgrade so easily now (confirmed at time of request) and there wouldn't be so many staff in J. Plus, it ruins the integrity of the J cabin which AC wants.

To yvrgary's point, sorry. Explain please? I don't see the price fluctuation. YYZ YVR is almost always around $650 as an example (in recent times) YYZ YUL is always around $130. I don't see the 500-1000% fluctuation that you mention. Perhaps you have an example that you can share? I'd certainly like to know.

cperciva

This makes perfect sense to me -- it suggests that they're pricing LMUs based on the number of seats they want to move. In oversold-Y situations they might offer crazy-cheap LMUs because if nobody takes them they'll end up with op-ups anyway, whereas if there's only one seat available they'll want the highest possible price for it.

The closest analogy I can think of is electricity prices: During peak times for unpredictable energy sources (occasionally wind, but usually solar) the grid price will drop below zero because there's so much supply and it has to go somewhere; this is the situation where Air Canada hands out op-ups.

If Air Canada's IT was better, they could probably get a good yield on "SDC LMUs", i.e., when people check in, offer them the option of paying to upgrade into business class on a different flight; given that load management is one of the prototypical "hard problems" of the airline industry, this could enable them to sell more tickets too. Realistically though, I doubt Air Canada's legacy systems would be able to handle something like this...

pitz

I suspect the LMU offers, which are done without deference to the hard-coded fare rules, are run on a completely different system which interfaces to the old-fashioned traditional reservations system. It basically has an inventory with which it can work with on an autonomous basis, and can access full-J fares at full-J pricing as a last resort.

So when we see the insane offers such as $5000 for an upgrade on a TATL or TPAC segment, that's likely the differential between the paid fare, and a walk-up paid-full-J fare.

I agree with others, if they started to, through the LMU mechanism, discount or make buying LMU's so predictable, then eventually customers would start to game the system. Same with upgrades to Altitude members. Its better to let the J cabin fly mostly empty, than to create a situation where customers deliberately will fly on the emptier flights simply because they're practically guaranteed an upgrade.

pitz

I think you're missing one important point, and that is, LMU's are somewhat of an impulse purchase for some people. Just like lottery tickets, and most of the stuff you see being flogged in the shopping malls. Have a few beers, go to the airport with a bank account flush with quarterly bonus money, and that's a recipe for a certain chunk of the population to hit the button to do it. A travelling salesman might do it if they just hit the commission jackpot on a sale. Etc.

These are people who often don't act on complete rationality. And they're usually not in a position to book even a discounted-J at the time of booking. Circumstances and emotions change, and the LMU's attempt to monetize some of this.

cperciva

I agree to some extent, but my point was that this isn't a zero-sum game: If Air Canada can shift traffic between flights, they can sell more seats -- or alternatively, reduce the size of the J cabin without losing any J revenue.

pitz

In most cases at larger companies, and in government, I doubt it. The loophole is that they buy a full-fare Y as a walk-up or very short notice fare. And actually travel in J either as an upgrade, or as something they expense separately. The fare difference is negligible between Latitude and Business.

NW, for a while, even ran a promotion, "pay full fare economy, fly in business", spelling it out in plain-English to anyone who didn't know how the jig worked. Knowing full well that they were targeting executives at companies that had an economy-only policy.