Blumie

The strategy is to generate as much revenue as possible from a limited inventory of seats.

freeupgrade

Just a theory, as I did terrible in economics in college - however, my guess is that AA would rather get some "normal" revenue from the empty F seat, rather than have to give it away to an EXP (as an electronic upgrade) , and gain $Zero revenue from the seat.

Also, I am sure AA realizes that (at some point) they are competing with other carriers, and offers "loss-leader fares" to capture whatever revenue they can at the last minute - i.e. Last minute traveler is comparing fares between UA and AA. Example: Desperate traveler sees F fare on AA, and AA F fare is lower than last-minute UA Y fare - guess what airline pax buys ticket on?

Again, just theory on my part. Hope this helps.

freeupgrade

Exactly - well said. Please also see my boring economic theories below.

fotographer

Please let me know how close those days are.. waiting to book a few trips in Jan

Stripe

It's also possible that the Y fare is fully refundable and the F fare has restrictions.

Exec_Plat

Same exact conditons on both fares? Same change fees? F isnt really a Y-Up?

Also keep in mind that inventory on one flight segment can 'interact' with other fares and routings. AA may need to keep certain fare buckets open on one flight to allow fares on other planes that they need to sell. SUre, they can restrict fares to one segment or another by restricting flights in the published fares (so that cheaper F seat you see cannot be used for that particular point to point routing but COULD be used if bundled with other segments), but this is a much slower process that RM changing class availability.

IME

mvoight

Exactly.........Otherwise this wouldn't be logical.

grrizzli

As was discussed here a few weeks ago, it is also possible that the F fare is not a first class fare at all but a coach fare in disguise. But you would need to subscribe to a third-party website to get the full fare code information and educate yourself to understand fare codes better than most AA customer service agents do in order to figure this out.

Antarius

I have noticed this a few times where the discount Y buckets are gone leaving full Y that costs more than discount J/F. If you catch it right after this happens, F is less than Y. It appears that RM does some re-processing at some point and maybe releases more inventory in discount (although more expensive than previously) making Y less than F.

Basing the above on business travel. Sometimes I end up with F instead of Y as it is cheaper but a coworker who books 3 hours later has Y cheaper than F (and vice versa).

jordyn

I think these fares are basically always errors in AA's yield management. It may be reasonable for first to be only slightly more expensive than coach, but unless you assume there is some class of people who prefers coach enough to pay a premium for it, then there should always be some coach fare that is available for slightly less money than the equivalent first class fare; otherwise you risk selling out of the higher quality product faster and at a lower price than the worse product.

Especially given the lack of restrictions on First fares in the new pricing regime, I think most of the rationalizations here fail to hold up to much scrutiny. Even if it's true that the coach fares have fewer restrictions than the cheaper first fares, AA is doing itself a disservice by not selling a coach fare that is at least slightly cheaper than the available first fare with equivalent levels of restrictions. They already have a separate option for buying unrestricted tickets, so people that intentionally want to buy a ticket without restrictions can do so at a higher price.

Often1

1. OP uses terms such as Y & F, but I suspect that he is referring to Economy & First Class cabins, not to fare buckets. It is entirely possible that a fully-refundable Economy ticket costs less than a restricted First Class seat because many businesses pay for flexibility, not comfort.

2. AA, like all carriers, handles yield management on a statistically significant basis. It doesn't work for every flight. When it doesn't, AA may wind up selling seats than, on average, it would. The alternative of giving them away as freebies makes little sense because most of the cost of operating a segment is baked in already.

jordyn

Right, but they have a "Refundable" option already. AA doesn't let you specify more granular levels of restriction, so there's no reasonable way for people to shop for other levels of restrictiveness.

It's reasonable for AA to offer a refundable coach fare that is cheaper than a restricted first fare, but they're shooting themselves in the foot to not also have a restricted coach fare for slightly less than the first fare too.

(I agree this happens because yield management works in aggregate; it still doesn't mean that it's good for AA when it happens.)

Exec_Plat

You fail to consider that fares and classes span both the segment we are discussing as well as other possible fares/routings... when this happens you can always find 'distortions' that seem to go against logic. AA cannot instantly change fares, and may indeed wish to keep cheap F inventory on one flight to sell more expensive F inventory on another. (not F, but perhaps P, etc)


Agree. Over time they get better with constructing fares that are relatively static, and managing revenue (that can be done continuously). Personally I think they use these 'errors' or anomalies to fine tune fares and specifically the flight rules (day of travel, routing, flight numbers) on those fares.


if they could continuously alter fares and inventory, it would be a different story.

DWFI

There definitely is a class of people like that.
I know several companies where people have to fly Y and simply cannot purchase paid F under any circumstances because it looks bad to someone (often the client) or it's just a blanket policy for people of their pay grade/level.
More common than you think.

hillrider

+1

Sounds like a great way to benefit from all those company policies that won't allow employees to purchase premium cabin tickets no matter what the cost!