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No Wonder AA is so profitable [fully flex first class fare price]

No Wonder AA is so profitable [fully flex first class fare price]

Old Feb 14, 16, 1:21 pm
  #1  
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No Wonder AA is so profitable [fully flex first class fare price]

Hows this for a One Way First Class Fare ORD-MCO on the website

Chicago to Orlando
1 Adult
Saturday January 7, 2017
Your Trip Price:
$6,441.10 USD

Same on Expedia
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Old Feb 14, 16, 1:24 pm
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Originally Posted by UncleDude View Post
Hows this for a One Way First Class Fare ORD-MCO on the website

Chicago to Orlando
1 Adult
Saturday January 7, 2017
Your Trip Price:
$6,441.10 USD
Are you trying to sell newspapers???

That's a full-fare flexible First Class one-way.

The same flight in discount First Class one-way is $390.
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Old Feb 14, 16, 1:41 pm
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Old Feb 14, 16, 3:24 pm
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Originally Posted by UncleDude View Post
Hows this for a One Way First Class Fare ORD-MCO on the website

Chicago to Orlando
1 Adult
Saturday January 7, 2017
Your Trip Price:
$6,441.10 USD

Same on Expedia
That is for a fully refundable ticket that allows travel on any route pretty much no matter how silly or transcontinental, 2 stopovers of any duration (up to the total ticket validity of a year), probably allows travel on other airlines, etc, etc. It's like the maximum hotel rate written on the hotel room door, actual rates are always lower.

Almost noone buys such a ticket. The standing joke is that the full F, J or Y fares only exist to calculate proportional discount or fare allowance for industry discount, corporate travel allowance, etc since noone ever buys one.
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Old Feb 14, 16, 4:23 pm
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Originally Posted by flatlander View Post
That is for a fully refundable ticket that allows travel on any route pretty much no matter how silly or transcontinental, 2 stopovers of any duration (up to the total ticket validity of a year), probably allows travel on other airlines, etc, etc. It's like the maximum hotel rate written on the hotel room door, actual rates are always lower.

Almost noone buys such a ticket. The standing joke is that the full F, J or Y fares only exist to calculate proportional discount or fare allowance for industry discount, corporate travel allowance, etc since noone ever buys one.
I think all rev mgmt systems employ this, having one base fare and pivoting everything off of it.
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Old Feb 14, 16, 6:02 pm
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Originally Posted by matrixwalker2012 View Post
I think all rev mgmt systems employ this, having one base fare and pivoting everything off of it.
RM optimization systems allocate inventory based on past performance by bucket (done automatically unless the yield management analyst inhibits it, though the analyst still has to provide the influence level, however the base or lowest bucket is set by the analyst through the required influence to achieve this). The actual fare prices are established by the pricing analysts by filing fare batches through ATPCO.

This fare in particular is outrageous considering that it exceeds the full fare F rate of markets such as JFK-LAX in 3 class F. However, it isn't surprising considering the poor quality of analysts AA hires... I have seen too many cases now of domestic flights operated by 737s having a J fare of nearly $10,000 while the full refundable F far loaded for the flight is only $1,000, seriously J class on a domestic 2-class flight?!?!?!?!
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Old Feb 14, 16, 6:23 pm
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Originally Posted by fly747first View Post
However, it isn't surprising considering the poor quality of analysts AA hires...
Isn't AA generally considered to have an excellent RM department?
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Old Feb 14, 16, 6:29 pm
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No one actually pays that fare..or very very few.
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Old Feb 14, 16, 7:36 pm
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It's hard to be profitable when the revenue line is $0. No one buys this fare.

OP doesn't seem to understand the difference between price, revenue, and profit.
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Old Feb 14, 16, 8:16 pm
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Originally Posted by grahampros View Post
No one actually pays that fare..or very very few.
I would actually go with nobody.
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Old Feb 14, 16, 10:49 pm
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Originally Posted by rjw242 View Post
Isn't AA generally considered to have an excellent RM department?
I wouldn't say excellent, but definitely better than UA's for sure... I don't know if you remember Smisek's statement last year in which he admitted that UA had not been as profitable as its competitors due to inaccurate forecasts (done by a huge team of RM underachievers, haha)--that alone should have gotten him fired even before the corruption scandal.

Typically, excellence in RM is reflected not only through consistent high yields without killing load factors, but also, in terms of final inventory allocation needed to fill the analyst's assigned flights--an analyst with exceptional forecasting skills would be able to close one bucket without ever having to reopen it and thereby fill the flight with higher buckets. However, too often, I see AA's analysts being too aggressive then panicking at the last minute and giving the flight away at the lowest buckets.
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Old Feb 14, 16, 11:49 pm
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Originally Posted by rjw242 View Post
Isn't AA generally considered to have an excellent RM department?
Consider the information proffered in this thread on the subject "for entertainment value only."
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Old Feb 17, 16, 9:32 pm
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Originally Posted by rjw242 View Post
Isn't AA generally considered to have an excellent RM department?
Back in the heyday of Bob Crandall, sure. Now? Well, it's been many many many years since Bob Crandall ran AA.
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