Dave Noble

not really - it doesn't matter that seats go empty on some flights - what matters is what is earned overall

Being able to pay $75 and get on an earlier flight is an option for those that value getting to their destination earlier without the requirement of having to buy a flexible ticket

No one is being forced to take the option up - but I also see no good reason to have a sulk and leave poor teddy out of the warmth of the pram when the airline states that this is the price

Which is the better option for passenger
(a) have possibility to pay $75 and be able to travel earlier
(b) have to wait for booked flight regardless

Which will make more revenue for the airline
(a) charging $75 to those that want to change to a different flight
(b) do it for free

rufflesinc

If the passenger's original plans were based on the (b), then that depends on what the passenger could be able to do with the new time vs f&b on AA's dime in the AC
You ignore that fact that the airline now has a freed up seat on a later flight and filled up a seat on an earlier flight.
Oh you can bet that I will make the most of my layover if I have lounge access and also not help out the airline if they need whatevs, if they feel like gouging a fee that costs them nothing.

Gig103

What does that even mean? I can't imagine eating $75 worth of soup and carrots (edit: referencing trying to "make the most" of an Admirals Club visit), and how is the airline asking you for help?

rufflesinc

By getting on an earlier flight

Dave Noble

So what? there is an empty seat. unless there is an oversell situation on the flight that the passenger is booked on, then it doesn't matter

The passenger is not doing the airline a favour by offering to get on an earlier ( or later flight ) - the passenger is doing it because it benefits the passenger

rufflesinc

It means that no one is losing a seat

The passenger is not doing the airline a favour by offering to get on an earlier ( or later flight ) [/QUOTE]
The passenger is doing the favor by going on an earlier flight and thus relieving the airline of a future risk.
No, because it benefits both.

Dave Noble

Who says that anyone is losing a seat? It is obviously not viewed as a benefit by the airline to give a free change to the passenger vs charging for it

If the passenger is just doing the airline a favour by getting on the earlier flight, then no reason to be disappointed if the airline does the passenger a favour and saves the passenger from being put up and chooses not to take them up on their kind and generous offer

Alternatively it may be that the airline thinks that it is the passenger that is looking for a benefit of travelling on another flight and so has in place a charging structure to gain revenue from these passengers that want to buy a ticket that has change restrictions and also want to make changes on the day of travel

rufflesinc

The airline is not losing a passenger who would have paid for that seat
"put up"? What does that even mean?
And that is what bothers some people, that there's zero cost to the airline at that point, yet they nickel and dime people.

muishkin

And if you can charge them $75 for it then even better! You mentioned adaptive pricing i.e. AA float the price of the SDFC based on current supply/demand, however that is likely not practical because the information required is simply not there and the adaptive algorithm itself might not generalize well to the long run since it's likely based on short-term data. Whatever AA/Delta/United analysis which was used to arrive at the $75 price point in the first place is probably good enough than any adaptive scheme is seen as too expensive, confusing, difficult to implement, and worth very little gain.

rufflesinc

I didn't suggest that as an alternative. I pointed out that AA declined to use it. The information is already there: the fare buckets. But lets not gloss over the obvious: 99% of the time, econ seats empty 1-2 hours before a flight are going out empty.

Dave Noble

The seat might well go to just someone else wanting to get on an earlier flight or just stay empty

Unless the flight is going to be oversold and the airline going to have to compensate passengers, getting $75 seems, to me, to be gain

typo - was supposed to be "put out"

So what if it costs the airline nothing, there are lots of things that one could argue cost the airline nothing ; that is not a reason to give it away; if a passenger feels that it is worth paying to get on an earlier flight , the person can; if it is just viewed as "nickels" and "dimes", then it is a small enough cost that should be of no concern

Regardless, you might think that you are doing the airline a favour , the airline doesn't seem to agree .... and it is the airline that is deciding on the charges

rufflesinc

And that's the point. It is advantage to have put a passenger on an earlier flight thats about to go out than keep on a later flight where things could go wrong later.
You assume the latter is true.
And if I had a nickel for every post on FT with this type of complaint, I could afford to fly full fare intl F

muishkin

AA declined to use it for the reasons that I pointed out already. It's more complex than just the fare buckets. Basically you'll need an accurate reward function that maps the price of SDFC to the revenue. First, you'll need to know the price which will maximize your revenue from selling SDFC for the current flight. Lets assume for simplicity's sake that this optimal point in terms of revenue is where the supply is more than the demand (could be true). The supply curve of the current flight is a fixed constant and is known. However, the day to day demand curve is not known accurately because of the uncertainties in the number of people looking to SDFC and how much they wanted it. However, we are not finished just yet. The second part is to consider that if you lower the SDFC price to below that optimal point, then you might get more people to SDFC which free AA to sell more seats on the later flight. However to estimate this accurately you'll need to know the probability that the freed seats of the later flight will be sold. I doubt AA knows this accurately.

So you have this reward function:

D(SDFC_price)*SDFC_price + max(P(D(SDFC_price))*Fare*D(SDFC_price)-Free_Seats * Fare, 0)

where D is the demand curve of SDFC for the current flight, and P is the probability function that I mentioned, and Free_Seats is the existing number of free seats on the later flight.

You can't optimize this reward function without knowing something about functions D and P.

Dave Noble

Generally things do not go wrong and so no benefit to the airline - there is a benefit in getting $75 from those wishing to change flights

If the person cannot afford the $75 or doesn't feel it is worth it, the person gets to travel on the booked flight

rjw242