5khours

They know everything except what their pricing pattern does to the long travel behavior of their customer, and because they don't know they pretend like it's not important. As I've said they absolutely know how to maximize revenue on any given flight, but they're doing it in a way that does not maximize revenue per customers and result in a significant loss of business over the long run.

bpe

There are enough customers out there now that by maximizing revenue for all their individual flights, they will simply find the customers; either customers who choose to stay loyal, or new ones who will pay the ticket prices. Overall, they don't lose business over the long run, esepcially with global travel demand rising, or at least staying constant.

And it's not just Delta - all airlines are doing this, so when DL loses a customer to AA, they gain one from UA. No difference in net revenue.

UKtravelbear

Of course it could just be an error/IT glitch and moving onto the next page the price reverts to something more sensible,

Happened to me on expedia once - fare came up as £10k+ clicked on it to see it was real but on the next page it dropped down to £1k and a 'price change' warning too.

Often1

DL isn't "screwing" anyone. If you wonder how air carriers provide el cheapo $400 TCON's, it's through TPAC premium. Fares are based on market demand and there's demand. Just looked at IAD-PEK for Friday-Sunday RT and it's $23K on AA, $20 on UA, and $19K on EK (all different routes). That's pretty much in line with DL's $17K xORD.

The folks here who self-righteously determine what's the right price to pay based on their company's business model and pricing structure are just plain wrong. That may work for them, but if you're in a business where you bill $1,000/hour or more and you cut a day off travel because you're ready to hit the ground running, that's worth a $8K/day differential just on an 8-hour day.

Some people travel set routes months in advance. Others seize business opportunities when they arise. Anybody who won't spend $20K to make $1 Million isn't really in a for-profit business !

Often1

What company that you know of allows shareholders to hire and fire anybody?

And, even if shareholders made personnel decisions, how can you possibly say that spending $17K is too much?

5khours

Just about every company that is not public, and for those that are public the Board and CEO will definitely listen to and (often) do what a major shareholder requests.

$17k is way too much any way you think about it.

Often1

So if a business opportunity which would net my company $1 Mill arises today and requires a meeting in PEK on Friday and I have to be back for a Monday meeting on the East Coast and the best price on an F/J ticket is $17K, your business advice is not to take the trip and pass on the revenue because the ticket is too expensive or I ought to sit in steerage and arrive too exhausted to walk off the plane and be at the top of my game?

To be frank, so long as the business opportunity nets $17K+$1 + utility cost of my time, only a fool passes on it. Lotta small-minded companies with small-minded business people circling very large drains out there.

Hear of any companies making decisions like that and I'd love to put the shareholders in touch with a plaintiffs' lawyer who does shareholder derivative actions !

5khours

Obviously depends on who's footing the bill. When someone else is paying, of course you have to go now and you have to be in F. I know. I used to work at a major financial firm and consistently had the highest travel expenses in the firm... and closed million dollar deals on every trip. I know the arguments and would use them again if it were someone else' money. But I can tell you from the perspective of someone footing the bill, there are almost no deals that can't wait a day for a cheaper fare or fail because Ambien and a seat in Y didn't do the job.

Often1

True. But, I'm not willing to do that. Same thing as salary and other aspects of compensation.

mother-

None of that has much bearing on reality.

-There are never "enough customers out there" for anything that isn't a fixed or diminishing resource.
-They won't simply find the customers. That isn't how markets work.
+The new ones WILL pay the ticket prices or they wouldn't be new, but that's just circular reasoning.
-Businesses that raise prices without concern for the demand side of the equation do in fact lose business over the long run
-The types of global demand that might be rising have nothing to do with US legacy carriers.

cfischer

Free market. Nothing wrong here. There is plenty of potential competition.

5khours

That was my position exactly when I got called on the carpet by the head of the firm. "If I don't go in F, I'm not going." So let me ask you two questions. 1) If your employer said, you can buy the $17k tickets or we'll reimburse $5k a trip for airfare and give you $300k a year in cash (assuming you're doing 2 TPACs a month like I was), would you still be buying the $17k tickets. And 2) If the choice was keep your flights under $5k or your fired, would you walk?

Honest answers only

cfischer

I booked some BOS-PEK flights last month for $3k, the next day prices changed to $6k. That's how it goes, prices change all the time based on the market. Last minute is always a bad choice.

bpe

Global demand as a whole is rising, which means that, according to supply and demand, prices will go up. Capacity (supply) is essentially a fixed resource in the short to medium term - in the long term it can grow, but airlines are also cutting back on capacity and growth given fuel prices and other costs.

But last-minute pricing really is a case of limited supply, often monopolistic. For instance, there is only one nonstop flight from DTW to PVG within the next 24 hours with (let's say) 3 business class seats. No more than that. Day to day demand might differ, but it's clearly there. Therefore, prices will be high.
(If you want to consider other flights with stops within 24 hours, they exist too, but they are different products. And even with them, there are still only a dozen or so reasonable combination of flights, all with limited numbers of seats, so again, supply is quite limited.)

They are paying attention to demand as well as supply. It's just impossible to please people who aren't willing to pay market prices.

vxmike

Of course I doubt there is one person on FT who would take the $17K flight instead of the $5K flight plus $12K cash. I'm sure there are some who would walk in your second scenario and are able to find another similar job, however. Probably still the minority I imagine.

If as an employer I found it necessary for any reason to routinely send my employees on flights that ran $17K in F I would do one of the following:

- buy Starpoints at $.035/each. After a transfer to AA even a redemption at the AAnytime award R/T in F to Asia for 270K miles would only run ~$8K. Plenty of availability at the SAAver levels that would only be ~$4K.

- hire mileage runners employed by the firm and use their RDMs. Plenty of people would do this merely in exchange for free flights, EQM, and the various other benefits.

A firm with these kind of flight needs that actually spends $17K in CASH is clearly not operating an efficient travel department. Any savvy FTer could save such a firm hundreds of thousands per year. I would also think a large firm doing this routinely would have a corporate discount with their preferred carrier and certainly not pay $17K.