ab2013

I know. Round trip V fare DTW-LHR is usually $1K or so. I gave a lowball estimate just to show that that number is significant, so it's generous. People are just looking at the pure cost of service here for some reason. Opportunity cost is still a cost, at least according to economics

MSPeconomist

Indeed, opportunity cost is the key idea behind revenue management.

jjclancy

Your position restated: "these tickets will very rarely be used on flights that go out full".

There are plenty of employees that can tell you of their experiences failing to clear nonrev standby, sometimes on multiple consecutive attempts. If anything, positive space benefits are more likely to be used on desirable flights that go out full. I know that's how I'd use them if I had them.

flyerCO

The opportunity cost is barely any different from offering standby travel for empty seats. You're trying to equate the fact they will fly (confirmed booking) with someone else not being able to fly (buy a ticket). Yes in a very small number of cases that will happen. This is why I've said not completely zero. However in vast majority of cases there will be no lost opportunity to make revenue.

MSPeconomist

How much this costs DL will depend somewhat on how good DL's big data analytics is for predicting ticket sales as we recover from the pandemic. DL is trying to do inventory management in unprecedented times. In the past, DL did this extremely well, but everything's different now and will be for a long time.

writerguyfl

This is speculation. Albeit, it's speculation based on working in hotels, a "legitimate" theatre group, a travel industry call center, and a major theme park operator. Each of those jobs involved products with perishable inventory. Several of my positions handled comped rooms/tickets similar to these comped airline tickets.

Given the need to properly staff an airline, the likelihood that these free flights will be used on last-minute seats is pretty low. Delta employees probably aren't deciding to fly to Europe tomorrow over their 2 days off simply because they have a free ticket. Instead, I'd guess that the overwhelming majority of tickets will be used in conjunction with annual vacations.

Anyone that's ever been responsible for staffing a high-volume business knows that you have to be careful when you approve time off. Most companies will have their employees request time off many weeks or even months in advance. For an employee with kids of school age, planning a vacation months in advance is quite normal, if not a necessity.

If these assumptions are correct, that means the bulk of these free tickets will be redeemed weeks or months in advance of the flight. If the flights are expected to be full, the revenue management software will simply reduce the number of "cheap" fares for the flight by the number of employee redemptions. The overall revenue for that flight will end up being roughly equivalent to what it would have been. As such, the actual cost to Delta to offer these tickets is minimal. A few customers on full flights will simply pay more to cover the costs.

TL;DR: Employees will redeem "free" tickets weeks/months before they travel. Any loss of revenue on full flights will be made up by reducing the number of discounted fares being sold.

xooz

To kick the dying horse, you neglect to consider that airline employees often pay for confirmed tickets. The erosion of "non-rev" benefits and the high loads (at least pre-COVID) have certainly increased the number of employees purchasing tickets. That said, the impact would be small in the end.

LarryJ

Airline employees can already fly for free when there are seats available. No reason to use your free positive-space passes on flights that you'd be likely to get a free seat on anyway. A large number of these passes will be used on flights that the employee believes will likely be full and many of them will be full.

It's a very nice gesture on the part of Delta and it will cost them a good bit of lost revenue.

WidgetTravels

Yup. Most employees I know look at 3-5 flights for these passes.

SYD and JNB are the big ones. Long flights where loads aren't the only concern. Weight restrictions can and frequently do kill non rev hopes and dreams.

In that same vein, ATH and TLV in my experience can be very tough to get on.

For those who don't do international travel, they all pretty much look at HNL for using these passes.

flyerCO

Simply not the case. In vast majority of cases, these will have no more bearing cost wise than standby benefits.

It only cost them revenue if all the following are met

• Flight is full
• A passenger who is willing to pay can't because flights is full and
• Revenue on other passengers on flight doesn't make up what is lost from not being able to sell the additional ticket.

Only when all three are met does DL have any "cost." In addition there's inventory restrictions for these.

Again, this is a nice gesture. However the PR spin of it costing millions simply isn't true.

steve64

In general, as an ex-AAirline employee myself, I wouldn't be so quick to assume the opportunity costs are so minor.
As Larry and others have said, an employee isn't going to use these on some last minute discretionary trip (many rainy DFW Saturday afternoons, I'd call Mom to see if she wants to go out for dinner tonight ... she lives in Tampa). These "positive space" (hold confirmed) passes will be used on the trips that I have to be there on a specific day (Brother's wedding), to the point that I would've purchased an advance fare ticket instead of risking non-rev.

I don't know about DL, but AA also offered unlimited ID20's. A 20 percent discount off any fare, any flight. Just like a "normal" passenger, the fare bucket I wanted had to be available and I had to comply with all fare rules. But an ID20 ticket is "hold confirmed" space, I can make seat assignments, earn miles, volunteer for oversale vouchers etc.
Over time (as my salary increased and as the internet grew [selling 'last minute' seats at substantial discounts]) I flew via ID20's more than on non-rev passes. I became AA Gold and one of FT's earlier members.
Every such pass given to me would be ID20 revenue lost. I did not require the flight to depart full to have lost that revenue.

Revenue is revenue. Period.
Any empty seat at departure (for almost any reason except IIROPS) is a failure of YM to 100% optimize the fare mix for that flight.

In an "absolute sense", most people think that it's the high fare tickets (and cargo) that makes the money.
The truth is that it took full mixture of all the tickets sold to eeek out a small profit. An airline can choose to only sell seats at the high fare buckets, but the plane is likely to go out half full and loose money. Or they can sell all seats at low fares, likely selling all seats, but still losing money.
It is the "optimized mixture" of fares that make a flight profitable.

Combing that "optimized mixture" concept with "passenger purchase behavior" changes the thought process.
While the high fares are needed, they are considered as simply "paying the bill" to operate the flight. The profit, if any, came from the lower fare buckets.
Those high fare tickets are more likely to have been passengers that were going to take the flight anyhow. To get the fare mix that the flight had requires, the airline to have lured in some discretionary passengers. They do this with low fares.

Most discretionary passengers don't think the same way as your typical FT'er. They aren't as likely to consider themselves as being loyal to any specific airline or hub captives etc. Their #1 purchase criteria is price. A $10 difference can be enough to make the sale.
If a DL employee has "purchased" a seat on the 2pm departure, that's one less seat to offer at that fare bucket's price. Even if they didn't take the last seat from that bucket, it is still more likely that bucket will sell out before departure. If a potential cusotmer is shopping after the bucket is sold out, then they'll see the 6pm departure $20 cheaper than the desired 2pm flight. They may purchase the 6pm, or they might go to AA.com and find (and purchase !!) a 2:15pm flight at the $20 lower fare.
DL has lost the revenue. It makes no difference if the flight ends up departing full or not.

To combine my thoughts with yours ....
When determining if there was an "opportunity cost" in providing a $0 positive space ticket for a given flight, it's irrelevant if the flight went out full or not.
What is relevant is if the specific fare class(es) that the employee ticket qualifies for, were ever sold out. In the pre-Covid world, those lower fare buckets will zero out (from sales or YM tweaking) on most flights. If those bucket(s) ever hit zero after the employee removed a seat from inventory, then it's highly likely there will be an opportunity cost for providing the pass. The fact that the passes will remain valid in a "post Covid world" means the possibility of there being an opportunity cost rises.

LarryJ

Why would an employee, who has full access to the booking data, use a free poisitive space pass on a flight that wasn't likely to be full? If it's not full, they can travel for free without using the PS pass.

Qwkynuf

So the consensus seems to be that because this move wasn't devastatingly expensive to Delta, it has no value.

It doesn't matter that they provided a benefit to their employees that they didn't have to provide.

you people make me sad.

cmd320

Who said it has no value?

Obviously for Delta there is value in trying to improve employee morale at a time when it’s quite low, especially since they’re designing facets of the operation to center around avoiding FA unionization.

mersk862

As a former DL employee, I used mine on ATL-DTW-PEK//PVG-ATL and ATL-PVG//SIN-NRT-DTW-ATL last year. A big part of it was looking to use them where it would give me a significant increase in getting into D1 vs normal nonrev.

I do agree that weight restricted flights are popular uses - SYD, JNB, Deep South America were all popular choices. No one used them on something like an ATL-BOS trip; fares were cheap enough that you would simply pay (using the 20-30% discount) if you planned far enough out.