Airline compensation for one world explorer

i have read enough to know that the price of the same ONE ticket can be different depending on where it was purchased.

i also know that many people build in MR's into their ONE tickets.

my question is as follows:
when person A buys a first class ONE ticket and takes 5 flights and person b takes 9 flights, even though the ticket was the same price 4 first class segments were flown, how do the airlines get paid?

do they just devide the cost of the ticket by segments? that does not seem fair.

thanks in advance if any one can help me understand this.

The formula for dividing up tickets between airlines is a trade secret, very complex and highly unfair. The RTW products are extremely stilted. The 3 "ocean" sectors (trans-Atlantic, trans-Pacific and trans-Asia) get the lion's share of the revenue (maybe 20% each, or 60% total), while the remaining sectors divide the remaining ticket value (so the 17 sectors would get <3% of the ticket price each, while the trans-Atlantic sector gets 20% or 7 times as much). These numbers are approximate but indicative. Hence the great desire of the issuing airline to fly at least one of the 3 key sectors in order to get some money back on that ticket. I don't know what the ticket issuer gets, if anything (probably just the float on the ticket price for a year, plus the residual on any unflown segments).

so some one on a Aone5 flying lax-jfk in A class on aa would be providing aa with just a few $ in revenue. the round trip ticket for jfk-lax in first class is about $3000 and the explorer pax are paying 1/10 of that.

if this is the case why would the airlines agree to partake in the program?

Shall I presume that codeshares enter into this equation? This would explain the eagerness of the booking agent at AA to ensure that my trans-Pacific flight was ticketed as AA 7364 instead of QF 12.

... or the initial insistance of my CX booking agent that I travel on 889 JFK-HKG rather than the AA codeshare: AA6123. They only relented after I pointed out that as a QFF Platinum I would earn double the frequent flyer miles when travelling on an American Airlines flight number. I would get over 8,000 less on the CX flight number for the same trip on the same aircraft.

Well, good question, but keep in mind that 1) you are limited to one US transcon segment on the ticket, so that limits the revenue bleed, and 2) 'A' inventory is highly restricted on the AFS 3-class flights so they're really only accepting the low OWE revenue ticket if they think they can't sell the seat for full price anyway (comes out of same inventory as J-to-F upgrades, although for those they get a full J/D fare revenue plus miles/eVIPs.)

What is a trans-Asia segment? Can you provide an example? Thanks.

"trans-asia" is actually a bit misleading... it's a term that's meant to include any of the transcontinental flights between asia/southwest pacific and europa/africa, or the reverse of either.

For example:
HKG-JNB (v.v.)
JNB-SYD (v.v.)
NRT-LHR (v.v.)
BOM-DXB (v.v.)


Of course, this begs the question of weather intercontinental flights from North to South also earn a similar share of the ticket's worth (i.e. transcontinental flights between Africa and Europe, SWP to Asia, or between North and South America).

Would MEL-LON count as two intercontinental sectors (even on a singe flight number), earning for the carrier (QF, CX, BA, AY) the marginal additional cost of the 4th, 5th, or 6th continent (asia) as the case may be?

MEL-LHR counts exactly the same as HKG-LHR or BKK-LHR for that matter (never mind that it is twice as long). I'm told that JKF-EZE earns a lot less revenue than JFK-LHR (even though it is a longer distance); for whatever reason, the revenue is distributed in this rather unfair way, and it is those 3 sectors that get much of the revenue on the RTW tickets. The airlines don't really care because it evens out in the long run, and it isn't really worth the cost of setting up a more equitable distribution system for the RTW ticket revenues. As for the codeshares, I don't know the numbers but I suspect that results in a loss for the codeshare airline (their cost is higher than the RTW ticket revenue); so in the example of CX/AA, it may be that CX gets more from an AA codeshare in J/F than it does from the RTW ticket fare allocation. I'm pretty sure that is the case for the QF/AA codeshares, for example.

Now this would be really unfair.

Oops, I booked QF107 JFK-SYD on the AA codeshare on my AONE5 because I thought I'd help AA out by giving them the revenue. Oh well, at least I tried.

I thought 'Z' class was used for J-F upgrades or straight F awards.

'A' class is simply 'discount' first.

AA uses A for 1st class upgrades so is used for Y-F or J-F mileage upgrades

Dave

I thought A was only used for the YUP fares? Isn't mileage redemptions still done against Z?

never has been, as far as I remember.

AA uses
A for mileage upgrades to 1st class
C for mileage upgrades to business class
X for upgrade credit upgrades to 1st class ( where available )
R for upgrade credit upgrades to business class ( where available )
T for award economy
U for award business
Z for award 1st

Qantas uses
Z for award 1st and upgrades to 1st
U for award business and upgrades to business

Dave