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Why I'm Clearly Not Cut Out For Revenue Mgmt

Why I'm Clearly Not Cut Out For Revenue Mgmt

Old Sep 23, 14, 10:00 am
  #31  
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Originally Posted by claaaaaydavis View Post
don't forget that they are also selling upgrades upon check in. a friend just got a $150 buy upgrade at check in.
Was that $ 150 for an upgrade on p.s.?
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Old Sep 23, 14, 10:25 am
  #32  
 
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Originally Posted by Kacee View Post
Per OP, it's JFK-SFO.

You have completely ignored the fact that many companies will not allow J purchases.

You are also wrong about Z costing more than Y on this route. Y is more expensive ($1676 vs. $1659).

So I repeat, J7 Z4 Y0 is money-losing inventory management. UA is likely to lose full Y fare purchases on this flight and instead wind up giving J seats away as upgrades or for $200-300 buy-ups.
The OP didn't mention it was JFK-SFO until after I had already posted. My statement was correct, only for the JFK-LAX market. You are correct though with the fares loaded for JFK-SFO, it doesn't make sense not to have Y open with Z>0.

I wasn't ignoring the point about many corporate travelers being unable to book J (even if cheaper). Trust me, I'm very familiar with such policies. My point was that you can't just look at booking classes open in isolation because it's needs to be viewed in relation to the fares loaded. Moot point though in this instance, because I stand corrected.
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Old Sep 23, 14, 10:34 am
  #33  
 
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Originally Posted by uanj View Post
I think it is entirely possible they are waiting to accommodate as many business class passengers as possible before applying upgrades.. Remember that depending on your flight there could be a lot of international connections and they can get booked up to the last days before the flight.
You don't specify the city pairs, but if you are talking about the P.S. flights from LAX-JFK, then yes it is extremely likely they will sell the 7 J seats.

LAX-JFK is filled with entertainment business people who fly first class because it is in their contract and the studio pays full fare. That is why AA flies specially equipped extra luxo A321's on the route, UA runs the special PS service and JetBlue added premium class on the route.

The other route which has this unique characteristic is LAX-LHR.
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Old Sep 23, 14, 10:37 am
  #34  
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DL offers BE service on three transcon nonstop routes from JFK: LAX, SFO, and SEA. Many of these aircraft have flat beds and all have F&B better than regular domestic FC.
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Old Sep 23, 14, 11:30 am
  #35  
 
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Originally Posted by Kacee View Post
Per OP, it's JFK-SFO.

You have completely ignored the fact that many companies will not allow J purchases.

You are also wrong about Z costing more than Y on this route. Y is more expensive ($1676 vs. $1659).

So I repeat, J7 Z4 Y0 is money-losing inventory management. UA is likely to lose full Y fare purchases on this flight and instead wind up giving J seats away as upgrades or for $200-300 buy-ups.
Impossible to make that statement.

FYI - the transcons to New York are a whole different beast for corporates. They are dominated by the investment banks, consulting firms, law firms, and media companies who have 'we pay for J' on 5+ hour flights policies for most employees.

And they pay very different fares than what are published to the public. Walkup last seat J seat on AA, UA, or Delta is around $999 one way for the bigger guys who give them volume.

And last seat Y as you can imagine is close to that or a bit lower with their discounts.

It's all about those contracts, which ultimately push up fares for those who don't have them to absurd levels for such a stage length (i.e. $8,000 roundtrip in First on AA).
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Old Sep 23, 14, 11:46 am
  #36  
 
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Originally Posted by mahasamatman View Post
They have all the historical data, and they've been in the business a lot longer than any of us.
And have gone bankrupt more than most of us (I hope)
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Old Sep 23, 14, 1:30 pm
  #37  
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Alright, now I'm just getting curious

3 flights on this day are now showing 0 inventory in Y, but 6+ in J (with a bunch of Z/P inventory, which is what 1-way tickets are pricing into) and 2 more have just a single seat in Y (though if trying to book a 1-way, it doesn't actually offer the full-fare Y but instead offers up the P fare).

Update: My flight is down to 5 in J, but the rest are still 7+
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Old Sep 23, 14, 4:21 pm
  #38  
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Originally Posted by USHPNWDLUA View Post
How likely it is UA can sell those J seats could be an endless debate on FT, that only a soothsayer (I think RNE might be one...) or a tarot card reader could answer... But I don't think this likelihood debate matters.
Thanks for the mention. Using all my powers of clairvoyance—with a smidgen of help from the spirit world—I foresee that it is categorically without a shred of doubt that there is a 100% certainty that UA may or may not be able to sell those seats.

RNE, prognosticating since 2005.
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Old Sep 23, 14, 6:22 pm
  #39  
 
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Originally Posted by Kacee View Post
But J7 Z4 Y0 does not strike me as revenue maximizing inventory management given that many corporate travelers are not permitted to purchase J.
Your concept has merit, but only to a point.
Strictly thinking along the lines of "never turn away revenue" would also mean that airlines should never cap the number of high fare tickets sold. In most cases, that "last minute" fare is going to bring in more revenue than the cost of an additional VDB.

But airlines don't sell unlimited tickets. They have to draw the line somewhere. It's actually many different lines with many different trigger points. Keep in mind that the Coach cabin was most likely oversold before we could ever see the Y bucket drop below 9. Some of those oversold seats are due to anticipated no-shows/SDC off the flight/etc. But some are because they can see open seats in J, so to your point, they kept selling Y beyond the "noshow/SDC/etc" level.

But even your concept hits a stopping point.
We don't know how far oversold Y is. Being it's now at Y0 means it's hit the point that they're not comfortable selling another. That's really the bottom line. What looks like open J seats might already be potentially committed as protection for the Y overflow. And even then they might already be anticipating some VDBs. So they're not really walking away from from the revenue of passenger who's restricted from buying J, it's that they honestly don't expect to have a seat.

Ok, so they're still taking the gamble on selling a few more J seats, even though those seats are backing up the Y oversell. And maybe the J fare for this specific flight isn't really much different from the current Y fare, so what are they gaining by keeping J open when Y is beyond the breaking point ?
Perhaps this flight has a history of selling last minute (last few days) J seats as connections off Intl First Class fares. Now which passenger will you turn away ? That's one possible answer to your question of "why". I'm sure there are many others.

It's all a guessing game, but it's an educated guess they've been doing for years. I'm sure your concept is something they're well aware of. They know the sweet spot and have hit it.

Something else that armchair YM analysts usually fail to consider are the flights before/after this flight.
If they open up even more Y seats to the point that it looks like it will take VDBs to pull off, is there room on the next flight(s) ?
How about the previous flight? Has YM allowed so many oversells that they anticipate VDBs onto this flight ?
On day of departure, if Gate Agts can't find reasonable protection, they're going to have to increase the VDB amounts to find passengers willing to wait so long for a confirmed seat. Possibly to the point of going IDB.
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Old Sep 23, 14, 8:47 pm
  #40  
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Originally Posted by milesmuncher View Post
that's probably why I'm clearly not cut out for rev mgmt.
Not good at math?

Seriously, this is a huge science and art with tons of factors and data. It will probably keep evolving...

On the subject of that, I heard this on NPR today: http://www.npr.org/2014/09/23/350946...n-more-flights - there was a few seconds from Jim Compton at UA
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Old Sep 23, 14, 11:33 pm
  #41  
 
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Originally Posted by cesco.g View Post
Was that $ 150 for an upgrade on p.s.?
yup, both ways. silver on a pretty last minute fare, not sure what bucket.
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Old Sep 24, 14, 10:23 am
  #42  
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Update for those following along out of curiosity: we're now down to 2 seats in J. So much for my upgrade hopes!
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Old Sep 25, 14, 1:14 pm
  #43  
 
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Originally Posted by mduell View Post
That's completely orthogonal to my question about eligible fares. Are there any eligible Z fares to book for your dates?
You must be a scrabble player. I was impelled to look it up...😳
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Old Sep 25, 14, 4:39 pm
  #44  
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Originally Posted by Bear4Asian View Post
You must be a scrabble player. I was impelled to look it up...😳
Worse... engineer.
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