Yield will Bankrupt AA

[WingNaPrayer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/17/2002 4:24:25 PM eolesen wrote:
[P]Assuming an average value of around $300 per voucher, that only comes to about 185 oversales for a single day.[BR][BR]Considering MIA boards somewhere in the area of 25,000 passengers on around 215 departures every day, that's less than one oversale per flight operated. [BR][BR]Yep. That's gonna bankrupt AA alright...[/P]----------------[/BLOCKQUOTE]
[P][/P]Actually, it's more like 187 departures every day....we're not counting Eagle. If you feel that (using your numbers) 215 oversales a day, every day, 365 days a year (78,475 displaced customers) is acceptable for one station... how about if it's happening at [EM]every[/EM] station? Put that number to your 5 biggest hubs alone and you've got close to 400,000 displaced customers every year...minimum. Now do the extra math, at an average of 300.00 per voucher (and we know not all vouchers are 300.00, many are much higher) you're looking at a minimum, a minimum mind you, of 12 million dollars per year that's being flushed down the revenue crapper, all because a yield department can't get their heads out of their collective asses.[BR][BR]Now, lets say [EM]you[/EM] own this business. Is it acceptable? I'm telling you as a stockholder that its not. Every passenger with a voucher knows that a voucher is nothing more than an airline's way of holding your travel habits hostage, and taking away your ability to choose between carriers.[BR][BR]You can't defend AA's yield department, they cost your company more in actual hard losses than any other department. (save for perhaps legal, but that's another mess)

 

[Wild Onion]

I seriously doubt the amount of systemwide oversales are as high as are suggested here. Also, the Latin America flights have a historically high no show rate, which justifies paying oversales on flight where we are consistently selling (and collecting revenue) on more than 100% of the seats.

From a gate agent's perspective, I have a high level of confidence in AA yield management.

 

[DL Gold Medallion]

There are three problems with this argument:

1) Not all the cvouchers are used. I'm no expert, but I'd guess around 50% of all airline bump vouchers go unused, giving the airline free voluntary bumps to avoid the dreaded invol.

2) Even when a voucher is used, it's incremental cost is nowhere near as high as the face value of the voucher.

3) Chances are, the voluntary bump was offered to make room for a higher-fare last-minute passenger. If a guy walks up and pays $1000 for a walkup one-way ticket, and you have to give a passenger a $300 voucher which he may or may not use and in any case will not cost the airline anywhere near $300, it's a no-brainer to take the $1000.

 

[WingNaPrayer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/25/2002 10:42:18 AM Wild Onion wrote:
[P]I seriously doubt the amount of systemwide oversales are as high as are suggested here. Also, the Latin America flights have a historically high no show rate, which justifies paying oversales on flight where we are consistently selling (and collecting revenue) on more than 100% of the seats.[BR][BR]----------------[/P][/BLOCKQUOTE]
[P]I have to disagree, the Latin American flights are some of my own most used markets with AA and over the past year, that historically high no show rate doesn't exist. With the use it or loose it rules in full affect, there is no reason to oversell a flight with the percentages that yield obviously does.[BR][BR]I run into the same lady on several of my flights, especially POP and PUJ and she claims that, thanks to the bumps and vouchers, she hasn't paid for a ticket on AA in nearly four and a half years. Now, is she full of it, or can this really happen? I think it can. Even someone traveling on a voucher can accept a bump and get....another voucher! You'd like to think she's a goodwill passenger but she's not, she's just riding the system for all it's willing to hand over to her. As an import/export businesswoman, she appreciates the free rides. Another thing she mentioned is that she hauls a lot of merchandise as checked baggage, and that she's able to use vouchers to pay for excess baggage charges. I haven't asked about that, but I'd appreciate it if someone here in the know can verify that. If such is the case, then AA is eating a lot of this woman's business expenses for naught.[BR][BR]In all fairness, I've received several vouchers from AA over the years, never for a bump because I never volunteer, usually for flight cancellations, and I've yet to use any of the vouchers, they always end up in file 13 somewhere in oblivion.[/P]

 

[ElmhurstNick]

[blockquote]
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On 11/17/2002 4:32:18 PM ITRADE wrote:

I will also be willing to bet you that a good percentage of the folks that are willing to take bumps or free vouchers are folks who are extremely price sensitive and have little brand loyalty. You will not often see $350 an hour attorneys who will willingly be bumped from a flight to possibly sit around for three or four hours for the next flight. College students yes, biglaw attorneys no.
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[/blockquote]Well, I'm price sensitive, but until the last round of mainline to Eagle cuts I was over 97% loyal to American (30-40 RTs/year). I am always looking for a bump on the way home from a business trip. Heck, I'm not going to be doing much at home on a Thursday night, so if somebody wants to pay me $50/hour to spend my evening at the airport, so be it.

But you're right - starting a business trip, I never take a bump.