Posts Tagged ‘American Airlines’

A (very) brief explanation of ticket prices

Thursday, June 11th, 2015

I’m going to stray a little bit from my typical career advice, and I’m going to discuss a few of the airline business practices that tend to drive everyone crazy. One of those is the issue of ticket prices.

As most of you know, airline ticket prices can vary wildly even on the same flight. It’s very possible to have two passengers sitting next to each other who paid a difference of hundreds of dollars for their tickets. What gives?

512px-NWA_Airline_Ticket_JL2703First of all, it helps if you think of an airplane as a venue for a concert or a baseball game. When you buy tickets to a game, you expect to pay more for a better seat, such as one behind home plate or along one of the baselines. You expect to pay less to sit in the “nosebleed” section.

Flights are similar. First class, business class, and seats with extra legroom demand a higher fare because of the benefits or added comfort of sitting in those seats. That’s simple enough. But what drives the rest of the pricing differences?

American Airlines, under Robert Crandall, perfected the use of modern pricing algorithms (it’s actually a trick he learned working for, of all places, Hallmark). With today’s computerized reservations systems, airlines use sophisticated computer models to adjust the pricing of every seat as soon as a seat is sold. This is one reason why it costs less to buy a seat well in advance of the flight.

The airline already knows what the basic cost of a flight will be, and therefore how much it needs to sell each seat to make money on that flight, which allows it to set the basic fare.

Next, it needs to collect all of the various fees and taxes that might be required—landing fees, passenger facility charges, security fees, et cetera. These can easily add more than $100 to the price of a ticket.

As soon as seats begin to sell, prices begin to change. (In fact, if you use the same computer to check the prices of a flight several times, the website can [and often will] use the cookie it has placed on your computer to gauge your interest and raise the fare.) Prices also change as the date of the flight gets closer.

Because airlines get most of their revenue from business travelers, the prices go up quite dramatically within 14 to 21 days of a flight, since this is when business travelers buy most of their tickets. This is similar to the concert or ball game analogy: Supply has diminished, and demand often rises. The airline is, in effect, scalping its own seats, and it is doing so to its best customers, because roughly 5% of the passengers provide almost 95% of the revenue.

Something else is at play as well. The airline doesn’t collect nearly the revenue from leisure travelers as it does from business travelers on a per-seat basis. So, if the mix gets slightly out of whack, ticket prices will move, especially if the “out of whack” portion of the equation means that more leisure travelers are buying tickets than usual. In addition, if passengers are using frequent flyer miles to buy the seat, either prices will increase or the number of seats available for redeeming miles will decrease or even disappear (think of Hawaii).

Just like a concert or a ball game, there can be a last-minute deal, and it can be great one for the consumer. The Yankees may sell a few tickets in the second or even third inning, but an airline can never sell a seat on a given flight once that flight has left the gate, and even the Yankees won’t sell tickets after the fourth inning or so. Therefore, sometimes they will offer steep discounts just to fill the seat at the last minute.

Ticket prices are maddening at times, but there really is a method to the madness, and a madness to the method. Or something like that!—Chip Wright

Your aviation inspirations, Part I

Wednesday, August 22nd, 2012

Thanks to all who provided your aviation inspirations, both on this blog and on our Facebook page. Many of these names are familiar, but some aren’t (to me, anyway)–and researching them for this blog was a treat. There was so much historical information to relay that I decided to break this blog into two installments by alphabetical order. Here’s the first group.

Aviators of the 1920s and ’30s: As Denny Kotz noted, these pilots are the ones “who figured all of this stuff out. It is one thing to be taught how to fly–it is another thing to have to figure it out on your own. They wrote the how-to-do-it book.”

Richard Ira Bong holds the title of the United States’ highest-scoring air ace. He shot down 40 Japanese aircraft in World War II and conducted all of his aerial victories in a P-38 Lightning. He eventually became a test pilot for Lockheed, and died in 1945 while conducting a test flight of a P-80 Shooting Star. Suggested by Doug (no last name).

 

 

 Col. John Boyd. An Air Force fighter pilot and later a Pentagon consultant, Boyd was dubbed “Forty Second Boyd” because, as an instructor pilot, he had a standing bet that, beginning from a point of disadvantage, he could beat any opposing combat in air combat maneuvering in fewer than 40 seconds. Suggested by Randall Tilley.
 
 
 
Gregory “Pappy” Boyington. The World War II Marine Corps officer was a fighting ace who flew a Vought F4 Corsair. During his squadron’s first tour of combat duty, he shot down 14 enemy aircraft in 32 days. Suggested by Randall Tilley.

 

 


Gen. James “Jimmy” Doolittle.
I could easily devote an entire blog to Doolittle, but here are a few of his accomplishments: test pilot, record setter, aeronautical engineer, air racer. He was the first to perform an outside loop (previously thought to be a fatal maneuver). He developed instrument flying. Oh, and during World War II, he carried out a successful bombing raid on Tokyo, Kobe, Yokohama, Osaka, and Nagoya utilizing 16 B-25 bombers. That raid was considered a major morale-building victory for the United States. Suggested by Kayak Jack.

Amelia Earhart.  I could devote another entire blog to Earhart, who was the first woman to fly solo across the Atlantic Ocean. The 16th woman to be issued a pilot’s license, Earhart was a founding member of The Ninety-Nines, the International Organization of Women Pilots. (She and several other competitors in the first Women’s Air Derby formed the Ninety-Nines because they enjoyed the opportunity to meet and commune with other women pilots.) She was a huge promoter of aviation and the role of women in flying. In 1937, during her second attempt to fly around the world, Earhart and her navigator, Fred Noonan, disappeared en route to Howland Island in a Lockheed Electra. Suggested by Gena Gonzales and Kayak Jack

Carl Ben Eielson became a pilot in the U.S. Army Air Service in 1917. The war ended while he was still in flight training, and he wasn’t willing to stop flying, so he and some friends formed the Hatton Aero Club and later flew air mail in Alaska. He is credited with flying the first airplane across the Arctic Ocean, with Australian explorer Hubert Wilkins in 1928. Suggested by Doug (no last name)

 

Roger Fernandez. Don’t look for Roger in Wikipedia–he’s the CFI who signed off Steven Warren for his private pilot checkride at Tullahoma Airport 20 years ago.

Gen. Roy S. Geiger. Geiger has the distinction of being the first Marine to lead an army during World War II. He became a naval aviator in 1917, and commanded a squadron of the First Marine Aviation Force during World War I. Suggested by Randall Tilley

Heli-rescue pilots. As Darrell O’Sullivan says, “They fly at all hours and in weather that is best observed from an armchair on the front porch.”

Howard Hughes. The wealthy entrepreneur–the subject of numerous books and even a movie or two–dabbled in Hollywood film production, but his aviation legacy soars. He set multiple world speed records and commissioned aircraft like the Hughes H-1 Racer (and set a landplane airspeed record of 352 mph in 1935). Later, he designed and built a heavy transport aircraft constructed from wood. Dubbed “The Spruce Goose”–a name he hated–it only flew once, in 1947. Hughes also owned a majority of Trans World Airlines, which eventually merged with American Airlines. There’s much, much more to the Howard Hughes legacy, and I urge you to look him up yourself. Suggested by Robert L. Rhyne III.

In the second part of this blog I’ll relate the rest of the heroes, including some names you can probably guess and some others who won’t be as familiar to you.—Jill W. Tallman