Fare Madness

[MrWings]

I get get AC043 from Calgary-Maui direct for $349.

I can get on AC043 from YVR-YYC-Maui for $299.

How does that make any sense?

[kevenv]

I had something similar not long ago. I was looking at CYQM to KBOS. To connect through CYHZ was cheaper than me driving to Halifax and flying from there direct on the exact flight I would have connected on!

[taylor498]

http://en.wikipedia.org/wiki/Yield_management

[denkauto]

Premium price for a superior product ie: direct flight. Makes sense to me.

[MrWings]

If you lowered the fare for Calgary passengers to $299, is it not reasonable to assume that some of those might pick up that fare?

Instead they'd rather process an extra person from Vancouver, make that ac heavier, have them consume mock-peanuts and a drink and then clean up after them. What does that cost? If it is negligible, why do they charge for overweight baggage?

I guess my point is they'd be money ahead if they dropped the fare for Calgary instead of incurring the extra expense of bringing in a passenger from YVR.

[iflyforpie]

YVR is closer to Hawaii... duh!

[pilotman15]

YXU-YYZ-YAM is cheaper then YYZ-YAM.

With this yield management and direct flight stuff.... there is no direct YXU-YAM. Figure that one out.

[bmc]

These anomalies surface all the time.

1. Fares are based on demand and local competition. They should be absed on cost, but often have slight consideration.
2. Fares should have a relationship to distance. Should, but are more often driven by demand and competition.
3. Fares are subject to inventory availability. Cheap stuff is designated to more restrictive inventory. The advertised cheap stuff is purely a call to action to get you to make a decision to travel. It is not indicative of the price for the entire airplane. If you consider buying a new Honda Civic, the prices advertised are low. Go to the dealer and see what the prices are for stock on the lot and/or once you select options. Sam Ting.
4. In the low season, there will only be so much traffic you can generate to fill flights so you look at behind and beyond markets to suppliment your loads. In doing so, you have to price the tickets to draw traffic off of direct or non stop flights. To get someone in YVR to go to Hawaii via Calgary has to build some incentive. Since airline seats are a perishable commodity, if you know the seats will go empty, price them for what you can get.

You can probably find airfares from Seattle to Europe offered by AC that are cheaper than what is offered out of YVR for the same reason. Only so much local traffic to support your nonstops, so you look to alternate markets. I'm sure DL does the same thing in the reverse direction.

On the surface, it looks mad. And it is to an extent. The practice exists because there is too much capacity chasing too few bums in the low season. That's the bottom line. If the industry has some responsibility, there would be half as many aircraft flying. Airfares would be much higher. There would be fewer pilots working, but everyone would make more money. That existed at one time. It is often referred to as "the good old days".

[iflyforpie]

That existed at one time. It is often referred to as "the good old days".

It is interesting that the former CEO of American Airlines is quoted as saying yield management is "the single most important technical development in transportation management since we entered deregulation."

Author: unknown.

IF AIR CANADA SOLD PAINT.

THE WAY IT WORKS AT A REGULAR PAINT STORE:

Customer: Hi. How much is your paint?

Clerk: We have regular quality paint for $18 a gallon and premium paint for $25. How many gallons would you like?

Customer: Five gallons of regular paint please.

Clerk: Great. That will be $90 plus tax.

NOW, IMAGINE YOU ARE BUYING YOUR PAINT AT AN AIR CANADA PAINT STORE:

First, you spend days trying to reach them by phone to ask if they have paint. Nobody answers. So you drive to an Air Canada store.

Customer: Hi. How much is your paint?

Clerk: Well, sir, that all depends on quite a lot of things.

Customer: Can you give me a guess? Is there an average price?

Clerk: Our lowest price is $12 a gallon, and we have 60 different prices up to $200 a gallon.

Customer: What's the difference in the paint?

Clerk: Oh, there isn't any difference; it's all the same paint.

Customer: Well, then I'd like some of that $12. paint.

Clerk: When do you intend to use the paint?

Customer: I want to paint tomorrow. It's my day off.

Clerk: Sir, the paint for tomorrow is the $200. paint.

Customer: When would I have to paint to get the $12. paint?

Clerk: You would have to start very late at night in about three weeks. But you will have to agree to start painting before Friday of that week and continue painting until at least Sunday.

Customer: You've got to be kidding!

Clerk: I'll check and see if we have any paint available.

Customer: You have shelves FULL of paint! I can see it!

Clerk: But it doesn't mean that we have paint available. We sell only a certain number of gallons on any given weekend. Oh, and by the way, the price per gallon just went to $16. We don't have any more $12. paint.

Customer: The price went up as we were talking?

Clerk: Yes, sir. We change the prices and rules hundreds of times a day, and since you haven't actually walked out of the store with your paint yet, we just decided to change. I suggest you purchase your paint as soon as possible. How many gallons do you want?

Customer: Well, maybe five gallons. Make that six, so I'll have enough.

Clerk: Oh no, sir, you can't do that. If you buy paint and don't use it, there are penalties and possible confiscation of the paint you already have.

Customer: WHAT?

Clerk: We can sell enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do the
bedroom, you will lose your remaining gallons of paint.

Customer: What does it matter whether I use all the paint? I already paid you for it!

Clerk: We make plans based upon the idea that all our paint is used, every drop. If you don't, it causes us all sorts of problems.

Customer: This is ******!! I suppose something terrible happens if I don't keep painting until after Saturday night!

Clerk: Oh yes! Every gallon you bought automatically becomes the $200 paint.

Customer: But what are all these "Paint on sale from $10 a gallon" signs?

Clerk: Well, that's for our budget paint. It only comes in half-gallons. One $5 half-gallon will do half a room. The second half-gallon to complete the room is $20. None of the cans have labels, some are empty and there are no refunds, even on the empty
cans.

Customer: To hell with this! I'll buy what I need somewhere else!

Clerk: I don't think so, sir. You may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you won't be able to paint your connecting hall and
stairway from anyone but us. And I should point out sir, that if you paint in only
one direction, it will be $300 a gallon.

Customer: I thought your most expensive paint was $200!

Clerk: That's if you paint around the room to the point at which you started. A hallway is different.

Customer: And if I buy $200 paint for the hall, but only paint in one direction, you'll confiscate the remaining paint.

Clerk: No, we'll charge you an extra use fee plus the difference on your next gallon of paint. But I believe you're getting it now,
sir.

Customer: You're insane!

Clerk: But we're now Canada's only paint supplier! And don't go looking for bargains! Thanks for painting with Air Canada.
.....Next!

[whiteguy]

I get get AC043 from Calgary-Maui direct for $349.

I can get on AC043 from YVR-YYC-Maui for $299.

How does that make any sense?

That's the way fares have been for years. Nothing unusual or were commenting on the fact that the flight numbers are the same!

[Invertago]

Me pilot, me fly plane, me get hours, is all good, management do da thinking!

[bmc]

Yield management is good and is responsive to many different market segments. No one has suggested a better system.

[Panama Jack]

taylor498 took the words right out of my mind.

Consider though, what Publilius Syrus said in ancient Rome, about 2000 years ago:

"Everything is worth what it's purchaser will pay for it."

It is a common industry problem, however, that sometimes Origin Destination Itinerary net Fares (fare proration) are poorly structured as a result of tug-a-wars between different commercial groups in an airline-- ie. sales want to drum up their numbers, while revenue management is looking to maximize yield (I am not necessarily saying that this is the case here, though). It is a bit of a complex industry.

True Low-Cost airlines get around this whole overcomplication by simply not selling any "connections." It is one more aspect which Michael O'Leary refers to as "bollockology."

[MrWings]

So, I ended up going to Hawaii in 3 legs compared to direct. Same on the way home.

Pros
Saved about $275 per ticket. For a group of 4, that is over $1000.

Cons
Long days.
I had to fly with United Airlines for many of the legs. Let's just say I was happy to get back onto Air Canada.

Was it worth it? Well, to me, yes. Without the break in fare we probably wouldn't have been able to go.

To the airlines, I doubt it. This was booked through the Air Canada site but 4 out of the 6 legs were with United. I don't see how anyone made any money on this by hauling our 4 carcasses on 4 extra legs on pretty much full airplanes.

[ez4u2say]

The fare issues "making sense" has never made sense..I can recal when you could travel to YVR from YYZ via Mexico for about the same price...how about domestice travel in Canada between YYC and YQR..just over an hours flight..lowest fare on AC March 24 $264 March 25 and 26 $174 March 27 $159 and March 28 $99..all exclusive of taxes etc..WJ are somewhat similar except some dates are higher and they also go to a low of $99 and that's to the winter paridise of Regina where you can lay on the beach, at 30C drinking mai tia's????..I think that I need some more of those mai tia's to figure it out...