Tango-Bravo From United States of America, joined Jun 2001, 3811 posts, RR: 27 Posted (13 years 12 months 3 days 9 hours ago) and read 3440 times:
How is the difference between high-yield and low-yield passenger traffic determined?
In checking the range of fares available in the market PHX-MSP-PHX a few days ago, a round trip coach ticket with all taxes and fees included could set one back for as little as $153.50 or as much $1,735.00. It is very obvious that one of these represents low-yield while the other would fit the definition of high-yield.
But what about the dozens, if not hundreds, of other coach fares available in the same market that fall at one of countless increments possible between the lowest and highest found? At what point does low-yield end and high-yield begin? Or are there any number of in-between categories - perhaps "intermediate-yield" or "high-/low-intermediate yield"?
Jmc1975 From Israel, joined Sep 2000, 3334 posts, RR: 15
Reply 1, posted (13 years 12 months 3 days 8 hours ago) and read 3428 times:
Very good question. High-yield and low-yield passengers can be translated into simpler terms: business and leisure.
Most business travelers are considered to be high-yield passengers because of their lack of flexibility and demand for convenient times. They also tend to choose nonstop flights and they travel rather frequently. Because of their high demands, their tickets will sell at a premium price.
Most leisure traffic is considered low-yield because the passengers are always looking for the best rate. They are willing to fly at odd times, make a connection, maybe drive to a more distant airport and they don't travel quite so frequently. Therefore, their tickets will sell much cheaper.
To answer your question, there really is not an "intermediate-yield". A high-yield market generally has a large percentage of business travelers (i.e. ORD-LGA, SFO-JFK, LAX-DCA). A low-yield market would have a large percentage of leisure travellers (i.e. BWI-MCO, LAX-HNL, LAS-PHX). It is more important for airlines in low-yield markets to fill their to seats to make a profit, whereas in high-yield markets, some airlines make out like bandits by filling only half their seats.