Squigee
Topic Author
Posts: 634
Joined: Sun May 20, 2001 3:21 pm

What If Air Canada Sold House Paint?

Sat Aug 23, 2003 1:35 am

First, a summary of how ordinary hardware stores sell paint:

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.
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Now, imagine you are buying paint from Air Canada.

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 crazy!! 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 user 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!
Someday, we'll look back at this, laugh nervously, and then change the subject.
 
User avatar
yyz717
Posts: 15689
Joined: Mon Sep 10, 2001 12:26 pm

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 2:13 am

LOL!

If AC sold house paint.......they would force all competitors out of business by selling paint below cost.

If AC sold house paint........the would demand govt financial support due to:
1. SARS reduced the demand for house paint,
2. The Iraqi war reduced the demand for house paint,
3. 9-11 reduced the demand for house paint.

If AC sold house paint.......they would insist that all store employees in BC spoke French to ensure that all customers could be served in English and French. Unilingual BC residents would not be eligible to work in the paint stores in BC. If need be, Quebecois would be flown in to the BC paint stores every day at high cost if there was a shortage of local French-speaking paint store applicants.

If AC sold house paint.......they would still lose money & file for bankruptcy due to incompetent mgmt.




I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
hmmmm...
Posts: 1959
Joined: Tue May 18, 1999 8:32 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 2:33 am

My mother ,the travel agent, showed me this paint analogy a couple of years ago. She thought it was pretty funny. It was meant to show how tough it can be for a travel agent to explain all these crazy pricing rules to the general public. I do not know the original source.
An optimist robs himself of the joy of being pleasantly surprised
 
Greg
Posts: 5539
Joined: Sat May 28, 2005 1:11 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 4:13 am

It's no different for any carrier, really.
Maybe a bit simpler for WN and JetBlue...but there is still an incredible variance in the pricing...
 
citationjet
Posts: 2258
Joined: Sun Mar 09, 2003 2:26 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 4:55 am

The seat sold on a particular is a perishable commodity; once the flight departs the revenue from that seat on that flight is lost forever. The airline is trying to maximize revenue considering all seats for a given flight.

The paint store analogy, their product is virtually not a perishible commodity.
Boeing Flown: 701,702,703;717;720;721,722;731,732,733,734,735,737,738,739;741,742,743,744,747SP;752,753;762,763;772,773.
 
727LOVER
Posts: 6642
Joined: Tue Oct 09, 2001 12:22 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 5:08 am

When I first heard this-5 YEARS AGO!!-it was not airline specific. Now, how did Air Canada get it's name attached?
Love Trumps Hate
 
richierich
Posts: 3288
Joined: Sat Nov 04, 2000 5:49 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 5:09 am

I'd go with 'Gimli Green' for my house.
Too bad that it tends to run out before you are finished with it.
None shall pass!!!!
 
exFATboy
Posts: 1887
Joined: Thu Jul 17, 2003 11:15 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 5:44 am

That's great...even better than the "what if Microsoft sold beer" e-mail from a couple of years ago ("if you bought new beer, all your old beer would go bad immediately." "the new beer wouldn't fit in your referigerator", etc.)

Now I know that if you understand the economic theory behind airline pricing, you know the analogy doesn't work. But it's still funny as hell.

 
richierich
Posts: 3288
Joined: Sat Nov 04, 2000 5:49 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 6:06 am

CitationJet is right on... it's a perishable commodity. And obviously a highly competitive market.

It is just the nature of what we are dealing with. When you fly, you are really purchasing rental of a seat. If you don't make your flight, you still have to pay for your rented seat as someone else could have 'rented' it. Once the flight leaves the gate, an empty seat is as good as spoiled fruit as it cannot be sold.

As for the prices changes, this is true across the transportation and hospitality business. Even Greyhound does it! An empty plane makes no money. Ideally, as an airline, you wish you could charge a flat fare as it would make it so much simpler. But an empty seat means loss of potential revenue. The strategy is to know your competition and differentiate your product. Every airline has a pricing structure that starts of small and grows up until time of flight, when in some cases it will go down again to hopefully fill that perishable seat.
None shall pass!!!!
 
caribb
Posts: 1502
Joined: Mon Nov 08, 1999 6:33 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 6:28 am

LOL

They forgot the part about paying taxes... there's a 7% tax everywhere plus a provincial tax depending on your province... some provinces pay 7.5%, some 8% one (Alberta) 0% and some pay taxes ontop of the original 7% other's don't.... Then there's a store tax for instance at Dorval, er, Pierre Elliot Trudeau International paint store and Vancouver International Paint store... for maintaining the beauty of the can which of course has no real effect on can maintenance.. that's inside the price of the can of paint and taxed by all the taxes... then there's a security tax implemented to secure the paint from terrorists who might turn it into a bomb and attack America. There's also a navigation tax to be sure you bring it exactly to your house and not somewhere else... to be sure it gets there safely. Of course you can add insurance to be sure your paint actually works and you don't die from the fumes or any attempts to say drink it. The stirring stick used to be free but now they charge you extra for it by the way....

Doug
 
hmmmm...
Posts: 1959
Joined: Tue May 18, 1999 8:32 am

RE: What If Air Canada Sold House Paint?

Sat Aug 23, 2003 9:27 am

Perishable, smerishable. The paint store analogy is valid. Airlines overbook flights to escape the "perishable" situation, and they don't give refunds on most tickets if you don't show. If you don't show, they still have your money and then they even try to sell the same seat, last minute, to somebody else. A paint store can't sell the same gallon of paint to two different people and collect twice. And even with all that protection, lo and behold, they still engage in these wild games of 20 different prices for the same seat on the same flight.
An optimist robs himself of the joy of being pleasantly surprised