tonytifao
Topic Author
Posts: 788
Joined: Wed Mar 02, 2005 10:22 pm

Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 7:17 am

I know that air fares pricing is much like "rocket science", so hard to understand.

I was wondering how much of airline pricing is based on Human Analysts vs Computer.

It just seems airlines jack up their prices on last minute flights even though loads are very, very, very low.

Take for example, 2 days ago, I had a reservation on hold with AA from MCO to CNF and back for priced at $500 each way, so total base of $1000. Since I was not sure I could be making the trip this weekend, I could not extend for the same price. The fare is now $870 each way. Fare went up nearly 75% in one day. I have to guess this is a computer generated and not a human pricing. I refuse to pay this difference when flight loads are low.

If this is the case, I was wondering if more investment on human analysts to adjust pricing could increase airline revenues.

What do you all think?

Thaks,
Tony
 
al2637
Posts: 228
Joined: Mon Oct 16, 2006 1:11 am

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 8:21 am

How can you tell the load is low?

Typically fares are set by humans, availability is set by computer, using heaps of input factors (historical data, flight loads, etc etc)
 
redhair
Posts: 52
Joined: Sun Apr 03, 2011 3:55 pm

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 11:42 am

As an Revenue Analyst I can tell it depends on the airline.

I think it's FR who has only two revenue analysts for all their routes (please correct me if I'm wrong) so everything should be pretty much computerized. However, in other airlines you do have systems that change prices but you do control almost every change made by the system. These systems are aimed to adjust your price when you're not at work.

As it refers to the price a few days before the departure it also depends on the airline. Some airlines keep low prices (sometimes it's even cheaper to buy your ticket 1 day before departure than 5 days earlier) and some others put higher prices... High prices even with really low loads make sense if you keep in mind that most of the people do not plan holidays on the same day or just a couple of days in advance. So, those who really need to fly are willing to pay a higher price as they are looking for "transportation from A to B the next morning". On the other hand, if you are looking for a good price, you are willing to change your departure date if that allows you to save a couple of hundred bucks.


Redhair
 
peanuts
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Joined: Thu Dec 24, 2009 1:17 am

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 11:58 am

Quoting tonytifao (Thread starter):
Since I was not sure I could be making the trip this weekend

Since you couldn't "commit" to your trip, neither did the airline "commit" to their price. In most cases, price will go up after that if availability is still there. It's a revenue generator since the airline got you pretty much cornered if you still have to go that particular day. If you are flexible on your travel dates then those walk-up fares weren't meant for you in the first place.

Even on an empty airplane, most airliners wouldn't deviate from this strategy. Otherwise the long term trend would be that all customers will wait until the final days to book their travels.

It sounds inefficient but in a way it's not. It's all about supply/demand with a fixed amount of seats. It's a nice way to make your employees happy (which also helps the bottom line) and just give them away...
 
skymiler
Posts: 306
Joined: Fri Aug 03, 2007 5:00 am

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 12:13 pm

Quoting peanuts (Reply 3):
Even on an empty airplane, most airliners wouldn't deviate from this strategy. Otherwise the long term trend would be that all customers will wait until the final days to book their travels.

Just ask TWA what happened when they did super cheap TATL stand by/day of flight fares out of JFK many, many years ago! Almost whole plane was full of $99 standbys!
I love to fly, and it shows!
 
tonytifao
Topic Author
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Joined: Wed Mar 02, 2005 10:22 pm

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 1:03 pm

Thanks for all the responses. It seems like it's a 3 day advance purchase fare. One some routes, I say; let the computer do the job, for instance, MIA-GRU. Other routes like MIA-CNF, I just don't see many people buying last minute high fares.

The intent of my posting was to see how much computer vs human the price altered.
 
peanuts
Posts: 826
Joined: Thu Dec 24, 2009 1:17 am

RE: Airline Pricing - Human Analysit Vs Computer

Thu Sep 15, 2011 1:42 pm

Quoting tonytifao (Reply 5):
The intent of my posting was to see how much computer vs human the price altered.

Does it really matter? Who ultimately "controls" the computer?
I don't think airlines simply purchase out-of-the-box software for this and just cross their fingers. Even if software "controls" pricing, analysts behind the computer control the input. I'm sure most carriers have their finger on the pulse, so to speak...

[Edited 2011-09-15 06:44:03]

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