Record Passenger Loads

[whlinder]

This brings up an interesting point to ponder...what are the real marginal costs of an additional passenger? Is it possible that some airlines are selling some tickets below even the marginal cost?

[post="257975"][/post]​

That was what I was hinting at, as well as the part of the equation that involves the percent of passengers that connect. They add to load factor but not to revenue for the connection.

Jim, you're talking about somewhat ideal conditions. What about the additional passenger who is flying on an RJ, which means that three bags don't get on that RJ, which means that three late deliveries must be made...

How much for some of those marginal passengers? Might it benefit the company to differentiate among different marginal passenger profiles?

[post="257984"][/post]​

US or any airline should be able to get a good idea of the Expected marginal cost of a passenger.
The marginal cost equation should be
GDS fee + Expected additional fuel used + Expected catering cost + frequent flyer mileage liability + Expected compensation for screwups. Additional staff to handle additional passengers would not be considered for the short term though, since those employees are going to work if the plane is 50% or 75% full.

I believe the expected compensation for screwups has to increase dramatically when you add a connection to the ticket, and even higher when you add a connection in PHL to it. I don't think such a formula would be that difficult to figure out, as long as US has all the data and people who can turn the data into something usable . It will definitely vary on a route by route basis, but that can just create more marginal cost functions.

Of course if you calculate your expected screwups wrong because you *think* there is a 95% chance that everything will run smoothly when in fact there is a 75% chance that everything will operate smoothly, you end up in trouble.

Seems to me US would be better off restricting cheap inventory on connecting flights and opening up that inventory to Hotwire and Priceline to sell US nonstop routes where the (expected) marginal cost is significantly less.

 

[mweiss]

Additional staff to handle additional passengers would not be considered for the short term though, since those employees are going to work if the plane is 50% or 75% full.

While that's true, one might choose as a matter of policy to aim for a lower LF in order to reduce the amount of staff necessary to handle the ground service load. This would make sense under a certain (most likely small) set of market conditions.

I believe the expected compensation for screwups has to increase dramatically ... when you add a connection in PHL to it.

True enough. Do you add it to your expected marginal cost, or do you try to solve the problem in PHL? Based on past experience, it would appear that the answer is "None of the above."

Seems to me US would be better off restricting cheap inventory on connecting flights and opening up that inventory to Hotwire and Priceline to sell US nonstop routes where the (expected) marginal cost is significantly less.

[post="258024"][/post]​

Maybe. At this point we're throwing darts at a board, though you'd have the means to better aim than I would.

 

[CAREFUL]

Too bad we didnt haul their bags too.
Its gotten so bad on some days from PHL that the manager has put a gag order on the baggage agents. When someone asks why their bags arent there they are to respond they dont know and will deliver them as soon as they arrive. If that isnt a good enough answer for the customer he has instructed them to give his name and number as a contact.
For those flying around inside the planes things might appear to be getting better, but from those of us stuck at the airports every day, its going to take a lot to get the puppy back on track. :down:

[post="257897"][/post]​

hey tadjr.....looks like they will be gagging tonite...LOL


Due to WEATHER, LOCIGS, there is a Traffic Management Program in effect for traffic arriving Philadelphia International Airport, Philadelphia, PA (PHL). This is causing some arriving flights to be delayed an average of 3 hours and 27 minutes. To see if you may be affected, select your departure airport and check "Delays by Destination".

 

[BoeingBoy]

Jim, you're talking about somewhat ideal conditions. What about the additional passenger who is flying on an RJ, which means that three bags don't get on that RJ, which means that three late deliveries must be made...

How much for some of those marginal passengers? Might it benefit the company to differentiate among different marginal passenger profiles?

[post="257984"][/post]​

Well, my guess of 2 cents was more of a "normal" incremental cost (the sub-1cent per mile was an "optimum" guess), but I see your point. In a worse case I guess the incremental cost could go up very, very, significantly - probably to 30, 40, 50 cents per mile.

Fortunately, the worst case (as bad as US baggage, misconnections, etc get sometimes) is relatively rare. Misconnected bags is running about 20-25 per 1000 passengers. Most missed connections are handled on-line and don't require paying another carrier to carry the passenger. Etc....

Does that make my 2 cents correct - don't know. But I suspect that the average is not much more than that.

Jim

 

[SVQLBA]

The marginal cost equation should be
GDS fee + Expected additional fuel used + Expected catering cost + frequent flyer mileage liability + Expected compensation for screwups. Additional staff to handle additional passengers would not be considered for the short term though, since those employees are going to work if the plane is 50% or 75% full.

[post="258024"][/post]​

What's insidious (sp?) is the bunch of extra complexity related costs that high-levels of connecting pax add. From additional time ticketing (more complex) to additional ramp manpower (all the bag running for min connect times that the main bag systems can't handle), costs and opportunity costs from blown CX, etc etc. Each bit individual seems small, but it all adds up, leading to far more marginal cost than your equation.

WN has a significant number of connecting pax (30% IIRC), but they get burdened with less of these complexity costs because of high usage of same-plane multi-stop itins, spread cxs around several hubs around the system, and keeping their operations even at large airports in a very compact footprint (through design and high asset utilization).

 

[tadjr]

hey tadjr.....looks like they will be gagging tonite...LOL


Due to WEATHER, LOCIGS, there is a Traffic Management Program in effect for traffic arriving Philadelphia International Airport, Philadelphia, PA (PHL). This is causing some arriving flights to be delayed an average of 3 hours and 27 minutes.

[post="258034"][/post]​

Oh yeah, coming and going again tonight. I cant wait til May to get rid of all the hourly flights to PHL. They were running anywhere from 2-6 hours late tonight (and the CLT flight was 3 hours late cause it COMES FROM PHL!!!).
Had the CHPRreferred line call tonight to the supervisors office when I was in there wanting to speak to a Supv (she was out sick and they had a part time agent covering her line and she was busy on the counter.) Seems a CHPR didnt get his bag again and didnt want to wait in the long line with only 2 agents working baggage and thought we should get someone else down there ASAP to take his claim. I asked the CHPR desk just who should we send? The agents stuck at the gate with the 4 delayed PHL flights? An agent from the counter stuck rerouting all the misconnects? Who? I advised him this is the staffing level we've been given (2 agents in baggage is a good thing nowadays!). I told him to give him the managers number although he wasnt there right now, its the best we could offer with what we're given to work with.
On a related note since we're getting rid of everyone. Why cant we get Atento to TAKE claims as well as answer questions about the claims? This sure would save a lot of aggravation. We could have a little form preprinted to hand out to those at the end of the line. Here is the baggage call number, here is a chart of bag descriptions and color codes. Call them with your bag tag numbers that you are missing and we'll see what we can do. In the mean time, muchas gracias por su cooperacion.

 

[whlinder]

At this point we're throwing darts at a board, though you'd have the means to better aim than I would.

[post="258030"][/post]​

I suppose so, if I had the time and the 'authorization'. Throwing darts at a board might be an improvement, as I can't tell anything that US Airways has done to price their product better in the past 3 months. When I was on Seth's Go-Fares website the other day there didn't seem to be any mention of an event/promo after December 04. Looking through US press releases I can't find any evidence of new Go-Fare markets this year, and I can't recall any threads on here (or Flyertalk) announcing new Go-Fare markets. They are sure taking their sweet time in converting the airline to 100% Go-Fares. But if they are abandoning Go-Fares as a pricing strategy (while keeping it as a marketing strategy against the LCC markets) they haven't announced or shown any indications of any other type of pricing strategy. The old one sure isn't working they went from a gap of 6.3% between actual and break-even load factor in 2003 to a gap of 12.8% in 2004. They match fare changes to stay competitive but I don't see any indications of trying anything new to improve their performance. Throw a dart, try something.

WN has a significant number of connecting pax (30% IIRC), but they get burdened with less of these complexity costs because of high usage of same-plane multi-stop itins, spread cxs around several hubs around the system, and keeping their operations even at large airports in a very compact footprint (through design and high asset utilization).

[post="258037"][/post]​

Is 30% high? I recall reading how TWA ran about 70% of their total passengers as connections through STL. Do airlines publish this stat anywhere?

 

[BoeingBoy]

whlinder,

I'd put it this way - 30% is significant for an airline that doesn't operate a 'hub/spoke' network but not high compared to 'legacy' carriers.

Anecdotally, I probably see somewhere between 70 and 80% connecting on my flights. But that's almost exclusively in and out of the hubs (mostly CLT anymore) where you'd expect to see a high connection percentage.

Jim

 

[BoeingBoy]

Well, I guess with these record bookings we must have a few empty seats out there - the company just announced a fare sale for spring and summer.

Some city pairs and fares - I've calculated the yields using 'straight line' routing since some of these can connect thru different hubs.

ALB - MCO $98 (4.58 cents)
BWI - FLL $98 (5.29)
BUF - JAX $98 (5.60)
CMH - TPA $118 (7.11)
MCI - MCO $118 (5.51)
LAS - PBI $198 (4.60)
LAX - TPA $198 (4.60)
MHT - TPA $98 (4.08)
ORF - FLL $78 (6.26)
PHX - FLL $198 (5.03)
PVD - PBI $98 (4.26)
RDU - TPA $78 (6.64)
SEA - MCO $198 (3.88)
SAN - JAX $198 (4.76)

Jim

 

[whlinder]

The straightline yields aren't bad if it is the lowest US price in the market, but the connection yields don't help. Using the data you posted in another thread for the 'operational success' of the company

Operationally, this airline is falling apart. Some numbers, all month to date as of yesterday..

4 of every 10 'first flight of the day' mainline originators (fleet launch) is late departing.
6 of every 10 daily mainline flights is late departing.
5 1/2 of every 10 express flights is late departing.
3 of every 10 mainline flights is over 14 minutes late arriving.
3 1/2 of every 10 express flights is over 14 minutes late arriving.
5 1/2 of every 10 mainline flights exceeds it alloted 'turn' time (park to push back).
130 flights (mainline & express combined) cancel every day.
2.3 of every 100 passengers (mainline & express combined) arrive without their baggage.

I would hazard a guess that if a passenger on those fares loses a bag, misconnects and is put on another airline, or is forced to spend a night because they missed a connection (on US Airways' dime) that the marginal cost of transporting the passenger is more than the revenue brought in on their ticket. The odds that those things happen are higher than they should be, and adding more passengers at yields less than half the CASM only increases the chance of a lost bag, etc.

 

[mweiss]

On the plus side, if 60% of mainline flights are late, then odds are that your late inbound will still allow you to connect with your late connection.

 

[diogenes]

Management lost operational control of this airline twice in the past 15 years. Both times, the grunts kept the airline going.

Ain't gonna happen again.