Yield will Bankrupt AA

WingNaPrayer

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Heard today that last Monday, AA paid out $56,000.00 in oversales travel vouchers in Miami alone.[BR]It''s nice to know the planes are full, but the Yield Department is costing this carrier an arm and a leg on a daily basis. Whoever is in charge of yield needs to be pink slipped immediately! 56 thousand is a chunk of change, especially when it''s something that happens on a regular basis.
 
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WingNaPrayer

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[BLOCKQUOTE][BR]----------------[BR]On 11/15/2002 9:26:12 PM FA Mikey wrote:
[P]On average only 14% are ever used for future travel. I would hardly call that killing our yields.[/P]----------------[BR]So in other words, what you're saying is that only 14% come back and use the free travel vouchers they are given due to oversales, overbooking, whatever, the remaining 86% remain pissed and never come back?[BR][BR]You can't have it both ways. Customer inconvenience breeds animosity and distaste, not to mention a word of mouth that spreads far and wide.[/BLOCKQUOTE]
 
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WingNaPrayer

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Oversales are just plain bad business, especially at the percentages that AA appears to use. There are many many people in the caribbean markets who have vouchered back and forth from the various islands for years without ever having to purchase a ticket. This is because they know that AA yield have their heads up their collective asses and continually oversell, even though they know the no-show factor on many of these flights is slim and none. During specific times of year, say when carnival is going on or something of that nature, these business people ferry back and forth, hauling their merchandise (even as carry ons)
 
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On 11/14/2002 12:16:16 PM WingNaPrayer wrote:

Heard today that last Monday, AA paid out $56,000.00 in oversales travel vouchers in Miami alone.
It's nice to know the planes are full, but the Yield Department is costing this carrier an arm and a leg on a daily basis. Whoever is in charge of yield needs to be pink slipped immediately! 56 thousand is a chunk of change, especially when it's something that happens on a regular basis.
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What a lot of people don't seem to understand is that the voucher is nothing more than play money to the airlines, most people, not all, won't use them and those that do are getting a seat that would probably go empty anyway/ it just bumps a non-rev out of a seat/, most planes/not all/ have empty seats when they leave the gate so if someone uses a voucher the seat gets filled, the pax feels he's getting something for nothing and the airline was able to accomodate probably a premium pax on the earlier overbooked flight, everyone is happy. History shows that there is around a 20% no show factor for some flights, so if you had a plane that seats 100, and 20 didn't show up you would loose the revenue of those 20 seats, now if you overbook the plane by the same 20% lets say 10 don't show, you only have to give 10 vouchers out and most people will/if the price is right/ give up their seats and take the next flight.
 

DFWCC

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Many times I have heard, its only filling an empty seat.
Do you recall several yrs back whenthere was hoopla over the Ideas in Action idea to remove metal spoons from the meal service. That idea was said to have saved @ $6,000,000. Mainly from fuel costs and replacments etc. And I don't recall what fuel cost p/gal were.
If the ave fl has 2 OS you have generated a lot of additional cost for a free voucher. Weight for 2 OS, 370lbs
3bgs + 2 cary ons.. 100lbs. Fuel cost to fly 470lbs an ave of say 500 miles will add up. What about paer work? Agts time? Baggage? 3 extra bags x 3000 fl/day now we are talking 9000 bgs/day some of which may be lost adding to del or replacement cost. Ther is more but I think you get the idea..
 

FA Mikey

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WING says:
During specific times of year, say when carnival is going on or something of that nature, these business people ferry back and forth, hauling their merchandise (even as carry ons) and during their busy season, many of them scoop up anywhere from 10-30 vouchers. The next thing you know, the entire family arrives in Florida for a nice DisneyWorld vacation, all compliments of AA (and it's stockholders).

Mike says:
Yea and we got the revenue for all those tickets that the person used to get the vouchers. So some people use it as ther very own FF program. Since the vast majority are never returned its a plus for us. Keeps more planes full. Keeps customers happy. Plus it offers passengers with flexible travel plans the oppotunity to get dollars off on future travel.
 
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WingNaPrayer

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Again, a free voucher always...[EM]always[/EM] equates to more than just a butt in a seat. The fuel to haul them, the meal, the snack, the soda, the baggage, the agent that processes the voucher at check-in, the gate people that deal with that butt the baggage handlers taking care of baggage that is being transported for free, the cabin crew's time on board, cabin service cleaning up after them and that's just for starters. Don't even get into the accounting mess that a voucher creates, and reach for the aspirin bottle if that flight gets weight restricted and you either have to hold back the cash- cow cargo so you can haul [EM]them[/EM], or you end up giving [EM]them[/EM]......ANOTHER VOUCHER![BR][BR]Most of this was created by the bright idea of ticketless travel. Without a paper ticket, just passing a customer off onto another carrier (which used to be real customer service rather than stranding a customer at an airport) isn't as easy as it used to be - it's customers held hostage.[BR][BR]99.999% of what goes wrong at a carrier is blame that can be directed squarely at yield.[BR][BR]And just for grins.... figure out who to dump the delay on while you process all those oftentimes last to board voucher holders.....hmmmmm.
 

avek00

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The bottom line is that the cost to AA to provide travel on those vouchers is minimal compared to the revenue from higher-fare tickets that AA is receiving from overselling the flight.
 
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WingNaPrayer

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[blockquote]
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On 11/17/2002 1:16:04 PM avek00 wrote:

The bottom line is that the cost to AA to provide travel on those vouchers is minimal compared to the revenue from higher-fare tickets that AA is receiving from overselling the flight.
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Don't tell the DOT that. If they hear you're purposely overselling flights to gouge higher ticket prices, you'll be in some DEEP $hit!
 

ITRADE

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I will also be willing to bet you that a good percentage of the folks that are willing to take bumps or free vouchers are folks who are extremely price sensitive and have little brand loyalty. You will not often see $350 an hour attorneys who will willingly be bumped from a flight to possibly sit around for three or four hours for the next flight. College students yes, biglaw attorneys no.
 
Assuming an average value of around $300 per voucher, that only comes to about 185 oversales for a single day.

Considering MIA boards somewhere in the area of 25,000 passengers on around 215 departures every day, that's less than one oversale per flight operated.

Yep. That's gonna bankrupt AA alright...
 

MrMarky

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I agree with ITrade. You've gotta be a leisure type with time to burn, to do a voluntary bump. It may be fine for Grandma and Grandpa, or Johnny College, but most business travelers are on a schedule and the value of the voucher is too trivial compared to a missed appointment.

Question: If you're an FF can you upgrade when flying on a voucher??

mAArky
 

ITRADE

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[BLOCKQUOTE][BR]----------------[BR]On 11/18/2002 5:34:56 AM MrMarky wrote:
[P]Question: If you're an FF can you upgrade when flying on a voucher??[BR][BR]mAArky[/P]----------------[/BLOCKQUOTE]
[P]Probably depends on the airline. In my experiences with US, the answer is an absolute NO![BR][BR]In fact, I've know of a guy who relayed the following story:[BR][BR]Person on bump voucher asks to be upgraded. Answer is no. Person knows that seats are available in F class. Response is that if the person were to be the ONLY passenger on the entire plane, they'd be enjoying their bump voucher travel experience from the comforts of F class.[BR][BR]Now, there are exceptions.[BR][BR]My wife and I had a bump voucher about three years ago. We tried to upgrade the day before and got slammed. We showed up and tried again at the front counter. No go. Resigned to our fate, we went to the gate and waited for boarding. About 5 minutes prior to boarding call, I was paged to come to the gate counter. Went up and was instantly upgraded. Reason was the flight was oversold in Y and they needed to clear some people. Since there were 6 seats open in F and my wife and I were both Preferreds, we got moved up.[/P]
 

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