Given that I am going to be flying with them in the near future, I hope British Airways employees use more logic and reason in the cockpit than they do pricing flights.
I suppose that there is some way to explain my discovery in a ‘Freakonomics’ sort of way. I refuse to try. I’ll simply present the facts and see if some of you can explain whether this makes any sense. Explanations forthcoming or not, if someone knows someone in British Airways who is responsible for pricing policy, tell them I’m willing to help. Why would I think they need help?.
I am flying to Bengaluru with a stopover in London in June returning in July. Chicago is my take off point. Economy seems uncomfortable (a combination of my girth inflation and airline seat size deflation), and Business is simply pricey. Maximizing across the two variables of comfort and price, and given my route British Airways World Traveller Plus and Virgin Atlantics Premium Economy became contenders. Web research and reports suggested that Virgin Atlantic is the better deal on price and comfort, except they only fly to Delhi in India. British Airways flies Bengaluru directly from London. So I thought I’ll split the difference. Fly BA in and Virgin on my return. I could always stop for a day in Delhi and see folks on my way out.
So I go to price One Way ORD to BLR with stopover in LHR and it tells me that the price is $ 4442.41.
Except when I checked out Round Trip ORD – BLR, going ORD to BLR with a stopover in LHR (exact same flight as one way above including flights and dates), and returning BLR – ORD the price was $ 3,533.32!
And in case you are wondering, I fired up my laptop and my netbook and had both these quotes simultaneously at about 1517 Hrs. on Friday, May 13, 2011. I present the relevant parts of the quotes below - click on them please.
One Way ORD to BLR
One Way ORD to BLR and Back
Now as I said, you may be able to explain the logic and reason for this. I however am changing my mind and turning to prayer. I’m flying BA and my plea to the Lord is, “Dear Lord, Please make sure that there is more logic and reason in BA’s cockpit than in their pricing.”
I suppose that there is some way to explain my discovery in a ‘Freakonomics’ sort of way. I refuse to try. I’ll simply present the facts and see if some of you can explain whether this makes any sense. Explanations forthcoming or not, if someone knows someone in British Airways who is responsible for pricing policy, tell them I’m willing to help. Why would I think they need help?.
I am flying to Bengaluru with a stopover in London in June returning in July. Chicago is my take off point. Economy seems uncomfortable (a combination of my girth inflation and airline seat size deflation), and Business is simply pricey. Maximizing across the two variables of comfort and price, and given my route British Airways World Traveller Plus and Virgin Atlantics Premium Economy became contenders. Web research and reports suggested that Virgin Atlantic is the better deal on price and comfort, except they only fly to Delhi in India. British Airways flies Bengaluru directly from London. So I thought I’ll split the difference. Fly BA in and Virgin on my return. I could always stop for a day in Delhi and see folks on my way out.
So I go to price One Way ORD to BLR with stopover in LHR and it tells me that the price is $ 4442.41.
Except when I checked out Round Trip ORD – BLR, going ORD to BLR with a stopover in LHR (exact same flight as one way above including flights and dates), and returning BLR – ORD the price was $ 3,533.32!
And in case you are wondering, I fired up my laptop and my netbook and had both these quotes simultaneously at about 1517 Hrs. on Friday, May 13, 2011. I present the relevant parts of the quotes below - click on them please.
One Way ORD to BLR
One Way ORD to BLR and Back
Now as I said, you may be able to explain the logic and reason for this. I however am changing my mind and turning to prayer. I’m flying BA and my plea to the Lord is, “Dear Lord, Please make sure that there is more logic and reason in BA’s cockpit than in their pricing.”
It is premised on behavioral economics and not the simplified price and qtty sales model.
ReplyDelete- LRS
LRS....and the Behavioral Econ logic is? I'm happy accepting that pricing in the airline industry is not a competitive story. But one must be able to explain why the marginal cost of returning is negative. Why does this make sense for anybody? Why wouldn't people simply buy a RT ticket even if they want to only travel OW?
ReplyDeleteMaybe because airline pricing seems very similar to autorickshaw pricng in India...cabbies in India charge a 'return fare/savari' when going to 'mofusill areas'.
ReplyDeleteAirlines have a similar strategy, for all routes...RT fares are cheaper than OW because they want to ensure that every seat is sold on every flight. (Obviously, RT passengers are irrelevant to this example.)
1) A one way traveller buys a RT as it is cheaper than OW
2) The airline fills the seat vacated by the above traveller on the return journey by always overbooking flights.
Thus they ensure a 'return fare/savari'on every trip!
And now back to my day job...
I posted a comment which, for reasons I cannot comprehend, has not appeared. So I am going to give it another shot...can you tell that I've not done too much of this stuff?
ReplyDeleteSo, what I think is that Airlines and Indian cabbies have very similar pricing strategies...they do not want operate the vehicle empty.
Indian cabbies often charge a "return fare" when taking a passenger to a 'mofussil area' ( the boonies)
Airlines ensure this on EVERY TRIP by pricing OW tickets higher than RT...an inbuilt mechanism to ensure a "return fare". The OW passenger pays a higher fare.
Moreover, they always overbook flights which allows them to sell the vacant seat of the OW (on the return leg)...icing on the cake!
Rahul - apologies for not seeing your comments earlier. In India and have been away from the blog (till now). Tell me which autorickshaw person in India will tell you, "Sir, from Mylapore to Tambaram, Rs. 200/-. From Mylapore to Tambaram and back, Rs. 150/-." That is the pricing story in my example. It makes sense to me if a RT may be just $1 more than a OW - but a RT being less than a OW makes little sense
ReplyDeleteIf the airlines objective function is to fill seats there are much simpler methods. That cannot be the objective function.
I have travelled by BA recently and had a harrowing time.My husband and I wanted to travel in style and bought the Business class tickets.A huge sum of our savings went down the drain!We were travelling from Bengaluru to Newyork with a stop over at Heathrow.Journey was fine during the first part of the journey.The second half of the journey which is trans Atlantic was shorter and with the better service,we thought we could sleep our way through. Lo and behold,we were trapped inside the aircraft for 6 hours reassuring us every half an hour that the plane will take off as soon as the technical snag is sorted out. .But 6 hours inside the plane is something which is normal only if the plane is hijacked and the passengers are held as hostages?????At the end of 6 long hours of waiting plane took off. The plane landed in JFK at 12.30 midnight instead of 5 30PM.Since you had mentioned about the famous airlines The British airways, I was prompted to write about my experience with them.
ReplyDeleteMamatha Aunty- Sorry you had such a bad flight experience. Just to be sure, I don't think BA is a good airline - I seldom fly them. And it seems my hope that they will FLY better than they PRICE may just remain a hope. Though in their defense, your gripe with them is when they did not fly! :-)
ReplyDeleteI'm assuming this is THE Mamatha Aunty - Welcome to America. hough Aunty, your post does disappoint me. I always thought of you as a FIRST CLASS. not a Business Class, type! :-)