Distressed Inventory – How Do Airlines Get Rid of Seats?

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ozfflyer

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have been looking at flights to EU & USA/Canada for next school holidays starting around mid November.

There seems to be reasonable loads end of November to around 20 December & again 1st week of January, but outside those periods, many flights seem to be only 1/3 to 1/2 sold, which is very low only 3-4 months out.

Hard to cancel flights, as might have decent loads in one direction only.

With school holidays in Qld( & Vic I think) starting tomorrow & NSW in a week & most airlines having crazy numbers of seats unsold for the long school holiday period, what do the yield managers do ?

Do they

1) offer agents more commission? (heard that something like 65% of international tickets ex Australia sold by agents - not sure how much of that is online)
This would be self defeating if all airlines did it

2) dump prices further to public? (already doing that in many cases & not working - some airlines have student fares, under 31 fares, teacher fares) or to the industry ?

3) offer long payment terms by credit card at no interest, where pax might even be paying off their airfares after their trip.

4) all of the above

5) or something else, like free stuff, eg. credit for hotel/cars/trains/theme parks etc. etc. Obviously if pax aren't going anywhere at present, none of these entities will be selling anything.

or 6) offer individual travel consultants incentives like, sell $x of us get free flights somewhere, with a fall back if someone sells just short of the mark.

Many marketing managers are probably under the age of say 45, who were 18 during the last recession & have no idea how to handle recessionary trends.
 
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Question - how do you know many flights are only 1/3 to 1/2 full? The only people who would know this would be airline executives and yield managers. (And, closer in to departure, crew and caterers.)
 
Question - how do you know many flights are only 1/3 to 1/2 full? The only people who would know this would be airline executives and yield managers. (And, closer in to departure, crew and caterers.)
experienced travel agents have ways & was told by one who's been doing it for 40 years.

If you think about it, the slow way, would be to book 11 bookings of 9 seats & that's 99 seats.
(most airlines allow for a no show factor, so if an airline allows 99 seats to be booked, there might only be 90 something seats left.

She said she had heard that some airlines are taking far more economy bookings than seats.

Example she gave was an aircraft with 50 business & 350 economy, taking up to 400 economy bookings, on basis that up to 50 people would have to be upgraded, hopefully mostly for some sort of fee.


She said one airline will start a massive dump & rest will have to follow, at least to some degree.

She's not one of those

"you have to book now or price will go up"

she knows I don't like paying top dollar.

She actually calls me the anti wanker(no insult), as I never carry on about paying too much, as never do.
 
I think we discussed this in another thread. I'm not sure experienced travel agents would know more than the maximum number of seats that display on the GDS, which depending on the airline would be 9, sometimes less. Now Y9B9H9K9 might indicate a flight with plenty of potential capacity, it doesn't mean the flight is only 1/3 full. A Qantas or Singapore airlines A380 might display Y9B9H9K9 at the time of departure - but with 400 economy seats that could mean as few a 9 empty seats in 40 rows. Less than one spare in every three-four rows.
 
I think we discussed this in another thread. I'm not sure experienced travel agents would know more than the maximum number of seats that display on the GDS, which depending on the airline would be 9, sometimes less. Now Y9B9H9K9 might indicate a flight with plenty of potential capacity, it doesn't mean the flight is only 1/3 full. A Qantas or Singapore airlines A380 might display Y9B9H9K9 at the time of departure - but with 400 economy seats that could mean as few a 9 empty seats in 40 rows. Less than one spare in every three-four rows.
no not talking about availability in any class. Am saying finding out exactly how many seats unsold, except for no show variation.
 
Meanwhile back to the OP main question.

When I was in the GFC and selling business equipment I figured that the people that were buying from me 'had' to be buying. I didn't discount instead maintaining the price which maintained my margin. For the people that were extending the life of their equipment I ran service programs to increase the attractiveness of servicing consistently.

Now, put that 'capital equipment' mind to aircraft seats.

Flights that are likely to be close to full, have less discounted seats available.
Other flights, partner fares, to encourage the passengers to seek out fellow travellers, more of the lower price fares without lowering the price expectation
Work with existing travel partners to support existing relationships ie dont offer 'new' agents better pricing, maintain and support ongoing business problems do pass)
Bundle accom and travel deals. look at the total sale.


For the airlines I fear that much of their schedules are locked in and have to be operated. The danger of discounting too much is that that resets the price expectation, making any recovery that much harder.

Now, what would Michael Porter do?

Alby
 
Meanwhile back to the OP main question.

When I was in the GFC and selling business equipment I figured that the people that were buying from me 'had' to be buying. I didn't discount instead maintaining the price which maintained my margin. For the people that were extending the life of their equipment I ran service programs to increase the attractiveness of servicing consistently.

Now, put that 'capital equipment' mind to aircraft seats.

Flights that are likely to be close to full, have less discounted seats available.
Other flights, partner fares, to encourage the passengers to seek out fellow travellers, more of the lower price fares without lowering the price expectation
Work with existing travel partners to support existing relationships ie dont offer 'new' agents better pricing, maintain and support ongoing business problems do pass)
Bundle accom and travel deals. look at the total sale.


For the airlines I fear that much of their schedules are locked in and have to be operated. The danger of discounting too much is that that resets the price expectation, making any recovery that much harder.

Now, what would Michael Porter do?

Alby
yes but this is far worse than the GFC, it's a recession, a big one & think someone needs to come up with something new or a variation on the theme. I'm thinking airlines working in with banks/credit card companies, spreading costs interest free over a long period like up to 12 months, even if departure date is only a month or 2 away.

When the GFC hit, VA & DL had just started flying SYD/LAX/SYD & fares of $999 were common in peak season, but those sort of fares are apparently not working this time around.

Michael Porter ?

Do you mean Michael Eugene Porter an American academic ?
 
I’m not seeing anything on the route I usually do that suggests anything abnormal for the long holiday periods. Fares on LCCs $600-$700 return without any add-ons such as luggage. Typical non holiday pricing $300-$500 return. Full service $1000-$1500 return. Typical non holiday $650-$900. This is MEL-SIN return or vice versa. Nothing to suggest loadings willl be any lighter than normal at this stage.
 
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I’m not seeing anything on the route I usually do that suggests anything abnormal for the long holiday periods. Fares on LCCs $600-$700 return without any add-ons such as luggage. Typical non holiday pricing $300-$500 return. Full service $1000-$1500 return. Typical non holiday $650-$900. This is MEL-SIN return or vice versa. Nothing to suggest loadings willl be any lighter than normal at this stage.
have a look at either end of peak season.

Know flights to USA are quite full for example, January 2-6. Normally peak season runs until around January 14, but flights after January 6 or 7 are nowhere near full.

If the public wants to find out how many seats available on a certain day from A to B on an airline, they can find out easily by contacting groups dept.

Say have a group of 150 people, who ideally would like to fly together on same flight.

If airline says they work out a price, they obviously have the seats to sell. If airline says can't get that many on same flight, they will say how many can get on same flight.

If it's that easy for the public, it's much easier for a travel agents who's been around nearly 1/2 century & probably knows every trick in the book.
 
have a look at either end of peak season.

These were fares from 15th Jan onwards. If you go peak of peak season, you can make LCC’s $750-$1000 with no add ons, full service $1200+. In reality peak season for Asian flights goes from early Dec thru to just after Chinese New Year. Many flights are even showing Y0 on expertflyer.

My point being you can’t extrapolate what you are seeing in one market to all markets. Just because it might appear that you can get cheaper fares to US doesn’t mean that applies to all destinations.
 
These were fares from 15th Jan onwards. If you go peak of peak season, you can make LCC’s $750-$1000 with no add ons, full service $1200+. In reality peak season for Asian flights goes from early Dec thru to just after Chinese New Year. Many flights are even showing Y0 on expertflyer.

My point being you can’t extrapolate what you are seeing in one market to all markets. Just because it might appear that you can get cheaper fares to US doesn’t mean that applies to all destinations.
not just looking at US/Canada. That was just an example of what am familar with. Also looked at EU (& UK who are still part of EU at least for another 6 weeks or so).

Maybe part of what is happening is many people are ditching long haul destinations & those that are perceived to be expensive (USA, UK) & flying short/medium haul to Asia/Pacific instead. HKG demonstrations are having a huge effect on CX, so they are dropping average fares, which means others have to as well.

Apparently Fiji is booming.
 
<snip>...
There seems to be reasonable loads end of November to around 20 December & again 1st week of January, but outside those periods, many flights seem to be only 1/3 to 1/2 sold, which is very low only 3-4 months out.

Hard to cancel flights, as might have decent loads in one direction only.
</snip>

<snip> ....

She said she had heard that some airlines are taking far more economy bookings than seats.

Example she gave was an aircraft with 50 business & 350 economy, taking up to 400 economy bookings, on basis that up to 50 people would have to be upgraded, hopefully mostly for some sort of fee.

</snip>

So which is it?

Are the flights empty or oversold?
 
not just looking at US/Canada. That was just an example of what am familar with. Also looked at EU (& UK who are still part of EU at least for another 6 weeks or so).

Maybe part of what is happening is many people are ditching long haul destinations & those that are perceived to be expensive (USA, UK) & flying short/medium haul to Asia/Pacific instead. HKG demonstrations are having a huge effect on CX, so they are dropping average fares, which means others have to as well.

Apparently Fiji is booming.

I have read elsewhere that allegedly leisure traveller bookings from Oz to Europe for 2020 (given that many book well in advance because they go on river or ocean cruises) are depressed. What that means in reality for airline load factors is something we'll discover once BITRE issues its statistics for those months.

I've not seen super cheap fares from CX: it seems to always be (and still is) one of the more expensive Asia Pacific airlines ex Oz.

Clearly consumer spending in Oz is variable depending on the industry but some discretionary sectors such as take away food are not doing well, so if we lump in international airfares in that category, that may explain Ozflyer's hypothesis. The lower A$ does not help.
 
I have read elsewhere that allegedly leisure traveller bookings from Oz to Europe for 2020 (given that many book well in advance because they go on river or ocean cruises) are depressed. What that means in reality for airline load factors is something we'll discover once BITRE issues its statistics for those months.

I've not seen super cheap fares from CX: it seems to always be (and still is) one of the more expensive Asia Pacific airlines ex Oz.

Clearly consumer spending in Oz is variable depending on the industry but some discretionary sectors such as take away food are not doing well, so if we lump in international airfares in that category, that may explain Ozflyer's hypothesis. The lower A$ does not help.
not that I'd fly to USA or Canada via HKG, but there have been some $1000 return fares from BNE & SYD to SFO & LAX via HKG for departures in early January.

Part of the issue with river cruises giving free return flights - cruises are seemingly $6k+. If someone sees return f ares for $1k, even if not when they were looking to go on a river cruise, it makes the cruise $5k+ seem expensive.

There are so many $1k return fare to EU around & as low as $770 (think that was scoot) that some people are now benchmarking $1k as some sort of normal return economy fare to EU & not talking from PER, but BNE, SYD & MEL
 
not just looking at US/Canada. That was just an example of what am familar with. Also looked at EU (& UK who are still part of EU at least for another 6 weeks or so).

I think we will by large tell what's happening in the EU market, as Melburnian1 points out, during the regular peak periods for travel there, not necessarily around Xmas. I am not sure ex-Australia but ex-Singapore it's always cheap to get to Europe during the European winter. Every year we consider ditching family Christmas in AU and heading to Europe as fares to MEL are as above, whilst to EU they can be as low as $700-800, even SQ routinely offers $~1000-1200 fares. I noticed on dates that SQ are charging $1500 return SIN-MEL they are charging $1040 SIN-LHR return. This is not abnormal, it happens every year. This probably means that the ME carriers charge less during this period to EU, as they can't pick up higher fares to/from Asia. Asian carriers, might offer some bones to put some backsides on seats on their Asia-EU services, but are making good money thank you very much to/from Asia.
 
right now you can get from MEL or BNE to LON for around $900 return on a full service carrier for departures to end of May.

Also had a look at flying to Italy, specifically MXP. At start of school holidays in mid June 2020 can fly full service carrier to MXP returning 3 weeks later for $1100.

To me, that's insanely cheap.
 
saw that even Lufthansa offering in May next year about 1000 Aud return.
 
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