Auctioning off airline seats ?

[ozfflyer]

Airlines always have certain days which never sell very well, such as December 25 or 31.

There seems to be a disconnect between what price sensitive passengers want to pay & what airlines will accept.

But if airlines either auctioned off some seats, with fixed dates, perhaps this might help them clear some seats without advertising lower prices.


Passengerscould have make an offer, so one one except those making the offer, could see the price (www.priceline.com used to do something like this) or simply do an auction on ebay.


Looking at flights, for example to LAX departing SYD December 25 coming home 2 weeks later.


The cheapest nonstop is around $1600 return for an adult & around $1200 for child.


If the auction started with minimum of $999 for everyone, which is a really good price point (so no age discrimination, except no unaccompanied minors), the airline would nearly get the same as the kids fare.

If a blind auction, they could accept whatever figure they wanted to.

Is this a good or bad idea ?

 

[albatross710]

Probably too hard for a single date and single airline. I think a feature like this would have to be delivered by the underlying technology like amedeus as a way to optimise the profitability.

I think they rely on the 'auction' feature inherent in the fare buckets, the slower the sales, the longer the lower fare buckets stay in the market. The lower fare buckets will have sold faster on the more popular dates.

 

[ozfflyer]

Probably too hard for a single date and single airline. I think a feature like this would have to be delivered by the underlying technology like amedeus as a way to optimise the profitability.

I think they rely on the 'auction' feature inherent in the fare buckets, the slower the sales, the longer the lower fare buckets stay in the market. He lower fare buckets will have sold faster on the more popular dates.

but get the impression, many people look online only for dates they want. eg. someone might want to go Dec 26 & return fare coming home 2 weeks later might be $1600 to $2000, but they might see an auction for departure December 25 or 31 for $999 minimum bid & that might get them moving

 

[trooper]

And then if they didn't get it for $999 they'd be all over social media talking about 'bait and switch"....

 

[ozfflyer]

And then if they didn't get it for $999 they'd be all over social media talking about 'bait and switch"....

so ?

They might then get more sales from free "advertising".

If blind auction, if someone did get $999 fare & told others, then might have to pay more.

 

[odysseus]

Bad idea, as albatross said.

Even priceline has moved away from that model, and uber in a similar sense, and even the original ebay. People want more certainty. Not wait x days only to get a result that's higher than they want to bid, with the extra restrictions of specific dates added as per your example.

There was even a local cruise site that tried a similar thing here, which is a more suited market since the cruises themselves are the vacation so the dates are fixed anyway and there's a larger low cost market. But that experiment also failed.

There are just better ways to get a return than rely on a very small niche to be online at a certain time for this sort of product, and at the same time it wasn't that appealing to the customers for other reasons.

 

[ozfflyer]

Bad idea, as albatross said.

Even priceline has moved away from that model, and uber in a similar sense, and even the original ebay. People want more certainty. Not wait x days only to get a result that's higher than they want to bid, with the extra restrictions of specific dates added as per your example.

There was even a local cruise site that tried a similar thing here, which is a more suited market since the cruises themselves are the vacation so the dates are fixed anyway and there's a larger low cost market. But that experiment also failed.

There are just better ways to get a return than rely on a very small niche to be online at a certain time for this sort of product, and at the same time it wasn't that appealing to the customers for other reasons.

airlines know what average stay on a return itinerary is. They might eg. have 1 departure date, with 2 or more return dates. Many people will move their preferred dates by a few days, if saving is significant, cf. what else is out there.

They could have very short auctions or as on ebay BUY IT NOW.

or simply make an offer, which could then be either accepted, declined or countered, almost immediately.

 

[albatross710]

There are just better ways to get a return than rely on a very small niche to be online at a certain time for this sort of product, and at the same time it wasn't that appealing to the customers for other reasons.

This is a good example of how consumers and the sellers have an agreed set of understanding how the market works. The disruptive do come along and upset it. But the disruption has to be significantly disruptive to make it work. Uber and AirBNB disrupted by bringing into the market significant inventory of private cars and apartments.

Empty jets has a similar model as proposed by the OP.

Alby

 

[ozfflyer]

This is a good example of how consumers and the sellers have an agreed set of understanding how the market works. The disruptive do come along and upset it. But the disruption has to be significantly disruptive to make it work. Uber and AirBNB disrupted by bringing into the market significant inventory of private cars and apartments.

Empty jets has a similar model as proposed by the OP.

Alby

not really like empty jets

What am talking about is airlines, who's flights are operating, but as of right now, some flights in just over 2 months time, have only 60% of seats booked. They can't downgrade the aircraft for various reasons, eg. don't have a smaller aircraft available which can do mission & flight in other direction might have much higher bookings than 60%.

Would suggest that normally flights in late DEC/JAN should be 80-90% booked by this time & they aren't & don't think it's an issue with only 1 airline.

Look at SYD/LAX direct - have VA, QF, UA, AA, DL + 1 stops NZ & FJ. Am sure they are all in same or similar boat. One will surely do something to fill seats, but what & will others copy ?

Look at simplistic example below in isolation.

Aircraft has 300 seats in economy SYD/LAX (forget about business)

60% sold, so that's 180 sold, 120 unsold.

Similarly on return.

If they can get 1/3 of the unsold seats sold quietly for $999, they might nett $750. $750 x 40 is $30k.

Do this on ½ dozen dates & there’s $180k.

Not huge bucks, but better than going empty.

Would work as long as other airlines didn’t do the same or starting dumping seats at $999, which no airline wants to advertise in peak season.

 

[Spongbob]

I got excited because I was hoping the thread was about buying old airlines seats (e.g. Qantas Mk 1 or Mk 2 business class seats from the retired 747). Silly me!

 

[CaptJCool]

I got excited because I was hoping the thread was about buying old airlines seats (e.g. Qantas Mk 1 or Mk 2 business class seats from the retired 747). Silly me!

Yea could go acouple of first suites in my second bedroom...

 

[MEL_Traveller]

The airfare might be cheap, but the hotel on arrival might not.

And once again, there's the issue of freight. A flight might be 60% full in the passenger cabin, but it might just be the day they fly the luxury car in the hold.

 

[ozfflyer]

The airfare might be cheap, but the hotel on arrival might not.

And once again, there's the issue of freight. A flight might be 60% full in the passenger cabin, but it might just be the day they fly the luxury car in the hold.

in peak season airlines should be at 100% load factor. When passengers & the media see/hear that an airline in peak season is not full, they often think, this airline might be going out of business. Airlines need to know how to fill aircraft, in these troubled economic times & need to find some way of doing it.

Contra deals with suppliers might be another route. Many contra deals are already done. If you find only 1 brand of beverages is being served, might be for this reason.

Have heard about a few of these sorts of deals, but mainly apply when airlines can't fill seats in low season, not high. All the contra deals I've seen, have blackout dates in peak season usually.

 

[MEL_Traveller]

in peak season airlines should be at 100% load factor. When passengers & the media see/hear that an airline in peak season is not full, they often think, this airline might be going out of business.

Please provide evidence that passengers on a Qantas flight less than 100% full believe it is going out of business?

 

[muppet]

<snip>

But if airlines either auctioned off some seats, with fixed dates, perhaps this might help them clear some seats without advertising lower prices.

<snip>

Is this a good or bad idea ?

Given this isn't an innovative idea, if it was a good idea for airlines they'd be doing it.

They've come up with better ways to make ends meet: frequent flier programs, ancillary revenue, one-sided terms and conditions.

Auctions are not well suited to highly competitive markets with low levels of information asymmetry. i.e. during the auction you can readily see the prices of hundreds of other products that are virtually the same (SYD to LAX flights).

 

[MEL_Traveller]

In a way, airlines are auctioning off seats anyway via inventory control. They release a flight on a certain date, with certain fares, and people either take them, or not.

If not, they lower the fares until people do bite.

 

[ozfflyer]

Given this isn't an innovative idea, if it was a good idea for airlines they'd be doing it.

They've come up with better ways to make ends meet: frequent flier programs, ancillary revenue, one-sided terms and conditions.

Auctions are not well suited to highly competitive markets with low levels of information asymmetry. i.e. during the auction you can readily see the prices of hundreds of other products that are virtually the same (SYD to LAX flights).

don't think it's been done in Australia before in any size & economy hasn't been this bad since 1992.

 

[ozfflyer]

In a way, airlines are auctioning off seats anyway via inventory control. They release a flight on a certain date, with certain fares, and people either take them, or not.

If not, they lower the fares until people do bite.

but many people aren't buying, which is the issue. They don't want fares too low as then some people will only wait until those insanely low loss leader fares are repeated. Benchmarking is a real problem.

 

[MEL_Traveller]

but many people aren't buying, which is the issue. They don't want fares too low as then some people will only wait until those insanely low loss leader fares are repeated. Benchmarking is a real problem.

Again, provide the evidence that benchmarking is a problem? Provide the evidence that people see a less-than-full Qantas flight as a sign Qantas is going out of business?

I suspect most people would get on a half full flight and be thanking their lucky stars they get a bed for the flight. And instagramming the same.

 

[ozfflyer]

Again, provide the evidence that benchmarking is a problem? Provide the evidence that people see a less-than-full Qantas flight as a sign Qantas is going out of business?

I suspect most people would get on a half full flight and be thanking their lucky stars they get a bed for the flight. And instagramming the same.

media loves reporting on 1/2 full flights, when they have no idea of yield.