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Give them an inch and they take $773 million

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Re: Give them an inch and they take $773 million

#31

Post by SomeCallMeTim »

sharkweek wrote: post #27
patio11 wrote: post #8

Earlier quoted context omitted.

The prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win. Many people disl…

As a tall guy I like to complain about airplane seating all the time. Once in a while I'm able to coax them into giving me an exit row; but that's beside the point. Even with my height, I have not bought a plane ticket in the past 10 years with any brand loyalty or concern for comfort whatsoever. I don't even really care about the airline's track record of promptness, because the odds are still mostly in my favor it…

> I fly on whatever airline [insert flight pricing aggregation service here] says is the cheapest for my itinerary

Then you must not fly Southwest, since they refuse to pay fees to "free" aggregation services, and you therefore have to buy the tickets direct.

Re: Give them an inch and they take $773 million

#33

Post by SomeCallMeTim »

patio11 wrote: post #8
verroq wrote: post #2

>implying the flights stayed 80% full after new seats were added >implying decreased customer satisfaction didn't hurt their revenue >implying their systems didn't need to scale because of increased customers >implying their R&D on smaller legroom didn't cost anything >implying upgrading planes didn't cost anything >implying more customers on planes didn't have an impact on maintenance costs >implying revenue means a…

The prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win. Many people disl…

Well, I'm not a statistic, then. I stopped flying United because I don't fit comfortably in their "normal" seats; they took the inches from the "normal" seats and put them in "Economy Plus" rows.

And, oops, you can't RESERVE an Economy Plus row when you buy a ticket, you need to upgrade later, and then one might not be available. I've even paid the upgrade and had them refund it when they overbooked the Economy Plus section. And since the normal seats are too small, that's just miserable.

So yes, a decrease in comfort has caused me to boycott an airline. But maybe they just want shorter people anyway since they'll weigh less.

Re: Give them an inch and they take $773 million

#34

Post by jdoliner »

endtwist wrote: post #12
Construct wrote: post #5

Not quite. The extra seats only provide additional revenue when the flights would have otherwise been full. From the article, the average flight is only 80% full, which means those six extra seats aren't providing any additional revenue. To determine the actual revenue increase from those six extra seats, we would have to know how frequently flights have less than 6 empty seats.

While these numbers will never be perfect, per se, RITA[1] shows that in 2011, Southwest's loadfactor was 80.8% while in 2012, loadfactor was 80.4%. So, the flights remained around 80% full on average. I took this into account in my calculation and assumed roughly 4.8 more seats were filled on average per flight, not a full 6. [1] http://www.transtats.bts.gov/carriers.asp?pn=1

I think the key question then is why it was that 4.8 more seats were filled on average per flight. If we had data the showed that the distribution of plane occupancy were the same year over year save for a few occasions where last year the plane had been at capacity but this year those extra 6 seats had been put to use then the conclusion could be valid. However with the data I've seen so far it seems spurious to conclude that the extra 4.8 filled seats were caused by the extra 6 physical seats.

Re: Give them an inch and they take $773 million

#35

Post by tjsnyder »

DrStalker wrote: post #6

If flights are at 80% capacity adding 6 extra seats just means an extra 6 empty seats on every flight. The $733 million number is meaningless - what is actually needed is to know how many post-reconfiguration flights had 5 or fewer free seats, since that is the only situation in which the extra capacity is being used.

It's 80% pre inch reduction (N Seats) and 80% post inch reduction (N + 6 Seats) which would average to an extra 4.8 seats per flight.

Re: Give them an inch and they take $773 million

#36

Post by ricardobeat »

film42 wrote: post #17

My girlfriends father is a pilot for southwest. For my birthday we flew home with my pregnant sister, we of course flew standby. On the way back, my sister and I were separated in Phoenix, where she ended up getting stuck for the night because every flight after 11am was booked. What I'm saying is that although they were able to add more seats, they still can't give everyone a seat, and to southwest that's money lost…

I love dark chocolate.

Re: Give them an inch and they take $773 million

#37

Post by olympus »

tiredofcareer wrote: post #21
patio11 wrote: post #8

Earlier quoted context omitted.

The prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win. Many people disl…

For most customers, maybe, but I suspect there's a pretty sizable portion of the population (myself included) that will happily pay more for an airline that treats me extraordinarily well, considers my comfort while on board, and gives me reasons to shout their name down the street. For example, Virgin America is one of those airlines for me, and I will happily pay a premium to fly one of their tragically few routes…

Sure, people would pay more to get better treatment but most people don't fly enough to know the difference. Ask a few people around which airlines give you the entire can of coke and which only give you half the can in a tiny plastic cup. Ask them which airlines give out free pretzels on medium length flights and which ones give out a menu where you have to pay for everything. Ask them how expensive the cheese sampler is off that menu and if they remembered to factor it into their cost of better treatment. Which airline has the widest seats? I actually don't know the answer to that. Thinnest stewards/stewardesses? I could care less about how attractive they are, but I like aisle seats and don't want fat stewardess butt in my face when they walk up and down the aisle. Are you going to be flying in a widebody jet or a tiny regional jet? You get the picture. There's lots of stuff to consider, and 1 inch less of legroom may not pop into people's minds (certainly not mine since I am always in an exit row. It's my mini-first class upgrade).

The fact of the matter is that most travelers aren't informed enough to know the difference between airlines except for the prices that show up on Priceline/Travelocity/Kayak/etc. I would like to see a feature chart on each airline and an estimated value to see if it was worth the extra money. I would pay extra to get updated intel like that before I book a flight.

Re: Give them an inch and they take $773 million

#38

Post by mehwoot »

tiredofcareer wrote: post #21
patio11 wrote: post #8

Earlier quoted context omitted.

The prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win. Many people disl…

For most customers, maybe, but I suspect there's a pretty sizable portion of the population (myself included) that will happily pay more for an airline that treats me extraordinarily well, considers my comfort while on board, and gives me reasons to shout their name down the street. For example, Virgin America is one of those airlines for me, and I will happily pay a premium to fly one of their tragically few routes…

For most customers, maybe, but I suspect there's a pretty sizable portion of the population

Yup, and for those two things you mention that you are willing to pay more for, there are probably 98 other things you aren't. Each person will have the things they are willing to pay more for, and most will be different, so for most services, 98% of people are going to choose the cheaper option.

Hence most companies won't give a shit, and almost everyone has moments where they wonder why there isn't an option to pay more for higher quality of X product.

Re: Give them an inch and they take $773 million

#39

Post by lancedouglas »

jdoliner wrote: post #34
endtwist wrote: post #12

Earlier quoted context omitted.

While these numbers will never be perfect, per se, RITA[1] shows that in 2011, Southwest's loadfactor was 80.8% while in 2012, loadfactor was 80.4%. So, the flights remained around 80% full on average. I took this into account in my calculation and assumed roughly 4.8 more seats were filled on average per flight, not a full 6. [1] http://www.transtats.bts.gov/carriers.asp?pn=1

I think the key question then is why it was that 4.8 more seats were filled on average per flight. If we had data the showed that the distribution of plane occupancy were the same year over year save for a few occasions where last year the plane had been at capacity but this year those extra 6 seats had been put to use then the conclusion could be valid. However with the data I've seen so far it seems spurious to con…

Since not all seats are sold for an equal price, the extra seats may have indeed increased revenue potential by allowing for more "premium location" seats on the plane.

There are a lot of factors and it would be silly to think that the airline didn't take more than we can come up with into account in their decision.

Re: Give them an inch and they take $773 million

#40

Post by megablast »

dangrossman wrote: post #4

I've been underestimating the size of the airline industry. I have a hard time reconciling the fact that the airlines always seem to be on the verge of bankruptcy with numbers this big -- $90+ billion a year in just passenger revenue.

There are plenty of years where some airlines make around $100-$200 profit per flight. Not per customer, but PER FLIGHT. Think about all the costs involved, and that is your reward.

http://si.wsj.net/public/resources/images/PJ-BH720A_MIDSE_G_...

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