Unsold PE & UC seats

On a recent trip to St Lucia I enquired about the cost of an upgrade from Econ to PE and was told it would be 512 per person, return. Given that we had paid quite enough for the actual holiday we didn't think we could justify the extra 1000 for a little extra luxury that PE offers, fair enough.

When we arrived at the airport(MAN) they were offering one way upgrades to PE for 256. I thought to myself at the time that there must only be a couple of PE seats left since that was the price which I had been quoted previously. Although I didn't wander 'up front' on the outbound flight, I did speak to a couple who were in PE up in the bubble who said there were quite a few empty seats up there. I can only imagine therefore that there were plenty more empty downstairs in PE.

I did manage a peek up front on the inbound flight and sure enough downstairs PE was totally empty and there were about half a dozen or so seats empty upstairs, even though we had been quoted the same 256 per person to upgrade on the return flight.

Now my question, surely VS are better charging a more attractive fare say 100 per person at the airport and stand a better chance of making a few extra quid rather than not reducing the cost at all and flying all the way there and back with a shed load of empty seats. Haven't done the maths but alot of spare seats multiplied by say 100 is lots more dosh for VS for not much outlay [:?]

I'm sure the more astute airline business types on the forum will come up with a reason [oo]

Regards,
NOC

[Nottingham Nick]

I am not an astute airline business type, but my guess would be - If people thought there was a better than even chance of getting a last minute upgrade at a bargain price - why would ANYONE pay full price for the seat?

There is also the issue of catering. If there was likely to be a mass exodus forward, then they would have to change all of the meal arrangements.

Just my thoughts, I don't know if there is a better answer.

Nick

[Scrooge]

There are a couple of things to look at.

Firstly is that lovely thing called yield management, they set the lowest prices that the airline can sell a seat for, how many seats can be sold at what prices and what reward seats are released.

Now I will say there are times that I personally think this dept. is staffed by a group of people wacked out of their minds on some seriously good drugs, however I do understand the reasoning behind the prices asked for.

The reason is, if you can buy an upgrade for £100 to the next cabin word will spread pretty quickly and nobody will book directly into say PE. Just pay the discounted price for a Y ticket, show up at the airport nice and early and hope that you can get the upgrade on the cheap*.

So in some ways the airline would rather fly with an empty seat than run the risk of diluting the value of the higher priced cabins in the future.



*

Aeroflot was great for this btw, except you had to pay the upgrade bribe to the purser, for $250 you could move from Y to C with no issue, for $300 you got treated like a king....oh those were the days.

[preiffer]

As Nick put it, it's simple.

If people ASSUME they can get a PE seat for dirt cheap, or an Upper one for a few hundred quid - nobody would pay the proper price. A cabin full of £100 PE upgrades is UNPROFITABLE. So while your suggestion may fill empty seats in the short term, in the long run it would drive premium passengers' price conditioning down and eventually the airline out of business.


It would be a BAD decision, long term.

I had the same 'chat' - but at the opposite end of the scale - with Ryanair ticket sales at Dublin a few years ago. I was booked on a late Easyjet flight to Liverpool and the earlier Ryanair flight was departing, at the sales staff's admission, half full.

I tried to plead my case, but to no avail. I have to admit that looking back on it, I agree 100% with the sales staff at Dublin (& what others have said in this thread). If people think there will be bargains at the airport, they will not book the cheaper fares a long time in advance. When we book the said discounted fares (i.e. PE / UC) the airline get to sit on our cash from the date of booking up to the date of departure - so up to 11 months.

James

I remember in the days of Jersey European Airways (JY), they introduced a 'last minute' fare, which was basically around £59 for routes like Belfast - Birmingham. It was only available 24 hours before departure, and was introduced as a way of mopping up the last few seats... the exercise was dropped after a few months as JY admitted that it had killed demand for advance bookings.

So with PE it's the same kind of thing, offering upgrades for £100 at the last minute devalues the product and will stop anyone from paying 'over the odds'.

And it's not just at the premium end of the market where this devaluation goes on... HotDealsUK is a 'bargain hunters' forum, where deals are voted HOT or COLD. Currently, Ryanair always get 'hot' votes for their £1 tickets. But the £5 and £10 inc. taxes sale? They get sniffed at..., because they are no longer seen as a bargain.

Oh, and I don't think Revenue Managements take special drugs... to dabble in what is one of the dark arts needs a clear head!

Imagine if you had booked the £1k upgrade and then at the airport other people upgraded but only paid the £100 you suggested.

I am sure you would have been delighted to overhear the 'I only paid a hundred quid for these nice seats at check-in but i bet some mug paid full price for them months ago' conversations in the cabin. And rather than enjoying the PE service you then spend the flight fuming at the iniquity of it all and feeling [:$] and swearing veangeance on SRB

VS have obviously priced the PE upgrades carefully (in the past I have checked and the PE cost is the same as Econ + upgrade option in the booking engine) so its only fair that the cost of an at check-in upgrade is the same. It is a premium product after all and selling it short devalues the product.

Just on my way back from Vegas. Upgrades available at check in,one way..econ to premium £199, econ to upper £1199, premium to upper £999

[Darren Wheeler]

£999 one way isn't a very good deal. Just did a random test booking for May and it comes in at £1998!!

quote:Originally posted by Darren Wheeler
£999 one way isn't a very good deal. Just did a random test booking for May and it comes in at £1998!!


...but a good way to promote advance booking...

Just look at how, in a similar way, free upgrades on miles or for FFs has ruined US domestic first!

[mcmbenjamin]

quote:Originally posted by slinky09
Just look at how, in a similar way, free upgrades on miles or for FFs has ruined US domestic first!


How is that?

[Scrooge]

quote:Originally posted by mcmbenjamin
quote:Originally posted by slinky09
Just look at how, in a similar way, free upgrades on miles or for FFs has ruined US domestic first!


How is that?


I think what he means is how many people actually pay for a first class seat now in the US.

I know I don't, it's either done by status, miles or Y+ fares.

[preiffer]

And if nobody PAYS for First/Business/PE, then there's no MONEY to provide a better service or cabin experience...

It all goes downhill. Rapidly...

[RichardMannion]

Indeed - the US 'upgrade' system is frankly stupid. Both my internal flights on Alaskan last week, where F was full both ways due to the 'elite' upgrades at the last minute, and there are rows of Y empty. I had a row of 3 to myself on the return.

I remember a christmas a few years back where I asked if they had any upgrades going spare? VS said they'd do me 5 in upper class for £1000. I phoned the wife who was still in the hotel, who said she;'d rather spend the extra £1000 on holiday shopping.
The VS guy could see the tears in my eyes and gave us 5 free upgrades to premium!

All very valid points, well presented. I still feel however that if you want to make sure you fly say in PE, then the ONLY way to do it is to pay the going rate, up front in full. The point I'm making is that on the relatively seldom occasions that a flight is undersold to such a degree as ours was, surely there comes a point where the benefits of earning some extra dosh(pretty important in the current climate) may slightly outweigh any risk of future sales impact on the selling of PE upfront, before departure.

Yes, I totally accept that if PE was consistenly undersold then yes, people would hold back and try to get a cheaper upgrade at the airport. But as far as I am aware, PE does particularly well with VS being a relatively cost effective way of getting a little bit of extra luxury onboard and as such it is a popular product. I just think that there is some unexploited revenue to be had and the opportunity isn't taken based on a potential/theoretical loss of revenue.

Only my opinion ofcourse [}:)]

NOC

It's a very interesting subject.
It is a Pandora's box, discounting, and I think what Virgin have to tread a fine line between upsetting people who have booked in advance, getting incrimental revenue on the day and maintaining the exclusivity of the product.

[Darren Wheeler]

Perhaps there is a case for a FC desk in the airport to manage special case upgrades?

For example.

It's noted that a passenger has been flying LHR-JFK in economy on a regular basis for several months. They may not have reached AU yet. On checking-in they are invited into the FC area (screened off) where they are offered the chance to purchase an upgrade to PE for a sum much lower than the normal fee, be it miles or cash. This is done as a 'loyalty reward' and in the hope that will choose PE next time or at least sell PE to whoever pays the fare.

If it's done right, it could open new revenue streams for VS while still maintaining exclusivity of the cabins.

That would have to be done very carefully, otherwise it comes across as pressure selling.

Different subject but similar idiology about 15 years ago I had a restaurant in Spain, we specialised in steak, lobster, racks of ribs and home made fillet steak burgers. Economics and competition was fierce and often ruthless. Most other places had a little price war going
and cut prices ridiculously to put bums on seats. I put my prices up, my restaurant often was half full and people would come in and say your not busy you should lower your prices.

The truth was my 1 customer spent as much as 5 in the other restaurants, they worked harder for less and my menu retained its kudos and justified the price.

Bums on seats for no profit is not the answer it comes quickly to the point where your better off not bothering, ie keep the plane on the ground.

[Scrooge]

Exactly, that goes back to yields, which in airline terminology is life or death.

Also I must note, VS has lowered prices on the main route that I watch, LAX -LHR, it is down over $1000 for a UC RT, this must be killing their yields, but will probably put people in seats.