WestJet investigated for predatory pricing

[YYZSaabGuy]

10 hours ago, Malcolm said:

So it seems to me base fares (all tickets sold on the flight) must be no less than the break even (cover all costs) level.  Ancillary revenue can not be guaranteed.

Guaranteed, no. Very little in this business is guaranteed. However, ancillary revenues can in general be forecast with a reasonable level of accuracy based on historic performance of a route, PAX mix (first class vs. business vs. premium economy vs. economy, etc.), stage length, seasonality, etc. I don't know why ULCCs would be any different; in fact, I would guess their revenue analytics guys/gals are pretty proficient at this stuff.

[Guest]

https://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbowps/Bilotkach_Gaggero_PIGA_WP12-01.pdf

[Guest]

3 hours ago, YYZSaabGuy said:

Guaranteed, no. Very little in this business is guaranteed. However, ancillary revenues can in general be forecast with a reasonable level of accuracy based on historic performance of a route, PAX mix (first class vs. business vs. premium economy vs. economy, etc.), stage length, seasonality, etc. I don't know why ULCCs would be any different; in fact, I would guess their revenue analytics guys/gals are pretty proficient at this stuff.

They better be but.

[Maverick]

15 hours ago, Malcolm said:

I don't see how you can guarantee your return  relying on base fares plus additional, discretionary optional charges. But perhaps that is why WestJet showed a loss recently.  Normal pricing would have the base fare on a single fare low cost being a break even number , of course for a multi fare traditional airline then the total revenue per flight from the fares would form the base and the rest would be gravy or if you prefer the profit margin.  In other words the total fares charged for a flight must be equal or greater than the cost of operation. Ancillary revenues then, if purchased by the passengers, generate a profit.

 

Maverick not trolling, simply stating my POV and regarding trolling, I guess I can accuse you of the same. I guess though you might be in Marketing, yield management  or a yield analyst so maybe I must defer to your superior knowledge but  Things do change but the basics do not.  .  So it seems to me base fares (all tickets   sold on the flight) must be no less than the break even (cover all costs) level.  Ancillary revenue can not be guaranteed.

 

Deep sigh, why Malcolm do you think that legacy airlines put so much effort into marketing their First and Business class? It's because the margins are higher which allows them to sell economy seats at a break-even or less cost and then then they can add seat selection, meals, baggage fees etc.

If you think that ULCC's or any other airline for that matter makes money on base fares only then you've been wasting a lot of bandwidth over the years here...

And no, I'm not in Marketing, yield management  or a yield analyst I'm just a regular old AME with a fairly good understanding of how airlines work.

[Guest]

22 minutes ago, Maverick said:

Deep sigh, why Malcolm do you think that legacy airlines put so much effort into marketing their First and Business class? It's because the margins are higher which allows them to sell economy seats at a break-even or less cost and then then they can add seat selection, meals, baggage fees etc.

If you think that ULCC's or any other airline for that matter makes money on base fares only then you've been wasting a lot of bandwidth over the years here...

And no, I'm not in Marketing, yield management  or a yield analyst I'm just a regular old AME with a fairly good understanding of how airlines work.

Deeper sigh:  I never said they made money on their base fares, I said the base fare revenues need to cover the operating costs and that ancillary revenues were gravy.

Quote

  Normal pricing would have the base fare on a single fare low cost being a break even number , of course for a multi fare traditional airline then the total revenue per flight from the fares would form the base and the rest would be gravy or if you prefer the profit margin

However as we don't have the benefit of imput from those in the "real know" lets agree to drop the subject.  Cheers. 

[CanadaEH]

Malcom I seriously question whether you are horribly ignorant or brilliantly trolling this forum. 

[Guest]

4 hours ago, CanadaEH said:

Malcom I seriously question whether you are horribly ignorant or brilliantly trolling this forum. 

Take your pick, .   but in the end it will be the competition bureau who rules how fares should be displayed / set etc.

[boestar]

no matter how you slice it you need to compare apples to apples.  If airline A supplies a fare that includes seat selection and a bag but airline B does not but add it as an ancillary cost then you need to massage the numbers and apply the ancillary cost to every seat on the plane to get a comparison that works.

if both airlines offer identical service (base fare + ancillary) then comparing base fare to base fare is the proper comparison.

If any airline places their profits explicitly in the ancillary fees bucket, they wont be around long.

The base fare of the airline should cover the cost of operating said flight WHEN ALL SEATS ARE FULL.   Base Fare = (Cost per hour / Number of available seats)*Hours of flight.  That should (very simplified) be the minimum fare charged for any given flight.   I know thats not how it works.  some pay mroe some pay less but in the end the number should be the same.

EVERYTHING ELSE IS GRAVY