I’d like to think that for the most part my blog isn’t about drawing conclusions, but rather about starting conversations. For example, earlier I posted about airberlin discontinuing flights between Miami and Berlin. I wasn’t saying it was a bad move, but rather just explained why I found it strange.
This post will be different, as I’m going to draw a conclusion — American’s revenue management got a route wrong. Really, really wrong. Even more so than they got award availability between London and New York wrong last weekend. 😉
As I posted about back in June, American will be adding one daily nonstop flight between Tampa and Los Angeles as of November 6, 2014. Currently Delta operates in the market with two daily nonstop flights. It’s probably not the most lucrative market in the world, but presumably Delta does decently well between passengers traveling to Los Angeles, other parts of California, Asia, and Australia.
While I don’t think this new route will be a game changer for American, I’m personally excited about the route, since my family lives in Tampa.
As you might expect for a brand new route, it’s totally empty for the foreseeable future. For example, here’s the seatmap for the inaugural flight from Tampa to Los Angeles, which is in less than three weeks:
Given that the right side of row eight is always blocked, that the center seats in rows 16 and 17 are always blocked, and that the last row is always blocked, that means at most 14 seats are taken on the seatmap.
And before anyone says that seatmaps aren’t accurate indicators of how booked a flight is (which is true), I had a friend look at the loads on the flights, and there are only a few days through the end of the schedule with more than a couple of dozen people booked on it.
Great, so you’d think they’d have some promotional fares, right?
Nope, quite the opposite actually. American doesn’t want you to fly their new nonstop flight between Tampa and Los Angeles.
For the first month of service, the cheapest one-way economy fare between Tampa and Los Angeles is $636.
American publishes several cheaper fares between Tampa and Los Angeles over the same timeframe, like the below $281 fare. Except it explicitly prohibits taking the nonstop flight:
Okay, so it’s not unusual for airlines to charge a premium for nonstop flights, since there’s a convenience factor to it. While it would still seem crazy, I could see American charging $636 if that’s what Delta was charging as well.
What’s Delta charging for their nonstop flights between Tampa and Los Angeles for the month of November? Substantially less than half of what American is charging, despite offering twice as many frequencies.
Admittedly revenue management is an extremely complex art. Airlines don’t sell seats on planes, but rather sell seats between city pairs, which is how fares are determined. Given that there are literally hundreds of thousands (if not millions) of combinations of fare classes and fare bases, I think it’s safe to say that sometimes things slip through the cracks. And I think this is one of those cases.
But there’s always going to be the person that argues airlines do everything right (even though their long term balance sheets suggest otherwise), so I’d certainly love to hear how those people would explain the above. 😉