Re: A340-500/600 and B777-200X/-300X

Date:         05 Jan 98 23:43:01 
From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works, Menlo Park, California
References:   1 2 3 4
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>Your example is good and surprising at the same time. The C and Y fares
>are the same if you take the direct flight or if you go via SFO.

>For the same fare UA sells less seats (301 vs. 418) on the direct
>flight. Are there more C seats in the 301 config, so that the missing
>revenue from 117 Y passengers can be (at least partly) compensated?

The 301-seat aircraft (fleet type 47P or OP) have a 36/123/142 (F/C/Y)
seating config, versus 18/80/320 for the 418-seat (47A/OA) aircraft.
(The latter are being changed to a 372-seat config of 18/84/270 with
greatly increased pitch in C (47B/OB), but only 5 of 24 are in this
config to date.)

If they sell F at the same $4,285 fare as C (not bloody likely, but I'm
too tired to track down the F fare right now), and they sell all of the
premium seats, F/C revenue for the 47P is $681,315 versus only $420,910
for the 47A, a difference of $260,405.  That's only considering ORD-HKG
fares where of course the fares would be more variable in reality.  In
all likelihood, that effect would widen the gap, since SFO-HKG probably
gets a significant amount of West Coast traffic which doesn't generate
as much revenue -- and the domestic traffic on ORD-SFO probably won't
make up that difference.

Now assume that the 101 available Y seats on the 47P flying ORD-HKG
(remember, they only sold 260 of the 301 seats when the flight started)
sell at the same fare as 101 of the Y seats on the 47A flying via SFO.
If the remaining 219 seats can be sold for more than $1,189 apiece --
the $1,486 "cheap" fare I found easily meets this -- then the 418 seat
47A will make more money.  It doesn't work that way, though, since few
of the 101 Y seats on the non-stop will be sold at the cheaper fares,
whereas with 320 Y seats the one-stop's much greater supply will mean a
lot of seats will have to be cheap to match the available demand.

In practice, friends at United have told me that the non-stop, even with
its restricted number of seats, has been even more profitable than they
expected.  Note that United also uses the 301-seat planes for ORD-NRT.
The 418-seat planes are capable of flying the route with a full load and
with only six flights per week there's plenty of demand, but United finds
it more profitable to offer fewer seats at higher prices.  (They'd love
to fly double daily ORD-NRT flights, probably using the 418-seat planes,
but the route authority doesn't allow it.)

>Or is UA just making less money if their passengers fly direct to HKG?

They wouldn't do it if that were the case -- they're in the business to
make money.

>What about the cargo volume in both cases?

Cargo doesn't usually mind stops, so the valuable ORD-HKG non-stop
payload is reserved for high-yielding passengers and their luggage.
ORD-SFO-HKG does get some revenue from cargo, but still not enough to
make up for the the higher passenger fares the non-stop can command.

Karl Swartz	|Home
"The average dog is a nicer person than the average person." - Andrew A. Rooney