AIRLINE CORRUPTION

[SPRINGFIELD_XD_40]

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How true is this issue ?? From The FREEMAN News ni siya nako nabasahan .
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Airline seats are sold to the highest bidder

by Ruth G. Mercado
May 26, 2005

Sitting beside you could be a guy paying less for his tickets because of a yield management scheme in the airline industry that sells seats to the highest bidder. Desperate passengers are told flights are fully booked, only to find available seats for those willing to pay a high price.
Unlike buses and ships where fare to seat allocation is one-is-to-one, fixed and regulated, the airline industry determines seats and pricing based on forecasts and yields. Called the passenger revenue optimization system, PROS is a yield management scheme so designed that data on flight schedules, fares, booking statistics, history of flights and air sector performances and current inventories are compiled and processed to forecast demand, allocate seats for each fare class and calculate overbooking. These forecasts are automatically meshed with current flights yielding a scheme of allocating seats by fare and class.

High yielding seats.

Aviation guru Avelino Zapanta in his book on airline management wrote that with PROS, “it is not just seats nor yields that are optimized but total revenue generation of each flight.”

“The system undoubtedly helped revolutionize the airlines’ revenue management,” he said. Revolutionize, that is, from a fraud-ridden and inefficiency-plagued manual system to a scheme that ensured all seats are sold and sold with high yields.

It used to be that ancient airline reservations units optimized sale of seats on the adage, “an empty seat is lost forever.” Problem is, even if the flight is full, it could still be in the red because seats are not yielding enough revenues to breakeven or profit. The cheapest fare type seats are sold out first.

Airlines then turned to ways of selling seats only to highest yielding fare types.

What happens under yield or automated management system is that for every flight, the system maps out seat allocation for each booking class and when these are filled, certain seats are sold — auctioned in a sense — to those willing to pay for a higher price. These are often the segment of travelers in haste, need to attend to an emergency or who must travel but booked at the last minute. As an airline marketing executive would put it, “bumuli ka nang mas mahal, makakuha ka nang upuan”.

He said that depending on supply and demand, computer-based yield management system maps out seat allocation and pricing that projects demand on a monthly, weekly, daily and hourly basis. For instance, the system’s five-year historical data show that Monday morning flights are full, demand is high and price is high. On dog day Wednesdays, demand is low with more seats allocated at lower prices. The computer tells how many seats are allocated for a certain price.

Said the airline marketing executive, “some people claim to be progressive thinking, but if you apply progressive thinking to them, they don’t like it. In the US there is night fare and morning fare. If these are applied here, maa-asar sila.”

Honest and realistic.

Zapanta though gave a caveat. Computer-based revenue management systems rely on constants like historic inputs and current fares. It does not provide variables for entry of low cost carriers whose fares are not captured in the new inputs because these rely on separate software. Tendency is, substantially lower fares of low cost carriers derail established forward booking forecasts. Other factors that upset established forecasts are sudden holding of events in certain destinations or fortuitous events that spawn travel for certain localities.

In such cases, Zapanta said manual adjustment intervention is needed to level up to the impact of new breed of competitors like low cost carriers or to sudden booking changes. “Without the right assessment that would translate the impact of the new breed of competitors into levels of traffic, major airlines could lose their own traffic,” he said.

Honest and realistic, the airline executive said, “reserved seats are for those who can afford. It may not sound nice. But then this is a business proposition.”

[FK]

mao ba... grabeha gud ka negosyante sa mga airline companies. ikaw FAFA SPRINGFIELD naka suway na ka ani?

[SPRINGFIELD_XD_40]

@ FK

Wala man pod fafa kay fortunately , I never dealt with a seat or flight that is fully book and obviously I have to bid for it to get it . All the flights I took were all available so I never had the ordeal of bidding the seats .

Damn .. hasta private institutions are being corrupted na pod !!

[Blitzwing]

I work for an online travel agency....I know airlines allocate a certain number of seats for their employees or for emergency purposes like passengers missing their flight and got reaccomodated to the next one. But if this would be the case then....no more chances for chance passengers.

B

[PissKhanXXX]

with his scheme, Zapanta doesn't seem to be a real aviation guru after all.

[omar50071]

As far as I know about airline bookings, in every flight, naa jud na ila i-vacant nga seats(dont know how many) until the last hour of the flight, for the reason nga basin naay big shot people from the government or other institutions nga mo book-in for emergency flight, and maybe mao na nga seats ang ipa bid for people who badly needed it, para pud cguro ma maximize ang ilaha income

[Minuano27]

i read that article also and i dunno how or why anyone would "bid" for a seat on our domestic airlines ...cguro that yield management thing applies in the US, Europe or other 1st world countries with a really large airline-flying population, where a number of people would just show up at the airport and try to get on a plane.

i often travel to manila, and i usually book in advance, at least 5 days ahead. so if they tell me there are "no seats", they can't just tell me that there are actually seats but i have to pay a higher price, because it means they're just giving me b.s., which is definitely not a commendable business practice.

on the other hand, PAL and the other airlines give you a lower fare if you book way ahead, so if the article is referring to that practice as "maximizing" then that would make sense. it has happened to me that i booked way ahead at a lower fare; when i got to the Centennial Terminal in Manila, i told the ppl in the counter that i wanted to take the earlier flight. they told me that i could get in but since my fare was discounted for my scheduled flight, i had to pay the difference; but i found it ok lang cuz at that point, i wanted to get back to Cebu early. but in no sense was i "bidding" for that seat. in effect, as i was changing the contract for my discounted fare, i was actually buying a new seat on a new flight at the regular rate...but as i said, ok lang cuz i wanted to be back home early...

[SPRINGFIELD_XD_40]

Actually I had no experience yet pero kadto lang weird kaau na na LATE ko ug check in about 30 minutes and my PAID ticket for the Philippines from Los ANgeles was given to someone else I beleived a CHANCE PASSENGER . I was so pissed off because they have nothing to lose , the seat was all paid for but becvause I was late for half an hour , they gave it to someone else . I know I was wrong for being late but CHANCE PASSENGERS are supposed to get seats when confirmed passengers are backing out of the flight . I did call that I will be late but I am not backing out . sa NORTHWEST AIRLINES diay ni siya nahitabo tsk tsk tsk ....

[Blitzwing]

Actually I had no experience yet pero kadto lang weird kaau na na LATE ko ug check in about 30 minutes and my PAID ticket for the Philippines from Los ANgeles was given to someone else I beleived a CHANCE PASSENGER . I was so pissed off because they have nothing to lose , the seat was all paid for but becvause I was late for half an hour , they gave it to someone else . I know I was wrong for being late but CHANCE PASSENGERS are supposed to get seats when confirmed passengers are backing out of the flight . I did call that I will be late but I am not backing out . sa NORTHWEST AIRLINES diay ni siya nahitabo tsk tsk tsk ....

Were you reaccomodated by NW on the next available flight with no additional cost?

If yes then swerte ka it's NW...coz they normally reaccom their passengers to the next available flight with no extra cost. They're actually one of the more flexible US airlines...uban pa to either pabayron kag change fee plus fare diff. NW have a no no show policy..meaning if you didn't call and you missed your flights automatic naa ka flight credits (depende sa fare rules). Kaapan lang kay they have a new policy that the credits have to be redeemed in three months after the original OB flight when you missed it. Sa una it was a year from the day it was originally issued. Delta have similar rules kaso lang they;re credits last for about a year and they don;t have a no no show policy too.

[Blitzwing]

most airlines require you to check in at least an hour or two prior to departure this is for domestic US...as for international 2-3 hours I think. In your case since late ka sa check in..they gave away the seat....I know it isn't fair since you paid for it but that's how they work.

B