Making Sense of Airline Pricing

I travelled to Toronto via London ten days ago, flying business class on British Airways. Fortunately, I wasn’t paying, and neither was my company. The client, unusually, was willing to pick up the bill.

tickets air

When searching on http://www.ba.com I noticed that a ticket from Prague cost less than half the cost of a ticket from London to Toronto and back. Four flights instead of two flights, but less than half the price. Now, I’m not naïve enough to think that it’s only distance that determines price, but I was still astonished at the difference. Revenue management is a fine art, and I suspect that all manner of factors come into play, demand being the main one, but whatever algorithm balances the profitability of expected sales from London against the profitability of expected sales from Prague must be a complicated one. How to decide whether to reduce the London price slightly to stimulate demand from London as opposed stimulating less profitable demand from Prague?

Certainly, if I had the time and needed the comfort, and was based in London, I’d be more than happy to add a comfortable day or two in Prague at both ends of a trip to Toronto, even if it meant flying through London both ways. I’d be saving a substantial amount of money.

So, what determines price? I can’t work it out. It’s a black box, the contents of which are known only to the revenue managers at British Airways. I had a look at business class flights to New York leaving on 18th and returning on 25th of November (converting prices into GBP, and showing % against London price):

PRG  LHR  JFK  LHR  PRG     2010      58%

LHR  JFK  LHR                         3472     100%

CDG  LHR  JFK  LHR  CDG     1854     53%

SOF  LHR  JFK  LHR   SOF     1794     52%

DME  LHR  JFK  LHR  DME      1769     51%

The distance between London and New York is 3459 miles,

And for Toronto they are these:

PRG  YYZ  JFK  YYZ  PRG      2130      40%

LHR  YYZ  LHR                         5277     100%

CDG  YYZ  JFK  YYZ  CDG     2383     45%

SOF  YYZ  JFK  YYZ   SOF     1978     37%

DME  YYZ  JFK  YYZ  DME      2595     49%

The distance between London and Toronto is 3547 miles,

Now these are snapshots on a particular day, so I’m not sure that these would be the cheapest prices you could ever pay for these routes, but one can at least conclude the following:

  • The cost of flying from London to Toronto is disproportionately more than the price of flying from London to New York. The distance is only slightly greater. Competition on the London to New York route, I suppose, is greater.
  • But if you’re flying to Toronto from continental Europe you’ll pay around 45% of the London-Toronto price, presumably because there’s greater competition on the indirect routes. But you’re still paying disproportionately more than the difference in distance would suggest.
  • If you’re flying to New York from continental Europe you’ll pay around 55% of the London-New York price.

You can’t, of course, buy an indirect route and board from London. But if you’ve got time, then spend a night in continental Europe before your transatlantic trip, but think twice before choosing Moscow.

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A Maggie Moment

It’s said that Prime Minister Margaret Thatcher sometimes straightened the ties of her ministerial colleagues before Cabinet meetings. I nearly had a Maggie moment myself on Bulgaria Air’s flight from Sofia to Prague on Tuesday. I’m no scolding matron (I hope), and I’ve never been an uncritical fan of the Iron Lady, but on the issue of the loosely worn tie, I couldn’t agree with her more.

Here’s Bulgaria Air’s chief cabinet attendant at his trolley:

LooseTie

You would agree, I think, that this create a discouraging image of the Balkans – a sloppy, slipshod attitude that, sadly, pervades much of business and politics in Bulgaria, though the country is wonderful in a million other ways.

His colleague was no paragon of service excellence, either. She wore a petulant, disdainful look as she demonstrated the safety equipment, as well as silver nail polish on extravagantly long fingernails.

I didn’t see the pilot, but I am confident that if he was wearing a tie he was wearing it crisply. Standards in the cockpit are important.

Not only mens sana in corpore sano but also mens sana indigent luculentam vestimentis (thanks to Google’s Latin Translator).

The British Airways look:

british airways

No wonder Bulgaria Air is cheaper.

Justifiable intrusion? Would you snoop on your staff?

Privacy law is a difficult area, and it raises complex legal and moral questions. I was reminded of this by an article in the Independent about British Airways’ monitoring of staff communications (emails and phone calls) during their acrimonious dispute with cabin staff and their union, Unite, some years ago. British Airways listened in to conversations between their staff and the Union.

I’d always supposed such monitoring to be illegal, but it turns out that it isn’t, as long as the devices (computers and phones) are the property of the company, in this case British Airways’ property. Legal opinion, quoted in the article, was that as long as no adverse and unjustified discrimination of the monitored individuals can be shown to result from monitoring, then there is no case to be made against it.

snooping

But it’s wrong, surely, to intrude into personal communication unless there is reason to suspect a serious crime or breach of trust. Monitoring staff communications with union officials is unwarranted. It is sneaky, dishonourable, unfair, intrusive.

My own policy is that you must allow your staff privacy. Even if it’s possible I do not intercept the communications of employees in my company, nor do I track the websites they access. I might count how many emails they receive and send (I did this once to get a sense of who was working hardest!) but I would never monitor recipients and sources, nor look at content. I might track the total number of times that a website such as Facebook is accessed (sometimes this gets out of hand!), but I don’t track individual usage.

Ours is a consulting company and I take it for granted that everyone works hard, in good faith. I do not intrude. But this rule should be the same for all kinds of company. Just because it is legal to monitor emails and conversations doesn’t make it right.