So I am reading about the rocket science behind Farecast. As they say, every action has an equal and opposite reaction. So airlines invested billions in yield management systems like Sabre. Now consumers have sophisticated search capabilities via sites like Travelocity and Farecast. And corporations have even better pattern recognition/travel expense management software and negotiated discounts. Mind boggling the effort both sides go through - and in the end most air travel averages to 12c or 13c an air mile.
Know of any other industry which forces long term customers (and routine ones) to make decisions at each transaction level? And spends tons of money trying to optimize at the transaction level versus holistic customer revenue - and is successful only a small part of the time? Breaks most rules of CRM and building customer loyalty.
Ten years ago I sent Delta a simple proposal. Bill me 10c a mile for 100,000 miles each year (and allow me to top off or carry forward). Send me a monthly statement based on usage. No tickets necessary. I would use the statement for client billings and internal accounting. If I choose to upgrade on certain segments charge me 20c a mile. Simplify your systems. Reduce head count in yield management and reservations. Lock me in so I don't comparison shop every time.
They did nothing. Oh, they probably laughed at the simplicity and audacity of the proposal. Southwest comes close to my concept now. With them I still have to buy a ticket for each trip but they have a transparent cap and floor fare on each segment so the comparison shopping is often not worth the effort. I use unused tickets for future flights (with no change fees that Delta and other airlines tack on). 98% of my reservations and credits are on-line. Not quite what I had proposed to Delta, but fairly simple. Southwest now has 80% of my domestic travel business. I hope some day they move to my monthly statement, no ticket vision.
But overall on airline pricing - reminds me of the scene from Indiana Jones where the villain does an impressive, intimidating flurry with his sword and Indy warily just pulls his gun and shoots him. All this technology and effort and bluster on both sides - let's just shoot it and move to 12c a mile.
