davidjohnson6
29th May 2013, 01:02
Those who have been following Flybe over the last few months will have noticed that the airline has begun selling tickets more than 12 months in advance. I'm aware that Monarch and Jet2 also follow this approach from time to time.
I understand that this
a) Persuades customers to pay for their passage very long in advance, thus boosting the company's working capital
b) Pinches some customers from other competing airlines who release seats at a later date
c) Allows customers to plan their travel earlier and thus have more chance of winning their custom when they come to making a booking
d) Gives information further in advance as to customer demand for routes and also specific flights.
However, I'm sceptical as to how many people really do book more than about 9 months in advance except for the most predictable seasonal spikes (e.g. 20-24 Dec). Furthermore, while EU261 requires an airline give only 2 weeks notice, airlines are presumably reluctant to annoy a load of customers by cancelling a flight even if it's 3+ months in advance - customers get rather p*ssed off. Additionally, it commits fleet planning *very* long in advance leaving much less opportunity to take advantage of any changes in the competitive landscape. The fact that hotel booking systems are rarely open more than 12 months ahead is another factor I'm thinking about.
I've come to the conclusion that selling tickets for scheduled flights (charters are a different setup) more than 12 months in advance (arbitrary, I know) is a sign of an airline that's in trouble and badly needs an infusion of cash but is likely to end up finding that it's sacrificed operational freedom for minimal actual extra cash. It also seems to be a signal from weaker airlines to stronger competitors to flag up that they are in trouble - much the same way as a lion hiding in the grass would perceive a baby antelope bleating for its absent mother
Is such a conclusion correct ? Do customers really book over 9 months in advance in significant numbers ? (Please don't quote MOL saying there is no visibility beyond 3 months - too much of what he says publicly is garbage). From an operational point of view, how constraining is it to commit to flights 18 months in advance ? Do tactical opportunities come up sufficiently often that greater operational freedom / less advance planning would provide significantly more profitable opportunities ?
I've made my own guess on this - I'm very interested in hearing from those who know, not just those who are guessing like me.
I understand that this
a) Persuades customers to pay for their passage very long in advance, thus boosting the company's working capital
b) Pinches some customers from other competing airlines who release seats at a later date
c) Allows customers to plan their travel earlier and thus have more chance of winning their custom when they come to making a booking
d) Gives information further in advance as to customer demand for routes and also specific flights.
However, I'm sceptical as to how many people really do book more than about 9 months in advance except for the most predictable seasonal spikes (e.g. 20-24 Dec). Furthermore, while EU261 requires an airline give only 2 weeks notice, airlines are presumably reluctant to annoy a load of customers by cancelling a flight even if it's 3+ months in advance - customers get rather p*ssed off. Additionally, it commits fleet planning *very* long in advance leaving much less opportunity to take advantage of any changes in the competitive landscape. The fact that hotel booking systems are rarely open more than 12 months ahead is another factor I'm thinking about.
I've come to the conclusion that selling tickets for scheduled flights (charters are a different setup) more than 12 months in advance (arbitrary, I know) is a sign of an airline that's in trouble and badly needs an infusion of cash but is likely to end up finding that it's sacrificed operational freedom for minimal actual extra cash. It also seems to be a signal from weaker airlines to stronger competitors to flag up that they are in trouble - much the same way as a lion hiding in the grass would perceive a baby antelope bleating for its absent mother
Is such a conclusion correct ? Do customers really book over 9 months in advance in significant numbers ? (Please don't quote MOL saying there is no visibility beyond 3 months - too much of what he says publicly is garbage). From an operational point of view, how constraining is it to commit to flights 18 months in advance ? Do tactical opportunities come up sufficiently often that greater operational freedom / less advance planning would provide significantly more profitable opportunities ?
I've made my own guess on this - I'm very interested in hearing from those who know, not just those who are guessing like me.