$153 each way on JFK-KEF in Summer 2019 on DL. Obviously they are losing their shirts. When WOW was in the market I might have understood this, but with only FI left is this really necessary with their costs? If it's still that bad with only two carriers just let FI have it. With the hub in KEF it's going to be very hard to compete with them anyway.

https://slickdeals.net/f/12177175-nonst ... -sept-2019

Doesn't UA fly EWR-KEF also?

evank516 wrote:

Doesn't UA fly EWR-KEF also?

Yup. Icelandair, WOW Air (sometimes with two flights a day) and United all fly from EWR in the Summer. NYC to KEF is a bloodbath.

The fare pre-tax is $221. Delta has published (and available) fares a comparable distance JFK-LAX at $251 pre-tax. JFK-LAS fares can be $187 pre-tax. DL has a lot of capacity NYC-JFK/LAS. I don't see a problem.

klakzky123 wrote:

evank516 wrote:

Doesn't UA fly EWR-KEF also?

Yup. Icelandair, WOW Air (sometimes with two flights a day) and United all fly from EWR in the Summer. NYC to KEF is a bloodbath.

Yes, but pricing between EWR and JFK is often quite different.

enilria wrote:

klakzky123 wrote:

evank516 wrote:

Doesn't UA fly EWR-KEF also?

Yup. Icelandair, WOW Air (sometimes with two flights a day) and United all fly from EWR in the Summer. NYC to KEF is a bloodbath.

Yes, but pricing between EWR and JFK is often quite different.

Agreed but my only suspicion is that given that these are pure leisure flights with no real business traffic, people are just purchasing purely on price rather than choosing between airports. I realize that's abnormal for NYC but that's the only explanation I can come up with for the low JFK fares.

MIflyer12 wrote:

The fare pre-tax is $221. Delta has published (and available) fares a comparable distance JFK-LAX at $251 pre-tax. JFK-LAS fares can be $187 pre-tax. DL has a lot of capacity NYC-JFK/LAS. I don't see a problem.

Delta is not selling JFK-LAX for $251 in the Summer. Even Wednesdays in May (which is shoulder) costs $419, and Wednesdays in July $604.

The cost to run an international op is massively higher. Just to use an intl arrival gate connected to the clearance hall in the USA is typically $10-20 per head and Iceland is probably more...that's not including other fees and customs inspection, international waste disposal, increased international crew rates, etc. Anyway, cost is not comparable.

Someone in the AA's JFK thread asked if DL is making money. This kind of pricing should show all you need to know about how far DL is willing to go to defend its market share in NYC.

I've recently seen lower transatlantic fares from DL, including one US-UK route for £68 pre-tax.

I can assure you all seats in Y are not priced like that. DL has a very capable pricing program which will move the price up and down. We are also 6+ months out and I can assure you the price will rise. DL does not fly routes it can't make money on.

klakzky123 wrote:

evank516 wrote:

Doesn't UA fly EWR-KEF also?

Yup. Icelandair, WOW Air (sometimes with two flights a day) and United all fly from EWR in the Summer. NYC to KEF is a bloodbath.

If MSP can handle 3 flights a day to KEF in the summer, NYC should be able to easily.

lavalampluva wrote:

klakzky123 wrote:

evank516 wrote:

Doesn't UA fly EWR-KEF also?

Yup. Icelandair, WOW Air (sometimes with two flights a day) and United all fly from EWR in the Summer. NYC to KEF is a bloodbath.

If MSP can handle 3 flights a day to KEF in the summer, NYC should be able to easily.

The difference is that MSP (even with 3 flights) has reasonable yields for MSP-KEF. FI has its base price at around $450 normally (with drops every now and then) and DL will generally price slightly higher. And of course the fares can get quite high at times. The other thing to note is that the DL MSP-KEF flights get connections as well at MSP and those yields can get pretty high at times. JFK on the other hand doesn't have nearly as many connections. JFK-KEF relies far more heavily on O&D.

But these NYC yields look awful in comparison.

On a random Wednesday in July, UA is selling one-way EWR-KEF for 538 or 736 round-trip. Remarkable they can command that much of a premium over DL at JFK.

enilria wrote:

$153 each way on JFK-KEF in Summer 2019 on DL. Obviously they are losing their shirts. When WOW was in the market I might have understood this, but with only FI left is this really necessary with their costs? If it's still that bad with only two carriers just let FI have it. With the hub in KEF it's going to be very hard to compete with them anyway.

https://slickdeals.net/f/12177175-nonst ... -sept-2019

It's a solid pricing strategy most airlines utilise. This far out, what's open will mostly be the lowest fare buckets with the tight ticketing restrictions. As we get closer, those will close as bookings come in. The fares open will also depend on the forecasted demand per flight (all cabins included, i imagine they use upgrade/pinching parameters for flights not expected to go full in 1 cabin when setting up flight AU's). International peak demand also tends to be directional.

mmo wrote:

DL does not fly routes it can't make money on.

That's totally false. I would suggest at least 15% of DL's routes lose money. This is very common. There are a number reasons this happens:

1) Competitive reasons. MSP-KEF is the poster child. There's no way that makes money. It's there to defend against FI growing in MSP.
2) Political reasons. MSP-HND. The numbers on this route are improving, but it's still about 10% less full than the other NRT flights and the yield isabout 10% worse than the other flights because there is so little local. Definitely not profitable, but going in the right direction. Probably will take a dive when MSP-ICN starts. They can't drop the route because they need to hold the HND authority for future rounds of HND liberalization.
3) Hope. You don't just drop a route the day it becomes unprofitable. Maybe if you are Frontier. You give a route time to succeed. Sometimes too much time.
4) Operational. A certain number of planes need to overnight at a maintenance base. Not unusual to run junk trips to satisfy maintenance needs.
5) Corporate Contract. This may be the most common type of loser in the DL network. A corporation like P&G says that they will pledge all their corporate traffic to DL if they connect to of their operations centers with a flight. This is VERY common.

waly777 wrote:

It's a solid pricing strategy most airlines utilise. This far out, what's open will mostly be the lowest fare buckets with the tight ticketing restrictions. As we get closer, those will close as bookings come in. The fares open will also depend on the forecasted demand per flight (all cabins included, i imagine they use upgrade/pinching parameters for flights not expected to go full in 1 cabin when setting up flight AU's). International peak demand also tends to be directional.

That's the way it worked years ago. Doesn't work like that now. In the old days the revenue management system would put in a bookings base at relatively low fares far in advance and then let that simmer for a few months to see what other demand showed up. Now the system is much more based upon demand in past years and DL does not operate like that in it's far out revenue management. If you think about it you can see that selling seats far in advance at deep discounts is really dumb because demand is inherently weak that far out. It's much more effective to discount less (if needed) at a point where demand is stronger.

BTW, why is this now in Travel, Polls, and Preferences????

enilria wrote:

mmo wrote:

DL does not fly routes it can't make money on.

That's totally false. I would suggest at least 15% of DL's routes lose money. This is very common. There are a number reasons this happens:

1) Competitive reasons. MSP-KEF is the poster child. There's no way that makes money. It's there to defend against FI growing in MSP.
2) Political reasons. MSP-HND. The numbers on this route are improving, but it's still about 10% less full than the other NRT flights and the yield isabout 10% worse than the other flights because there is so little local. Definitely not profitable, but going in the right direction. Probably will take a dive when MSP-ICN starts. They can't drop the route because they need to hold the HND authority for future rounds of HND liberalization.
3) Hope. You don't just drop a route the day it becomes unprofitable. Maybe if you are Frontier. You give a route time to succeed. Sometimes too much time.
4) Operational. A certain number of planes need to overnight at a maintenance base. Not unusual to run junk trips to satisfy maintenance needs.
5) Corporate Contract. This may be the most common type of loser in the DL network. A corporation like P&G says that they will pledge all their corporate traffic to DL if they connect to of their operations centers with a flight. This is VERY common.

waly777 wrote:

It's a solid pricing strategy most airlines utilise. This far out, what's open will mostly be the lowest fare buckets with the tight ticketing restrictions. As we get closer, those will close as bookings come in. The fares open will also depend on the forecasted demand per flight (all cabins included, i imagine they use upgrade/pinching parameters for flights not expected to go full in 1 cabin when setting up flight AU's). International peak demand also tends to be directional.

That's the way it worked years ago. Doesn't work like that now. In the old days the revenue management system would put in a bookings base at relatively low fares far in advance and then let that simmer for a few months to see what other demand showed up. Now the system is much more based upon demand in past years and DL does not operate like that in it's far out revenue management. If you think about it you can see that selling seats far in advance at deep discounts is really dumb because demand is inherently weak that far out. It's much more effective to discount less (if needed) at a point where demand is stronger.

Which was I mentioned the fare buckets open will also vary on the forecasted demand per flight for all cabins. If the demand is low, there's no point restricting availability to structural rbds, there will be a lot of tactical in use to improve volumes.

I disagree on it being dumb having discounted fares in advance. Especially when demand is low.
Just because it is a peak period, does not mean every leg/flight/cabin has high demand for the particular route.

If their forecasting systems are being properly managed and historical forecast accuracy is close to flown, then they can be quite sure of a route/leg/flight demand quite far out and implement appropriate POS/route, inventory and pricing strategies. One strategy does not fit all markets of course.

Are we 100% sure that WOW will not be returning to JFK next Summer? I understand they aren't bookable now, but is it official that they won't be returning?

waly777 wrote:

enilria wrote:

mmo wrote:

DL does not fly routes it can't make money on.

That's totally false. I would suggest at least 15% of DL's routes lose money. This is very common. There are a number reasons this happens:

1) Competitive reasons. MSP-KEF is the poster child. There's no way that makes money. It's there to defend against FI growing in MSP.
2) Political reasons. MSP-HND. The numbers on this route are improving, but it's still about 10% less full than the other NRT flights and the yield isabout 10% worse than the other flights because there is so little local. Definitely not profitable, but going in the right direction. Probably will take a dive when MSP-ICN starts. They can't drop the route because they need to hold the HND authority for future rounds of HND liberalization.
3) Hope. You don't just drop a route the day it becomes unprofitable. Maybe if you are Frontier. You give a route time to succeed. Sometimes too much time.
4) Operational. A certain number of planes need to overnight at a maintenance base. Not unusual to run junk trips to satisfy maintenance needs.
5) Corporate Contract. This may be the most common type of loser in the DL network. A corporation like P&G says that they will pledge all their corporate traffic to DL if they connect to of their operations centers with a flight. This is VERY common.

waly777 wrote:

It's a solid pricing strategy most airlines utilise. This far out, what's open will mostly be the lowest fare buckets with the tight ticketing restrictions. As we get closer, those will close as bookings come in. The fares open will also depend on the forecasted demand per flight (all cabins included, i imagine they use upgrade/pinching parameters for flights not expected to go full in 1 cabin when setting up flight AU's). International peak demand also tends to be directional.

That's the way it worked years ago. Doesn't work like that now. In the old days the revenue management system would put in a bookings base at relatively low fares far in advance and then let that simmer for a few months to see what other demand showed up. Now the system is much more based upon demand in past years and DL does not operate like that in it's far out revenue management. If you think about it you can see that selling seats far in advance at deep discounts is really dumb because demand is inherently weak that far out. It's much more effective to discount less (if needed) at a point where demand is stronger.

Which was I mentioned the fare buckets open will also vary on the forecasted demand per flight for all cabins. If the demand is low, there's no point restricting availability to structural rbds, there will be a lot of tactical in use to improve volumes.

I disagree on it being dumb having discounted fares in advance. Especially when demand is low.
Just because it is a peak period, does not mean every leg/flight/cabin has high demand for the particular route.

If their forecasting systems are being properly managed and historical forecast accuracy is close to flown, then they can be quite sure of a route/leg/flight demand quite far out and implement appropriate POS/route, inventory and pricing strategies. One strategy does not fit all markets of course.

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

enilria wrote:

waly777 wrote:

enilria wrote:

That's totally false. I would suggest at least 15% of DL's routes lose money. This is very common. There are a number reasons this happens:

1) Competitive reasons. MSP-KEF is the poster child. There's no way that makes money. It's there to defend against FI growing in MSP.
2) Political reasons. MSP-HND. The numbers on this route are improving, but it's still about 10% less full than the other NRT flights and the yield isabout 10% worse than the other flights because there is so little local. Definitely not profitable, but going in the right direction. Probably will take a dive when MSP-ICN starts. They can't drop the route because they need to hold the HND authority for future rounds of HND liberalization.
3) Hope. You don't just drop a route the day it becomes unprofitable. Maybe if you are Frontier. You give a route time to succeed. Sometimes too much time.
4) Operational. A certain number of planes need to overnight at a maintenance base. Not unusual to run junk trips to satisfy maintenance needs.
5) Corporate Contract. This may be the most common type of loser in the DL network. A corporation like P&G says that they will pledge all their corporate traffic to DL if they connect to of their operations centers with a flight. This is VERY common.

That's the way it worked years ago. Doesn't work like that now. In the old days the revenue management system would put in a bookings base at relatively low fares far in advance and then let that simmer for a few months to see what other demand showed up. Now the system is much more based upon demand in past years and DL does not operate like that in it's far out revenue management. If you think about it you can see that selling seats far in advance at deep discounts is really dumb because demand is inherently weak that far out. It's much more effective to discount less (if needed) at a point where demand is stronger.

Which was I mentioned the fare buckets open will also vary on the forecasted demand per flight for all cabins. If the demand is low, there's no point restricting availability to structural rbds, there will be a lot of tactical in use to improve volumes.

I disagree on it being dumb having discounted fares in advance. Especially when demand is low.
Just because it is a peak period, does not mean every leg/flight/cabin has high demand for the particular route.

If their forecasting systems are being properly managed and historical forecast accuracy is close to flown, then they can be quite sure of a route/leg/flight demand quite far out and implement appropriate POS/route, inventory and pricing strategies. One strategy does not fit all markets of course.

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

This works fine if you have high demand on the flight. If you don't, there is literally no point offering high fares when there is excess capacity (not just you, but your competitors) as you will risk excessive spoilage. You of course don't sell all of them on tactical rbds or you end up spilling more valuable pax closer to departure if the route has such a demand profile.

Even when there is demand, you have to understand the market enough and get the right RBD mix to ensure you don't spill or spoil. Locking up everything and selling high fares works out during super peak periods like the weekends after school close/before Christmas when demand significantly exceeds capacity. You will definitely have little to no spoilage.

waly777 wrote:

enilria wrote:

waly777 wrote:

Which was I mentioned the fare buckets open will also vary on the forecasted demand per flight for all cabins. If the demand is low, there's no point restricting availability to structural rbds, there will be a lot of tactical in use to improve volumes.

I disagree on it being dumb having discounted fares in advance. Especially when demand is low.
Just because it is a peak period, does not mean every leg/flight/cabin has high demand for the particular route.

If their forecasting systems are being properly managed and historical forecast accuracy is close to flown, then they can be quite sure of a route/leg/flight demand quite far out and implement appropriate POS/route, inventory and pricing strategies. One strategy does not fit all markets of course.

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

This works fine if you have high demand on the flight. If you don't, there is literally no point offering high fares when there is excess capacity (not just you, but your competitors) as you will risk excessive spoilage. You of course don't sell all of them on tactical rbds or you end up spilling more valuable pax closer to departure if the route has such a demand profile.

Even when there is demand, you have to understand the market enough and get the right RBD mix to ensure you don't spill or spoil. Locking up everything and selling high fares works out during super peak periods like the weekends after school close/before Christmas when demand significantly exceeds capacity. You will definitely have little to no spoilage.

OK, I'll go about it this way. If the market is so weak that they feel the need to trash the market 8 months in advance and as you say it is not a "high demand market", then the market must be a trainwreck they should give up on...and the reason this strategy is out of favor now is because few remaining markets are so weak that this strategy has any shot at a positive impact.

BTW, I don't think WOW even has schedules loaded for EWR for next Summer yet, so that makes it even nuttier.

And yet, people occaionally post that there is not enough competition, and that fares are too high.

enilria wrote:

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

I was going to respond to your first post to me but really couldn't care less. I don't know what your background is but your statement amazes me. I don't know where all the revenue management people you know work but I know plenty of revenue management people who would disagree. Take a look at TATL fares now bookable in the summer and where they are in the summer, they certainly do follow the pricing logic I described. We're going back to the UK on 22 DEC in J and the fare is double what we paid. Evey U2 and FR do the same thing, the longer out the date is the cheaper the fare is.

mmo wrote:

enilria wrote:

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

I was going to respond to your first post to me but really couldn't care less. I don't know what your background is but your statement amazes me. I don't know where all the revenue management people you know work but I know plenty of revenue management people who would disagree. Take a look at TATL fares now bookable in the summer and where they are in the summer, they certainly do follow the pricing logic I described. We're going back to the UK on 22 DEC in J and the fare is double what we paid. Evey U2 and FR do the same thing, the longer out the date is the cheaper the fare is.

I don't know what your background is, but your statement also amazes me. Show me other $330 RT fares U.S. to Europe on U.S. legacies for next July and we can talk more. Otherwise you just want to debate. If you got a fare in J for $330 then you really should post that for other people to take advantage of. If these fares for Summer so far in advance are super-common why does not body post those anywhere? Yes, there are the oopsie fares that the airlines now revoke after you buy, but show me these far out dirt cheap fares?

Please tell me where I said the far was from the US? Also, tell me where I ever said anything about $330? I have no issues with debating a topic, but I am not going to debate with someone who can't even keep the facts straight!!

But, just to prove a point, right not July travel BOS-LHR $617 return. Let's see you get that in June. Try looking out 300 days and see the fares then.

mmo wrote:

We're going back to the UK on 22 DEC in J and the fare is double what we paid. Evey U2 and FR do the same thing, the longer out the date is the cheaper the fare is.

Definitely this is not the case with FR. I have flown FR dozens of times, and 6-month in advance fares are usually priced higher. Particularly in low-season when 1-2 months in advance (or even less) you can get cheaper fares so FR can sell the inventory and stimulate traffic (city breaks, VFR, etc)

I live in ALC and that certainly is not the case for the UK market. We have some friends coming down after Christmas and the fare today is £157.xx and they paid just over 50.

enilria wrote:

waly777 wrote:

enilria wrote:

All the revenue management people I know no longer believe in offering rock bottom pricing 180+ days out. Demand is too weak to price into that weakness and generally the more modern strategy is to charge a premium to lock down your plans so far in advance.

This works fine if you have high demand on the flight. If you don't, there is literally no point offering high fares when there is excess capacity (not just you, but your competitors) as you will risk excessive spoilage. You of course don't sell all of them on tactical rbds or you end up spilling more valuable pax closer to departure if the route has such a demand profile.

Even when there is demand, you have to understand the market enough and get the right RBD mix to ensure you don't spill or spoil. Locking up everything and selling high fares works out during super peak periods like the weekends after school close/before Christmas when demand significantly exceeds capacity. You will definitely have little to no spoilage.

OK, I'll go about it this way. If the market is so weak that they feel the need to trash the market 8 months in advance and as you say it is not a "high demand market", then the market must be a trainwreck they should give up on...and the reason this strategy is out of favor now is because few remaining markets are so weak that this strategy has any shot at a positive impact.

BTW, I don't think WOW even has schedules loaded for EWR for next Summer yet, so that makes it even nuttier.

I did not say "high demand market". I am referring to demand per flight. I.e. demand on flight per day. Smh, they are not thrashing the market, simply getting the right mix of people onboard. Again, what you refer to as "this strategy" is very much in use and i can ask you to look at those same flights by April next year and see what the fares are.

Perhaps you don't quite understand how dynamic demand is. Flights for network carriers are loaded 330 days out in advance on average. The revenue management systems can already forecast the demand of a single flight that early out, down to each RBD, it's cancellation and no show rates too. Analysts and managers add or adjust influences/parameters to correct the system if the output produced is not what is desired. The revenue management system is always going to drive for maximum revenue

So no, they are not thrashing the market nor should they give up. They are simply applying one of many strategies to get that max revenue potential and sometimes it includes selling some of the seats cheaply in advance. The fare buckets will close as bookings come in to match the expected demand. The systems constantly monitors and opens or closes availability to match the strategy of the analyst for that route/flight/cabin.

And yes, I do this for a living.

SCQ83 wrote:

mmo wrote:

We're going back to the UK on 22 DEC in J and the fare is double what we paid. Evey U2 and FR do the same thing, the longer out the date is the cheaper the fare is.

Definitely this is not the case with FR. I have flown FR dozens of times, and 6-month in advance fares are usually priced higher. Particularly in low-season when 1-2 months in advance (or even less) you can get cheaper fares so FR can sell the inventory and stimulate traffic (city breaks, VFR, etc)

This is moreso the exception than the norm. The analyst in charge might have expected high demand for that flight and left higher fares open, when that did not materialise or bookings did not come in as expected, lower fare buckets will be opened up to fill up the flight. Closer to departure.

But it is standard practice to get cheaper fares the farther out you are from departure as there are usually less bookings and booked LF & forecasted demand will usually determine what levels are available. Though this will defer for super peak flights like the first weekend of school closure for summer, mid terms, sprink break etc. Demand will always be high for those specific periods no matter what and in the systems, those dates can be marked as "special events/holidays" (as the dates change every year) for the system to be more restrictive on what fare levels are open for sale from the start.

waly777 wrote:

Again, what you refer to as "this strategy" is very much in use and i can ask you to look at those same flights by April next year and see what the fares are.

April is shoulder. We are talking about July. That's the whole point.

Why is that DL, AA and UA fell that is is necessary to serve KEF when their flights esentially deadend in KEG? Is there that much O and D? Wouldn't be better for those 3 carriers to be more fare competitive to cities in Europe?

enilria wrote:

waly777 wrote:

Again, what you refer to as "this strategy" is very much in use and i can ask you to look at those same flights by April next year and see what the fares are.

April is shoulder. We are talking about July. That's the whole point.

In April... check the July flight prices, they would be far more expensive.

I did some sample bookings and Icelandair is $421 roundtrip, Basic Economy on Delta is $585. Those are for July.

Icelandair has always been a cheaper alternative, even before WOW.

Iceland is an interesting destination, its been a tourist draw for years, but really exploded over the past 10.

traditionally U.S. Carriers have not paid much attention to it.

waly777 wrote:

enilria wrote:

waly777 wrote:

Again, what you refer to as "this strategy" is very much in use and i can ask you to look at those same flights by April next year and see what the fares are.

April is shoulder. We are talking about July. That's the whole point.

In April... check the July flight prices, they would be far more expensive.

I feel like you aren't getting my point. July is supposed to be expensive all the time, not just by the time you get to April.

enilria wrote:

waly777 wrote:

enilria wrote:

April is shoulder. We are talking about July. That's the whole point.

In April... check the July flight prices, they would be far more expensive.

I feel like you aren't getting my point. July is supposed to be expensive all the time, not just by the time you get to April.

I do get your point but I'm telling you that point is unfortunately wrong and the price trend as we get closer to departure will prove this. Competition is a very key factor in price as well. They will risk empty seats if they follow your suggestion.

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

And you base this on? Are you taking into account belly cargo?

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

Why have they operated it consistently for 8 years then, going from 3x weekly in deep summer only to almost daily year-round service? While I shared your skepticism back when DL started operating here in 2011, I think they've proved since that they do have a place here. Low fares here and there don't change my opinion on that.

However, I can't see DL making much money on MSP-KEF, without knowing the facts of it. Still, they're returning on that route for the 3rd year running next summer so it must make some sense to keep it.

mmo wrote:

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

And you base this on? Are you taking into account belly cargo?

You are kidding, right? It's the biggest myth in passenger aviation that cargo significantly impacts passenger airline profitability. In the most recent quarter, only 3.5% of FI revenue was from Cargo. That's not changing anything from bad to good.

SRQKEF wrote:

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

Why have they operated it consistently for 8 years then, going from 3x weekly in deep summer only to almost daily year-round service? While I shared your skepticism back when DL started operating here in 2011, I think they've proved since that they do have a place here. Low fares here and there don't change my opinion on that.

However, I can't see DL making much money on MSP-KEF, without knowing the facts of it. Still, they're returning on that route for the 3rd year running next summer so it must make some sense to keep it.

I just looked up their reported average fare. JFK-KEF is about 1/3rd of LHR. Yes, that's hideous. In MSP it's about 60% lower than LHR.

It's the same as AA in DFW-KEF. I believe it is a flawed strategy. They think that by taking a chunk of the local market to KEF they are hurting the ability for FI/WW to stay in the market. It's a fallacy because while the local market is bigger than people think, it is often a stop over. For example, people fly JFK-KEF. Stay a couple of days and then fly KEF-TXL. DL can't offer that. There's no real way to do much damage to a KEF-based carrier. They should give up. It's like trying to run DL out of an ATL market. Not going to happen.

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

Well i don't have access to DL's data and neither do you, but DL is not afraid to cut routes that are unprofitable. This is part of a strategy that keeps their numbers on point.

enilria wrote:

SRQKEF wrote:

enilria wrote:

There's no way this route is profitable, though.

Why have they operated it consistently for 8 years then, going from 3x weekly in deep summer only to almost daily year-round service? While I shared your skepticism back when DL started operating here in 2011, I think they've proved since that they do have a place here. Low fares here and there don't change my opinion on that.

However, I can't see DL making much money on MSP-KEF, without knowing the facts of it. Still, they're returning on that route for the 3rd year running next summer so it must make some sense to keep it.

I just looked up their reported average fare. JFK-KEF is about 1/3rd of LHR. Yes, that's hideous. In MSP it's about 60% lower than LHR.

It's the same as AA in DFW-KEF. I believe it is a flawed strategy. They think that by taking a chunk of the local market to KEF they are hurting the ability for FI/WW to stay in the market. It's a fallacy because while the local market is bigger than people think, it is often a stop over. For example, people fly JFK-KEF. Stay a couple of days and then fly KEF-TXL. DL can't offer that. There's no real way to do much damage to a KEF-based carrier. They should give up. It's like trying to run DL out of an ATL market. Not going to happen.

The costs to operate out of LHR vs KEF are nowhere close.

waly777 wrote:

enilria wrote:

waly777 wrote:

DL's rev man system has to be on point for them to be that profitable, they know what they're doing.

There's no way this route is profitable, though.

Well i don't have access to DL's data and neither do you, but DL is not afraid to cut routes that are unprofitable. This is part of a strategy that keeps their numbers on point.

I absolutely do have access to Delta's data. It's published. I don't have their flight profitability system, but it can be simulated from the published data. People wrongly assume that every route is profitable. That's patently false. Even in the best of times 15-20% of routes lose money on the leg profit metric.

waly777 wrote:

The costs to operate out of LHR vs KEF are nowhere close.

The CASM on an old narrowbody to KEF is also significantly higher. DL's average fare on JFK-DUB is nearly double the DL fare to KEF. There are no cost items that could offset that sort of variance. The margin on KEF is dramatically lower than other Europe routes. Nobody thinks DUB is turning in 20% profit margins.

enilria wrote:

waly777 wrote:

enilria wrote:

There's no way this route is profitable, though.

Well i don't have access to DL's data and neither do you, but DL is not afraid to cut routes that are unprofitable. This is part of a strategy that keeps their numbers on point.

I absolutely do have access to Delta's data. It's published. I don't have their flight profitability system, but it can be simulated from the published data. People wrongly assume that every route is profitable. That's patently false. Even in the best of times 15-20% of routes lose money on the leg profit metric.

waly777 wrote:

The costs to operate out of LHR vs KEF are nowhere close.

The CASM on an old narrowbody to KEF is also significantly higher. DL's average fare on JFK-DUB is nearly double the DL fare to KEF. There are no cost items that could offset that sort of variance. The margin on KEF is dramatically lower than other Europe routes. Nobody thinks DUB is turning in 20% profit margins.

You have access to DL's route revenue and cost data? Lol i find that hard to believe as that data does not leave the revenue management and network planning teams where I work.

waly777 wrote:

enilria wrote:

waly777 wrote:

Well i don't have access to DL's data and neither do you, but DL is not afraid to cut routes that are unprofitable. This is part of a strategy that keeps their numbers on point.

I absolutely do have access to Delta's data. It's published. I don't have their flight profitability system, but it can be simulated from the published data. People wrongly assume that every route is profitable. That's patently false. Even in the best of times 15-20% of routes lose money on the leg profit metric.

waly777 wrote:

The costs to operate out of LHR vs KEF are nowhere close.

The CASM on an old narrowbody to KEF is also significantly higher. DL's average fare on JFK-DUB is nearly double the DL fare to KEF. There are no cost items that could offset that sort of variance. The margin on KEF is dramatically lower than other Europe routes. Nobody thinks DUB is turning in 20% profit margins.

You have access to DL's route revenue and cost data? Lol i find that hard to believe as that data does not leave the revenue management and network planning teams where I work.

Route revenue yes from DB1B. It's easily prorated to the leg. We have cost data by equipment by region from Form 41. The only data that is aggregated is the airport cost, but it doesn't vary so dramatically that it would swing anything that much. DIIO and ADI even have it processed and queryable. It's not going to be exact to the internal profitability system, but we aren't talking here about 2% variations. Good and bad markets stand out pretty clearly.

It's required by law to be reported. For example, I know DL had a 13% margin on Transatlatic in the last 12 months.

enilria wrote:

You are kidding, right? It's the biggest myth in passenger aviation that cargo significantly impacts passenger airline profitability. In the most recent quarter, only 3.5% of FI revenue was from Cargo. That's not changing anything from bad to good.

Really???? Again, I don't know what your background is but I suspect it's not in the commercial aviation industry. Having worked in commercial aviation for over 30 years, I can assure you cargo does impact profitability. Especially, in a market like KEF where fresh fish is a very time sensitive commodity. NW used to run a 747 from MSP-OSL and JFK-OSL and the fresh fish alone paid for the entire cost of the trip. Passenger revenue was all profit.

mmo wrote:

enilria wrote:

You are kidding, right? It's the biggest myth in passenger aviation that cargo significantly impacts passenger airline profitability. In the most recent quarter, only 3.5% of FI revenue was from Cargo. That's not changing anything from bad to good.

Really???? Again, I don't know what your background is but I suspect it's not in the commercial aviation industry. Having worked in commercial aviation for over 30 years, I can assure you cargo does impact profitability. Especially, in a market like KEF where fresh fish is a very time sensitive commodity. NW used to run a 747 from MSP-OSL and JFK-OSL and the fresh fish alone paid for the entire cost of the trip. Passenger revenue was all profit.

Don't want to compete with data from NW in 1992, but in the 3rd quarter of 2018 cargo is 3.5% of Icelandair's revenue? It impacts it by 3% which isn't much, but more than zero. Doesn't turn bad into good.

UPDATE: On Transatlantic in 2018, DL's revenue from freight was 4.05%. Same thing. Not enough to turn bad into good. All the cargo on DL's Atlantic flights produced the same revenue as 8 passengers/flight on average.

Am I correct in assuming that there's a time point before revenue management really comes into play with tweaking prices? For instance, would a fare for a flight 6 months from now would be relatively static and priced consistently with historical expectations (what prices were seats sold for last year?). Of course, there could be different rules for flights that sell out quickly, seat sales, etc.

I could see the last few weeks before the flight being 'peak season' for revenue management. Am I correct in this assumption?

wave46 wrote:

Am I correct in assuming that there's a time point before revenue management really comes into play with tweaking prices? For instance, would a fare for a flight 6 months from now would be relatively static and priced consistently with historical expectations (what prices were seats sold for last year?). Of course, there could be different rules for flights that sell out quickly, seat sales, etc.

I could see the last few weeks before the flight being 'peak season' for revenue management. Am I correct in this assumption?

It could be possible but that would seem to be a really lazy team and largely negate the point of having such a team.

Flights, seats and accompanying prices are loaded almost a year in advance. They should already be taken care of before they are loaded into the system.

enilria wrote:

waly777 wrote:

enilria wrote:

I absolutely do have access to Delta's data. It's published. I don't have their flight profitability system, but it can be simulated from the published data. People wrongly assume that every route is profitable. That's patently false. Even in the best of times 15-20% of routes lose money on the leg profit metric.

The CASM on an old narrowbody to KEF is also significantly higher. DL's average fare on JFK-DUB is nearly double the DL fare to KEF. There are no cost items that could offset that sort of variance. The margin on KEF is dramatically lower than other Europe routes. Nobody thinks DUB is turning in 20% profit margins.

You have access to DL's route revenue and cost data? Lol i find that hard to believe as that data does not leave the revenue management and network planning teams where I work.

Route revenue yes from DB1B. It's easily prorated to the leg. We have cost data by equipment by region from Form 41. The only data that is aggregated is the airport cost, but it doesn't vary so dramatically that it would swing anything that much. DIIO and ADI even have it processed and queryable. It's not going to be exact to the internal profitability system, but we aren't talking here about 2% variations. Good and bad markets stand out pretty clearly.

It's required by law to be reported. For example, I know DL had a 13% margin on Transatlatic in the last 12 months.

And yet you still cannot reliably show the route profitability. What you have access to is very generic data and your extrapolations are not going to be based on realistic assumptions which would put those figures quite off reality.

Again, if you don't work in Revenue management/optimisation, network planning, you will not have access to that data. It is that sensitive.