I was on an airplane recently and there were some empty rows in the “extra legroom” section, since I guess no one wanted to pay money to sit there. When some passengers in the crowded normal people section asked if they could sit there, the flight attendant just tells them they need to pay money. So, it turned out that those seats were just empty for the whole flight. I understand the rules and why the airline needs to enforce them, but I cannot help but feel that resource optimization had failed somehow.
One time I was flying for work and parlaying it into a weekend with my gf. I had 1st class (long flight) and she did not. We just asked the counter agent if any seats were open and she said yes. Then, my gf just sat next to me. When the flight attendant asked about it we just said that the counter person said it was cool. Stare down, he didn’t want to throw us out, so we flew 1st class.
Yeah exactly. The price is high but very few people pay it. I’ve flown first more times than I can count but its booked as an award ticket or its a free status based upgrade (when I had United Gold status). I was on a flight back from Mexico in December. Of the 12 of us in the front cabin, 10 were complimentary upgrades.
The margin on a regular seat is a couple bucks at best, and only on full flights. A big chunk of mainline airline profit is from selling premium seats.
In talking to a analyst at a local discount carrier, he said the airline makes more profit from you ordering a sandwich than from you buying the fare.
I wouldn’t. Wasting money is still wasting money even if you have FU money.
I’m surprised Amazon isn’t running an airline given their taste for heavily commoditzed scale-dependent operations. Sell fare at cost and order s**t on the plane through your Kindle!
^ To my above post. One of the most profitable airlines in North America is WestJet. They had 17,423,000 segments flown in 2012. Their profit was $242M. So they earn $13.80 per segment, on average. They don’t have premium seating in their configurations, but I’m illustrating how razor thin margins are at an airline and why they don’t do freebies.
By comparison UAL earned ~$4.19/passenger in 2012, excluding one time charges.
It’s a tough business. Comping you a bag of cookies can make the your fare unprofitable.
^ Same with Spirit and Allegiant, the ultra low cost carriers flying around here. My inner economist likes it. Complete decoupling of the fare and add ons. You pay for snacks, pay for bags, etc. and get a lower base fare. When travelling for personal I’m pretty cost consious, but it would take more than $10-20 difference for me to go to one of those airlines vs. UA where I can accrue miles and actually do something with them.
The bag fees, premium seats, early boarding (southwest, etc. They all fall pretty much straight to the bottom line so no wonder they push them so hard. But honestly, I find the premium seats aren’t worth paying for unless you’re super tall. Pack into a carryon if you don’t get a free checked bag.
one time i had a dream that a hamburger was eating me!
So you would send your kid to a public school? No chance. You are fooling yourself
In this world gone mad, we won’t spank the monkey. The monkey will spank us!!!
Yes I would. I went to a public school, and I thought they were quite good. If you are a guy making FU money, you’re likely living in a good area, and many of those public schools are great.
Private School = No Cred.
Public School = Cred.
Respect.
I think it’s just to avoid extra trouble on the plane, it’s easier to say no to all, than to say yes to one passenger and explain to hundred others who also want to sit there at no extra cost.
“Wasting money” is all relative isn’t it?
You may think paying for 1st class tickets is wasting money, thus you may use that money toward your children’s tuition instead.
Some may find 1st class tickets already a cheap (and sensible) alternative to private jet.
Yes, they are making 130% of their profits (which means they are losing money on the rest) from the side business. Selling $12 sandwiches, charging for extra luggage and wifi service.
There are a lot of bozos running Wall Street firms.
A bozo is someone with no foresight that leveraging your firm 50:1 is lethal.
A bozo is someone that loses 80% of the company’s valuation under his watch.
A bozo is taking a century old institution (Lehman) and bankrupting it.
A bozo is someone who doesn’t understand the financial products his firm is buying and selling and how these products can put his entire ship under water.
I wouldn’t hire Vikram Pandit to run the local gas station yet he ran a trillion dollar institution.
These bozos are no brighter than the ones in Washington.
You want to hear about more bozos. The entire team at LTCM. Despite the great credentials on paper, they managed to turn billions of AUM into 0 dollars. What was its track record when all was said and done? Negative 25% annual return during the greatest bull run in market history.
Reaching the top does not make you immune of being a bozo.
These failures do not mean the people involved were not very, very smart, and given the amount of money most of them walked away with, I don’t know if I can argue with that. If you have a substantial chance of making millions of dollars for yourself, but a small chance of getting fired and running your desk into the ground, are you foolish to take that bet? Or maybe you believe, like many CDS traders did, that the market would eventually unwind (although perhaps not to the extent that it actually did). However, if you are making $5 million a year, you only need to survive for a short amount of time before you can walk away and be set for life. Perhaps we could say that they were irresponsible or morally challenged in betting the fate of their companies, but this is not always basis for saying that they did not understand the risks. Many of these people did, after all, achieve their objective of making a lot of money for themselves, even at the expense of others.
That reminds me of something I read somewhere. A guy proposed that he and someone else at another firm take wildly aggressive positions (on opposite sides of the trade), and at the end, one guy will make tons of money and a huge bonus and the other guy would be fired. and then they’d split the dough.
If a client pays a performance incentive, or supports an outfit that does, they are asking for trouble and I would suggest they deserve what they get. I’m paid to setup the Monte Carlo simulation with the client’s interests in mind and, hopefully, in their favor. The results neither prove or disprove that I did my job. Try to have your sales team sell them apples.