Revenue Management and Virgin Pricing

[oz_mark]

As it's an issue that bit me today, I was wondering what other peoples experience with pricing on Virgin as the planes fill up.

I have noticed that both the Saver and Flexi buckets both arc upwards on an exponential curve as it happens. Maybe I am just used to Qantas where the red-e-deal prices just become unavailable.

Seems a bit wrong to me that a Saver fare at one time of day can be $400 while a Flexi on the next flight is only $300. Why not just have the $400 as a Flexi?

 

[docjames]

Two words: Revenue Management.

 

[oz_mark]

Two words: Revenue Management.

Yes I know.

But given I have just paid Flexi rates for a Saver fare, they're not going to sell me a thing onboard!

 

[dk4]

My guess - is that Virgin is quietly confident of selling out all seats on the “$400 Saver flight”, and wants to use this perceived opportunity to up the chances of additional ancillary sales on that flight (e.g. checked bags, onboard F&B), whereas the “$300 Flexi flight” is less likely to sell out, so they need a hook (e.g. "additional flexibility", onboard F&B, checked bags) to sell seats on that flight (hence Flexi @ $100 less)?

Additional guess - Fly Ahead or Flexi "flexible fare" benefits are therefore, unlikely to snag a seat on the “$400 Saver flight", at the airport desk, for someone who buys the $300 Flexi fare.

 

[oz_mark]

My guess is that Virgin is quietly confident of selling out all seats on the “$400 Saver flight”, and wants to use this perceived opportunity to up the chances of additional ancillary sales (e.g. checked bags, onboard F&B), whereas the “$300 Flexi flight” is unlikely to sell out, so they need a hook (e.g. "additional flexibility", onboard F&B, checked bags) to sell seats on that flight (hence Flexi @ $100 less)?

As I said, I am perhaps used to the Qantas model, where they just wouldn't have had red-e-deal's for sale. I guess it's a hangover from their LCC mindset (there are a few hanging around - and I have seen the same thing happen on Jetstar). I suspect you are right about the ancillary revenue.

It's a shame that some things have to be booked throught the GCC, as I would have been happy to pay the extra $50 and make it a flexi fare. Now I am determined not to give them an extra cent.

 

[anat0l]

Qantas is not completely free of this practice. The most common one I see at times are Red e-Deals which are cheaper than Sale fares. In the old days, sometimes you could see Super Saver fares cheaper than some Red e-Deals.

Of course, not to say that this is a good thing.



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[oz_mark]

While I have seen that on qantas, at least the inclusion are pretty much the same.

 

[Deleted member 29185]

I was wondering what other peoples experience with pricing on Virgin as the planes fill up.

On another thread, I remarked that my cost of flying with DJ has gone up by 35% in the last 18 months. That's not exactly right........it's far too conservative. The reality is that it is now far more difficult to pick up good fares within a week of flying. It never use to be a problem and I really thought I was hard done by if a saver fare exceeded $100. What you've experienced has become a real bug-bear for me of late.

I also remember someone pre-Christmas commenting about the price of a DJ fare (saver I think) that was between $200 and $300 dollars. My comment at the time, was it must be the Christmas rush (and QF debarcle) as I'd never paid over $200 for a DJ saver fare and that was quite true. Trouble is, it obviously was not just the pre-Christmas rush. DJ seem to have reached (perhaps surpassed) their targets so supply and demand takes over. Why sell a seat for $10 when you can get $50 for it? Why include freebies if you don't have to? A marketing stroke of genius for DJ was saying they'll continue to provide LCC on their full service planes......let's face it, it gives them far more latitude to muck with pricings than QF has and they can justify it fully by saying smuggly "but that's our LCC fare, sir".....LCC, $100 dearer than full service a bit later....yeah, right.

If you have some latitude with time, you can book the later (cheaper) fare and use fly ahead to get on the AC of your choice.....but of course you may be out of luck with a spare seat that way!

Welcome to the new world of DJ style LCC.

 

[oz_mark]

Welcome to the new world of DJ style LCC.

I'm taking it as a learning experience, and helping me to understand how Virgin play the game.

HAving to book through the GCC, I thought a $400 fare (based on what I could see at the time on the web page), was a flexi fare.

Quite p!ssed that if they had offered the flexi for just ~$50 more I would have taken it. After the booking was confirmed, the pricing had indeed gone up.

 

[dk4]

Such an interesting problem...

Should Virgin stop selling Saver fares, on a given flight, once the Saver fare bucket hits the minimum lead in price for a Flexi ticket on that route?
OR
Should Virgin continue to offer a Saver fare option, at a discount to the Flexi fare offer on every flight (which may then become higher than the Flexi price on alternate flights on the same route), for those who would rather have a discount than be forced to take the yet even higher priced Flexi product (bundle) for said flight?

 

[Deleted member 29185]

Should Virgin stop selling Saver fares, on a given flight, once the Saver fare bucket hits the minimum lead in price for a Flexi ticket on that route?
OR
Should Virgin continue to offer a Saver fare option, at a discount to the Flexi fare offer on every flight (which may then become higher than the Flexi price on alternate flights on the same route),

DJ can do what they like, my observation is that it's harder for those of us that fly on shorter notice, to budget for the flight. I never really had that problem a year ago. A bit like walking into a shop to buy a can of Coke. We normally have an expectation of what the price will be (give and take a bit), but it makes it hard if the price of those cans of Coke in the same shop fluctuate over the course of the day by a factor of 2 or even 3.

oz_mark, do mind telling us the route you flew? $400 for a saver fare is a lot of cash.

 

[Standby]

From what i'm told by a friend who works for a large travel agency chain,DJs fare ladder has overlaping pricing where Saver fares are more expensive than lead in flex fares.However they set their inventory so the Flex fare isnt cheaper than the saver fare at any time.
Qantas have a linear fare ladder with no overlap and consistant base product (bags /meals) across all fare families
Perhaps DJ do this so as to have a "reasonable" trade up gap between saver (no bags/meals generally for nontiers)However since the fare structure changed on DJ last year the product changes in many cases seems to make the overlap/trade up structure irrelevant. $400 is a lot for a fare without all the product I agree

 

[MarkD]

From what i'm told by a friend who works for a large travel agency chain,DJs fare ladder has overlaping pricing where Saver fares are more expensive than lead in flex fares.However they set their inventory so the Flex fare isnt cheaper than the saver fare at any time.
Qantas have a linear fare ladder with no overlap and consistant base product (bags /meals) across all fare families
Perhaps DJ do this so as to have a "reasonable" trade up gap between saver (no bags/meals generally for nontiers)However since the fare structure changed on DJ last year the product changes in many cases seems to make the overlap/trade up structure irrelevant. $400 is a lot for a fare without all the product I agree

I have bought flexi fares at less than saver on the same flight. That was around October last year, so I guess they may have fixed the bug, but it was definately possible.

 

[Fruitcake]

Such an interesting problem...

Should Virgin stop selling Saver fares, on a given flight, once the Saver fare bucket hits the minimum lead in price for a Flexi ticket on that route?
OR
Should Virgin continue to offer a Saver fare option, at a discount to the Flexi fare offer on every flight (which may then become higher than the Flexi price on alternate flights on the same route), for those who would rather have a discount than be forced to take the yet even higher priced Flexi product (bundle) for said flight?

I think the current way it's sold makes sense. In the hours leading up to departure the gap between saver and flexi should close (as the optionality of the Flexi loses its value, and the difference between the two devolves into the value of priority checkin (which obviously is rather intangible - indeed, worthless to many pax), the meal ($15 for a wrap and a drink?), the bag ($12), and possibly a better seat allocation (once again, intangible), and extra SCs. Indeed if you look at SYD-BNE the long-advance flexi/saver differential is normally $110. For flights leaving this afternoon, it's $60.

I don't see the point in forcing last-minute pax to take the bundle if they don't want it.

 

[oz_mark]

I don't see the point in forcing last-minute pax to take the bundle if they don't want it.

The fare I booked is actually 2 months away (June long weekend).

What has really annoyed me is that I had to book through the GCC, and they did not even give me the choice to book a Flexi.

 

[Fruitcake]

T

What has really annoyed me is that I had to book through the GCC, and they did not even give me the choice to book a Flexi.

Ah, I didn't mentally link this with your other thread. I'd also be really annoyed in that situation.

 

[oz_mark]

Ah, I didn't mentally link this with your other thread. I'd also be really annoyed in that situation.

Tis linked with the other issue, but was wondering what people generally thought of it.

 

[Baguss]

When booking for domestic flights, always book as far ahead as possible if you have specific dates. However, always be willing to wait for a sale. With Virgin if you book 12 months ahead you actually pay a premium to do so! You need to book normally within a good 2 - 3 months of travel.
If there is a public holiday then really a.s.a.p. ( I book these normally 9 - 10 months in advance). Remember, to take note of all State's public holidays not just focusing on your departure or destination.
Domestically sometimes (and it seems to be happening more and more these days) one airline is cheaper one way, and the return with another airline.
When booking Intentional flights, really leave up until the last minute ( 1 - 2 months out). This is more a test of your flexibility but probably your confidence.

 

[`X']

It happens all the time

For instance if you have a high end saver fare in say an X Fare Class, low end Saver S Class (may not be real class but using as example) but a Low End Flexi in H Fare Class and a High end Flexi in Y class.

Say the flight had the following fare classes and it was set to show the cheapest fare of the Class Buckets available

Example:
S: 0
X: 9
H: 9
Y: 9

The web is just simply showing the cheapest fares available in each category. If everyone keeps picking the cheap savers all thats left is going to be the high end savers. In this instance if your booking Savers... You == Stupid!

I see it probably 3 - 4 times a day.

 

[toowongman]

I have bought flexi fares at less than saver on the same flight. That was around October last year, so I guess they may have fixed the bug, but it was definately possible.

It still crops up quite a lot. I see this on MEL<>NTL and MEL<>PER ... but only on connecting flights. E.g. sometimes you can get a flexi cheaper than a saver for MEL-BNE-NTL or MEL-SYD-PER.
Here's a capture from a few moments ago as an example: