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Work Hard. Fly Right. SM

AGIFORS 2001 Reservations and Yield Management Conference The Imperial Queen’s Park Hotel Bangkok, Thailand May 8 – 11, 2001 Leon Kinloch VP Domestic Pricing & Revenue Management. Work Hard. Fly Right. SM. Why O&D Doesn’t Work. Work Hard. Fly Right. SM. Or

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Work Hard. Fly Right. SM

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  1. AGIFORS 2001 Reservations and Yield Management ConferenceThe Imperial Queen’s Park Hotel Bangkok, ThailandMay 8 – 11, 2001Leon KinlochVP Domestic Pricing & Revenue Management Work Hard. Fly Right. SM

  2. Why O&D Doesn’t Work Work Hard. Fly Right. SM

  3. Or A Funny Thing Happened On The Way To O&D . . . Work Hard. Fly Right. SM

  4. We spent millions analyzing . . . Work Hard. Fly Right. SM

  5. And then we had to figure out how to get our reservations/CRS Systems to support & control our new O&D solutions . . . Work Hard. Fly Right. SM

  6. We invented multiple roads to O&D control: • Stratify Fares • Stratify fares less displacement cost • Virtual buckets • Real time bid price • (The “big one”) Work Hard. Fly Right. SM

  7. Once you make your choice and you revel in your brilliance . . . You’re screwed ! Work Hard. Fly Right. SM

  8. The success of O&D is based on three basic assumptions: • Seamless availability must never fail • There must be honor among thieves • Travel Agents will always be lazy Work Hard. Fly Right. SM

  9. Seamless Availability Must Never Fail While we are in the 21st century, the systems that we rely on are not. We fall back to AVS far too often When the link is down, there is no O&D backup In codeshare relationships cascading or other methods of O&D information are inconsistent and often too slow Work Hard. Fly Right. SM

  10. There Must Be Honor Among Thieves • Sum of the locals faring bypasses O&D control • Enabled by our friendly neighborhood CRS • Products such as best buy rebook ignore O&D • Finds “unintended” itineraries • Applies pricing inconsistent with how inventory was sold Work Hard. Fly Right. SM

  11. (Human) Travel Agents Will Always Be Lazy • While this will always be true, there is a new “Phantom Menace” • The Internet • It definitely is Not lazy • Connection builders exploit gaping holes in O&D control • Overwhelms communications capabilities of GDS & airlines, thus forcing more AVS-based answers. Work Hard. Fly Right. SM

  12. SABRE AVAILABILITY 26MAYSATMSY12N# 26MAY SAT SAT/CDT MSY/CDT#0 692 F7 Y7 B7 H7 K7 M5 SATDFW 9 1155A 105P S80 0 DCA /E L0 Q0 V0 N0 1086 F5 Y7 B7 H7 K7 M5 MSY 7 217P 346P S80 0 DCA /E L0 Q0 V0 N0 26MAYSATDFW12N# 26MAY SAT SAT/CDT DFW/CDT#0 692 F7 A7 Y7 B7 H7 SATDFW 9 1155A 105P S80 0 DCA /E K7 L7 M7 Q7 V7 N6 26MAYDFWMSY1P# 26MAY SAT DFW/CDT MSY/CDT#0 1086 F5 A4 Y7 B7 H7 DFWMSY 7 217P 346P S80 0 DCA /E K7 L7 M7 Q6 V2 N1 OUTBOUND SOLD POINT TO POINT, RETURN SOLD AS MARRIED SEGMENTS 1781Q 29MAY T*MSYDFW SS1 827A 1009A /DCAA /E 1023Q 29MAY T DFWSAT*SS1 1107A 1222P /DCAA /E WPTN< (no taxes applied) 26MAY DEPARTURE DATE-----LAST DAY TO PURCHASE 27APR BASE FARE TAXES TOTAL 1- USD186.04 9.00XF USD195.04ADT 186.04 9.00 195.04TTL ADT-01 QRA14DNR SAT AA X/DFW AA MSY93.02QRA14DNR AA X/DFW AA SAT93.02QRA14 DNR 186.04 END XFDFW3MSY3DFW3 NO REFUND/CHG FEE USD 100 PLUS FARE DIFF Work Hard. Fly Right. SM

  13. It Is Happening To You – Example #1 When we asked for: SAT-MSY Q unavailable When we asked for: SAT-DFW Q available DFW-MSY Q available Price of combo of local should have been: $ 293.32 Unavailable O&D now prices at: $ 195.04 You lose: $ 98.28 Work Hard. Fly Right. SM

  14. SABRE AVAILABILITY AS AGENCY 126MAYSANHKG# CONST AT SFO ALLOW 40MIN PRKG 26MAY SAT SAN/PDT HKG/#15 2160F5 Y9 B9 M9 SANSFO 7 1100A 1225P 733 0 DCA /E H9 Q9 V9 W9 S0 T0 K9 L9 G9 A4 805 F8 C9 D9 Y9 HKG 140P 700P#1 744 L 0 DCA /E B0 M0 H0 Q0 V0 W0 S0 T0 K0 L0 126MAYSANSFO11A# CONST AT SFO ALLOW 40MIN PRKG 26MAY SAT SAN/PDT SFO/PDT#0 2160 F3 A3 Y9 B9 M9H9 SANSFO 7 1100A 1225P 733 0 DCA /E Q9 V9 W9 S9 T9 K9 L9 G9 126MAYSFOHKG# CONST AT SFO ALLOW 40MIN PRKG 26MAY SAT SFO/PDT HKG/#15 FOR MORE AVAILABILITY SEE OAK SFO SJC 805 F8 C9 D9 Y9 B9 SFOHKG 140P 700P#1 744 L 0 DCA /E M9 H9 Q9 V0 W0 S0 T0 K9 L9 FLIGHTS SOLD IN SEPARATELY 2160M 26MAY J SANSFO SS1 1100A 1225P /DCUA /E 805M 26MAY J SFOHKG SS1 140P 700P 27MAY S /DCUA /E PRICED AT THRU FARE WPTN 26MAY DEPARTURE DATE-----LAST DAY TO PURCHASE 10MAY BASE FARE TAXES TOTAL 1- USD919.00 3.00XF USD922.00ADT 919.00 3.00 922.00TTL ADT-01 MKSO SAN UA X/SFO UA HKG919.00MKSO NUC919.00END ROE1.00 SITI XFSAN3 NON-REF/SUPER-APEX Work Hard. Fly Right. SM

  15. It Is Happening To You - Example #2 When we ask for: SAN-HKG M unavailable When we ask for: SAN-SFO M available SFO-HKG M available Price of combo of local should have been: $ 1,055.02 Unavailable O&D now prices at: $ 922.00 You lose: $ 133.02 Work Hard. Fly Right. SM

  16. SABRE AVAILABILITY AS AGENCY 24MAY-THU- ALTERNATE SERVICE 1636 A9 D9 F9 Y9 H9 MSYIAH 600A 708A M80 0 G032 9 K9 B9 V9 Q9 T9 L0 1716 A9 D9 F9 Y9 H9 AUS 740A 835A M80 0 T235 9 K9 B9 V9 Q9 T9 L0 24MAY-THU- SERVES EFD/HOU/IAH ALTERNATE SERVICE 1636 A9 D9 F9 Y9 H9 MSYIAH 600A 708A M80 0 T108 9 K9 B9 V9 Q0 T0 L0 24MAY-THU-SERVES EFD/HOU/IAH ALTERNATE SERVICE 1716 A9 D9 F9 Y9 H9 IAHAUS 740A 835A M80 0 T055 9 K9 B9 V9 Q1 T0 L0 FLIGHTS SOLD AS MARRIED SEGMENT (*) CONNECTION 1636T 24MAY TH MSYIAH*SS1 600A 708A 1716T 24MAY TH IAHAUS*SS1 740A 835A ITINERARY PRICES AS COMBINATION OF LOCAL FARES 2MAY01 USD FARE TAX-USD TAX-USD USD TTL 1 - 129.31 9.69 US 8.50 XT 147.50 TTL 129.31 9.69 8.50 147.50 1 - PSGR 1 ADT 24MAY01MSY HOU67.91T14ZNAUS61.40T14ZNUSD129.31END ZPMSY 2.75IAH2.75XT5.50ZP XF3.00MSY3 V S 1/ 2 NOT VALID BEFORE/AFTER 24MAY Work Hard. Fly Right. SM

  17. It Is Happening To You - Example #3 When we ask for: MSY-AUS T available When we ask for: MSY-IAH T unavailable IAH-AUS T unavailable Price of available O&D should have been: $ 165.00 Unavailable combo of local prices at: $ 147.50 You lose: $ 17.50 Work Hard. Fly Right. SM

  18. Solutions • Pricing systems relying on nearly 30 year old AVS assumptions need revamping • Shotgun weddings? • Price itineraries as sold? • Pass bid price or minimum fare instead of class closures • O&D AVS? • The son of “The Big One?” Work Hard. Fly Right. SM

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