Occupancy Or Cheap Air Tickets Sale Maximization: The Never Ending Dilemma Of Airlines

Generating more occupancy rates in the airplanes and

, at the same time, maximizing the revenues and profits are the two most important considerations for the airlines. It is not easy to find an airline which is operating with a 100 percent occupancy rate which is the most ideal situation which an airline would like to aim for. However, it is also a fact that occupancy maximization is often not the ultimate aim because if it were so, then offering the lowest air fare could have guaranteed operation of fully occupied airplanes.

So, how does an airline determine what is the best combination of occupancy and revenue earned which can assure it of maximum profits? There is no rule of thumb for this. Rather, the airlines prefer to release the seats in buckets or lots. Some seats are on offer at the beginning, good fifteen to twenty days in advance of the scheduled flight. These early seats are generally priced at a lower rate since these are aimed at getting occupancy going by attracting customers with the lowest air fare seats. The next lots might get progressively expensive if the targeted occupancy levels are achieved within the stipulated time frame. In case of any problem in meeting the deadline and the result is that the cheap air tickets are again brought to the fore. Once the airline is satisfied with its sales, the remaining seats can also be sold off cheap. But, this scenario is not as simplistic as has been mentioned for the sake of understanding. The airline has to maintain an element of unpredictability in the prices since if it becomes too predictable that the airline offers cheap air tickets in the beginning or at the end, then the tickets will be sold off faster during these times and at lower rates. This might prevent the airline from missing on its aim of generating maximum revenues and hence, maximum profits.

For this reason we notice that the pricing keeps on changing very frequently and this is more so the case with the low cost carriers which already sell cheap air tickets and are faced with stiff competition. For these carriers, as also for full service ones, every seat sold is an addition to their total revenues which help them meet their costs. For this reason, occupancy becomes a top priority and cannot be ignored even if the airline has best yield management practices in place.

For the airlines who are not doing well and the passengers are not willing to travel on it due to the problems of delays and cancellations, the occupancy levels are the primary concern and the revenue maximization takes a back seat. By aiming to increase occupancy, the airline makes customers experience the plane and the services offered in-flight and to regularize the erratic flight operations. This is a strategy to make a turnaround and gain more customers.

by: Shawn Parker

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