The current pricing systems are consumer unfriendly, tremendously outdated and will change. It’s a broken system.
A consumer’s view of air travel is from the bottom up. How much will the ticket cost me? How do I optimize for convenience and travel time? What will I do if there is a delay? Should I buy trip insurance just in case my plans change?
But the top-down view from airline executives, airport operators, governments, flight crews and airport ground staff is far more complex. Collectively, they are tasked with coaxing a massive global system of air travel to operate smoothly, 24 hours a day, every day, and quickly solve for disruptions — from accidents to Acts of God. The International Air Transport Association (IATA) counted more than 740 billion passenger kilometres flown globally in May. That’s equal to 920,323 solo round-trips to the moon.
The risks are everywhere, from long waits on the tarmac after missing a scheduled departure by mere minutes, to choosing routes that turn out to be money-losers when air travellers don’t fly them as often as expected. But, believe it or not, some of the goals are the same: to optimize travel time and cost and to mitigate risk.
BBC Capital spoke with Montie Brewer, a former chief executive officer of Air Canada who is now an independent aviation consultant and a board member at low-cost carrier Allegiant in the United States and at Aer Lingus in Ireland. Brewer, based in Boston, began his career in the airline industry in 1981. He offered an inside look at how airlines manage their schedules, attempt to reduce risk and delays for fliers and prepare for unexpected hitches. Edited excerpts follow.
BBC Capital: Heavy air traffic and weather seem to be the biggest causes of airline delays. What do airlines do to manage those risks?
Brewer: Most airlines have their own meteorology departments for forecasting weather en route for safety reasons, planning an efficient flight pattern and understanding the potential impact for the entire operation. We used to just roll with the punches, but now you know it’s there and you avoid it. With this foresight, as an airline, you’d rather handle customers today when the weather is good than tomorrow when the weather is bad.
In bad weather, even though airlines aren’t liable for additional cost to the ticket [rebooking fees, however, are usually waived], there are other factors. Do you want the cost of customer ill will or overtime at the airport? Do you want your call centres clogged and not handling new bookings? If you know it’s going to happen, take care of it when you have your resources available.
BBC Capital: Has technology improved the ability to handle unforeseen circumstances or risks?
Brewer: Texting and email have made it easier to communicate information outwardly, but it’s still not perfect. Everyone wants the information that is unique to them and you can’t gin up people to handle individual requests fast enough. Reservations and operations systems tend to be different and are generally not set up to rebook in a consumer-friendly way. As an industry, we’re slowly getting to the point where we can give you rebooking options when you are notified of delays, but that will take tens of years still [to perfect].
BBC Capital: How do airlines decide where and when to fly in the first place?
Brewer: Planning is generally done up to a year in advance, largely around the IATA’s semi-annual Slot Conferences in which airlines and airports assess capacity and negotiate gates. The ultimate goal [for an airline] is to make your aircraft available to the greatest number of potential customers as possible and maximize the utility of every single flight. From an airline’s standpoint, we’re serving cities, not routes. So, we ask ourselves: how do we get the people of Boston to everywhere they’d want to go?
The schedule is actually finalized about 60-days before a flight departs. That’s when the operational realities come into play — scheduling of crews, availability of gates and the resources on the ground to make adjustments.
BBC Capital: So how do you estimate demand for individual cities and the aircraft you’ll need so far in advance?
Brewer: In North America, the US and Canadian governments take ticket samples. So, if there are two people going from White Plains, New York, to Appleton, Wisconsin, every day, then you get some idea of that market. Traffic tends to grow at about the pace of Gross Domestic Product.
In terms of making the plane and staff available... different aircraft require a different number of flight attendants and each cockpit requires a differently-trained pilot crew. To make sure you have enough pilots and flight attendants hired in time, you have to know about 18 months in advance what level of flying you’re going to need across your routes.
BBC Capital: It doesn’t sound like there’s that much slack in the system, for planes or crew?
Brewer: Well, there are rules of thumb on having spare aircraft, but you don’t really want a $50 to $250 million asset just sitting on the ground. In reality there are so many random events that can happen that you do need to build some flexibility into the system. The impact of delays can be very costly. An aircraft that goes out [is delayed or breaks down] in California when it’s supposed to be flying to Chicago impacts not just the people leaving California, but now everyone in Chicago and so on. If there weren’t spares, multiple customers would be impacted and the costs would grow.
BBC Capital: What drives another passenger frustration — inflexible ticket pricing?
Brewer: In my opinion, the current pricing systems are consumer unfriendly, tremendously outdated and will change. It’s a broken system. The vast majority of legacy carriers price based on market power (how can I optimize each flight) as opposed to consumer-based pricing (how can I entice you to fly). Leisure customers book further in advance and business customers book closer in so the price for a seat [on the same flight] can vary from $150 to $3,000.
BBC Capital: Why has this yet to be fixed?
Brewer: The pricing system is held hostage by the price indiscriminate buyer and fear of losing that customer. Innovators in the marketplace have been the low-cost, more consumer-based carriers who are providing value.