July/August 2003 Online Publication    






You don’t have to be an accountant or even a frequent flyer to know that airfare pricing is a mess.
 A Page from the Airlines
By Dan Brent / Citibank

Have you had occasion to book an airline reservation lately? You don’t have to be an accountant or even a frequent flyer to know that airfare pricing is a mess. My hometown of Rochester, NY (ROC in airline talk) has brought in two low-fare airlines – JetBlue and Air Tran – and improved its market position from the country’s second most expensive city to the fourth most expensive city to fly from.

But it’s also destination cities that drive pricing, the airlines tell us. This I could understand if larger cities were cheaper to fly to. But it doesn’t regularly work that way either. A few months ago I flew to Philadelphia. The ticket cost $550. A few days later I flew to Harrisburg – through Philadelphia. That ticket was $280. Go figure.

Attaché is the in-flight magazine of US Airways. A recent article was by David Siegel, the CEO of US Airways. In the article, he introduced his two top price-setters, two young ladies named Kathryn Cochran and Bernadette Cestone. Then he attempted to explain how the pricing works. Nice try! He did concede that prices change as often as three times a day for the same route. “Industry-wide, there have been as many as one million domestic fare changes in a single day,” Siegel admits. One million price changes! The goal is to soak the business traveler who can’t plan very far ahead and then bulk up the passenger numbers with leisure travelers who will trade flexibility to get cheaper tickets. OK, OK, Siegel didn’t say “Soak the business traveler.” What he said was that the pricing is set to “reflect the value of time.” He explains that “A mix of business and leisure travelers is necessary to support frequent flights in major business markets.”

At least this may explain why I can buy a 2000 mile cross-country ticket from Rochester to Los Angeles for $260 and would have to pay $729 to fly 150 miles from Rochester to Erie, Pennsylvania. Apparently in the first case I’m mistaken for a leisure traveler! But they know that nobody goes to Erie for vacation.

Here’s a thought. How about if the colleges hire some price-setters from the airlines and ask them to set tuitions like they set airfare prices! Maybe Kathryn or Bernadette could be persuaded to give it a try! For instance, low enrollment classes would have lower tuition charges. Maybe bargain-priced professors could be hired to teach red-eye specials in the dead of night. Early enrollment would get a discount. A “companions-attend-free” feature could be introduced. First Class students could be charged more, given soft chairs in the front of the classroom, and perhaps served hot breakfasts at the breaks in three-hour classes.

Auditing a class would, of course, be cheaper, and a middle price could be set for “Certification Only” credits. Classes whose enrollment doesn’t reach a minimum threshold level would be canceled. Students who had enrolled would be given a meal voucher and rescheduled in a later class. When overbooked classes occur, a free voucher would be offered as an incentive for students to drop out. Something similar to frequent flyer miles could be introduced for students who need to repeat classes. Perhaps a certain number of failed classes would get you a free or discounted-tuition class. It could even be a class you don’t need; if you’re flunking anyway, it doesn’t make much difference what the class is.

The objective is to have no two students who are paying the same tuition for a class!

Won’t work, you say? The airlines have flown themselves into bankruptcy with this arrangement, you say? Yea, you’re probably right. But it was a thought! After all, creativity is the fuel of our free-enterprise system.