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Confessions of a fat fingered airline pricing analyst

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Confessions of a fat fingered airline pricing analyst

Posted by George Hobica on Thursday, March 5, 2009

Brett Snyder is currently the force behind Crankyflier.com, a web site that comments on the airline industry. But for several years, he was one of the hundreds of folks who work in the pressure cooker atmosphere that is the lot of the airline airfare analyst. These are the people who decide how much you'll be paying for your next flight. They watch what their competition is doing, and react as quickly as possible to match or beat what other airlines are charging. And sometimes--less than they used to, thanks to new technology--they make mistakes.

We asked Brett to give us an idea what it was like to work in this fast paced environment. Here's what he told us:

Indianapolis to Santa Barbara.  It's not a big market, and I've never actually flown it, but I'm fairly sure it's responsible for turning at least a few of my hairs gray.  See, when I graduated from college, I decided to become an airline pricing analyst.  While I never filed a zero dollar fare, I did file at least a couple of fares that were way too low--"fat finger fares".

You wouldn't think that many people would actually want to fly between Indianapolis and Santa Barbara, but sure enough, all I needed to do was file an absurdly low $52 roundtrip fare and plenty of Midwesterners came out of the woodwork.  There was one travel agent who must have found the fare and called fifty of his friends, because he accounted for a substantial number of the bookings within just a few minutes.  It didn't take long for us to find the errant fare and fix it, but the damage had been done.  Fortunately, more damage was done to my ego than to the airline itself.

It might surprise you to know that I didn't get in trouble.
  In fact, filing your first mistake fare was considered a rite of passage.  You just hoped the revenue loss wasn't too bad.  Even if it did turn out to be minor, you knew you'd never live it down.  I think our director reminded me of that mistake at least once a week until the day I left, but that ribbing was always accompanied by a grin.

Despite that accepting attitude, working in the world of airline pricing is not easy.  Nearly every airline submits its fares to a central clearinghouse called the Airline Tariff Publishing Company (ATPCO) in Washington, DC.  Airlines can submit fares to ATPCO whenever they want, but the fares are only compiled and "released" by ATPCO three times every weekday (10 AM, 12.30 PM and 8 PM Eastern) and once per day (5 PM Eastern) on the weekend.  When those fares are released, the reservation systems (Sabre, Galileo, Amadeus, etc.) pick up the changes and enter them in their own data bases.  Massive amounts of revenue could be lost if you missed a single filing for an important fare change, so time is always of the essence.

Since my airline was based in the West we were under extra pressure, since the release times were based on the Eastern time zone.  During the summer, we had to be at work by 6 AM so we could review the changes from the night before.  We only had an hour to get our first set of fare changes in before the 7 AM Pacific Time (10 AM Eastern) deadline.  After those fares were filed, we'd see what every other airline did during that morning's release, evaluate the changes, and file many more fare changes of our own for the 9:30 AM deadline.  It wasn't unusual to see thousands of fare changes for our airline alone during a single release on a busy day.  The mornings were just insane.

It got even worse when a new sale was launched or some other major change occurred.  ATPCO's release normally would go out within 10 minutes of the 7 AM deadline once all airline changes were compiled, but major fare changes caused it to be delayed by a half an hour or more.  If we saw the delay, we knew we had to take quick action.  It was almost impossible to get ATPCO to postpone a future release for more than a few minutes, so we rarely had enough time to catch up.  We just had to work fast.

The afternoons were a different story.  Once our 9:30 AM deadline passed, there wasn't another one until the end of the day, so we could spend our time working on longer term projects and markets that weren't as critical to the bottom line on an individual basis.

Fortunately for us, our airline bought a software application that allowed us to really do things quickly.  Each analyst had a set of markets assigned, and when we arrived in the morning, all the changes in our markets would be waiting in our individual queues.  We naturally paid attention to the markets where we had the most revenue at stake.  Being uncompetitive in those markets could have a much greater impact than in a market like, oh, Indianapolis to Santa Barbara.

Under that kind of pressure, you had to know where to focus and what moves to make. 
Sometimes, it was best to not make any moves at all and see how things played out, but you always wanted to make sure you had a reason for why you did or did not take action.

It's no surprise that fare mistakes can happen in such a fast paced world, but the improvements in our technology made it less common. There were checks that flagged fares that seemed too low or even too high, for that matter.  I think I filed a $99,000 fare one time, but of course nobody would have ever noticed something on that end of the spectrum. Technology has improved even further since my days in the pricing department, which is why you see fewer "fat finger fares" now than you used to.

There really was an extraordinary rush of adrenaline when you were trying to get your fares filed in time for the next deadline.  It made for a very fun and unique work experience that I will certainly never forget.

 

To learn more, visit George Hobica's profile on Google+

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