Making Sense of Airline Pricing

I travelled to Toronto via London ten days ago, flying business class on British Airways. Fortunately, I wasn’t paying, and neither was my company. The client, unusually, was willing to pick up the bill.

tickets air

When searching on http://www.ba.com I noticed that a ticket from Prague cost less than half the cost of a ticket from London to Toronto and back. Four flights instead of two flights, but less than half the price. Now, I’m not naïve enough to think that it’s only distance that determines price, but I was still astonished at the difference. Revenue management is a fine art, and I suspect that all manner of factors come into play, demand being the main one, but whatever algorithm balances the profitability of expected sales from London against the profitability of expected sales from Prague must be a complicated one. How to decide whether to reduce the London price slightly to stimulate demand from London as opposed stimulating less profitable demand from Prague?

Certainly, if I had the time and needed the comfort, and was based in London, I’d be more than happy to add a comfortable day or two in Prague at both ends of a trip to Toronto, even if it meant flying through London both ways. I’d be saving a substantial amount of money.

So, what determines price? I can’t work it out. It’s a black box, the contents of which are known only to the revenue managers at British Airways. I had a look at business class flights to New York leaving on 18th and returning on 25th of November (converting prices into GBP, and showing % against London price):

PRG  LHR  JFK  LHR  PRG     2010      58%

LHR  JFK  LHR                         3472     100%

CDG  LHR  JFK  LHR  CDG     1854     53%

SOF  LHR  JFK  LHR   SOF     1794     52%

DME  LHR  JFK  LHR  DME      1769     51%

The distance between London and New York is 3459 miles,

And for Toronto they are these:

PRG  YYZ  JFK  YYZ  PRG      2130      40%

LHR  YYZ  LHR                         5277     100%

CDG  YYZ  JFK  YYZ  CDG     2383     45%

SOF  YYZ  JFK  YYZ   SOF     1978     37%

DME  YYZ  JFK  YYZ  DME      2595     49%

The distance between London and Toronto is 3547 miles,

Now these are snapshots on a particular day, so I’m not sure that these would be the cheapest prices you could ever pay for these routes, but one can at least conclude the following:

  • The cost of flying from London to Toronto is disproportionately more than the price of flying from London to New York. The distance is only slightly greater. Competition on the London to New York route, I suppose, is greater.
  • But if you’re flying to Toronto from continental Europe you’ll pay around 45% of the London-Toronto price, presumably because there’s greater competition on the indirect routes. But you’re still paying disproportionately more than the difference in distance would suggest.
  • If you’re flying to New York from continental Europe you’ll pay around 55% of the London-New York price.

You can’t, of course, buy an indirect route and board from London. But if you’ve got time, then spend a night in continental Europe before your transatlantic trip, but think twice before choosing Moscow.

The Niagara Falls – Pristine is too much to expect

I visited the Niagara Falls two days ago in the company of a new business partner based in Toronto (and occasionally Bermuda). It was a pleasant mid-afternoon drive from Toronto in fine Autumn weather and the car was a better pace to discuss business than an office or the foyer of a hotel.

The Falls, when we reached them were spectacular, and mercifully quiet. I don’t mean the Falls themselves, which were thunderous, as you would expect, but the crowds. It was late Season and late afternoon and the selfie-stick wielding tourists were no great danger to life or limb.

IMG_2585

It’s not a wilderness site anymore and it would be foolish to expect as much, but the brasher aspects of tourism are more or less kept at bay. Tall brand-name hotels and casinos tower over the gorge from a reasonable distance, and I suppose they must balance the need to provide their guests with a view with the need to preserve the atmosphere of the Falls themselves. I don’t doubt that most visitors would wish the hotels, indeed the whole town, were not there at all, but then there wouldn’t be jobs and taxes.

Worse than the hotels, casinos, souvenir shops and cafes, are the crumbling and brutal relics of early hydro-electric schemes which lurk just below the Falls. They’re as lovely in their dereliction as the abandoned industrial ruins of Eastern Europe which were built with equally complete disregard for the environment. But there’s still a rigorously defended strip of parkland that follows the gorge, and the Autumn leaves on Monday were splendid. With a little imagination you can picture the Falls as they must have been. And the water falls as reliably as it always has.

As great natural wonders of the world go, the Grand Canyon is better managed. Hotels are situated some miles away, and human interventions (pipes, walkways, toilets) are few. It’s a magnificent example of minimal intrusion and careful preservation. No cable car, no escalator, the only way up or down is on foot or on horseback.

At the other extreme lies Halong Bay, in Vietnam, which I visited in February. Magical from a distance, murky and polluted up close. A few quick bucks, no doubt made possible by corruption, are trumping conservation.

halong

But pollution, sadly, is everywhere. Even three hundred metres below the Niagara Falls there is this foul mess…

muck

But one mustn’t lament too much. Modern dentistry, at least, is some kind of consolation in the world we are spoiling.

The Art Gallery of Ontario

You’re lucky if you can find the way to your plane at most of today’s airports. They’re no longer merely the arrival and departure points for aircraft, but also shopping malls, restaurants, clubs for the privileged, and places of entertainment too. Heathrow Terminal 5, for example, is an obstacle course of retail and gastronomic distractions. So much so that sometimes the airport is the most fun you’ll have on holiday. Why board the plane?

Art galleries, too, have caught on to this, albeit for loftier motives. Ticket sales aren’t enough to keep the paintings on the walls. Without substantial subsidies galleries can’t afford merely to provide space for their paintings to hang, and cabinets for their curiosities. They must explore every possible avenue of cash generation.

The Art Gallery of Ontario (AGO) in Toronto, which I visited on Saturday, is a fine example of this approach. Since its reworking in 2008 by Frank Gehry (a native of the city) it houses an upmarket restaurant, a shop that’s as large as any of the exhibition rooms, a café, a ‘function room’ for hire (where better to get married than in the company of a Francis Bacon and a Bernini Pope), and a cluster of education and research centres.

Once you’ve passed through the arrivals hall, avoiding the VIP check-in desk (a kind of art gallery version of business class), you’re left wondering where to go if you’re to see any actual paintings.

If you’re interested in architecture, though, the building is probably your destination (just as, if you’re a fan of Norman Foster, then Heathrow Terminal 5 is probably as much fun as wherever you’re off to). Gehry’s adaptation of the neoclassical central courtyard, and a hotch-potch of 1970s extensions, is an imaginative balance of the classical, the modern and the extravagant (a wooden spiral staircase twists and slithers its way from the first floor to the roof and beyond).

Gehry slither

The tall tower building at the rear of the gallery is clad in cool blue, reflective titanium.

gehry blue

But somewhere inside, if you can find it, there’s the collection itself (a selection from 80,000 paintings and other kinds of bric-a-brac) – a very manageable display of paintings by the French Impressionists (a beautiful Renoir, a Degas, a Monet (usually just one of everything)), the Renaissance and Flemish masters, all generously arranged and well lit. There’s an unexpectedly huge roomful of Henry Moore’s vast and dignified reclining and standing figures, in quiet but far from lonely communion, perhaps more of them together in one place here than you could ever see together elsewhere.

There’s a whole floor devoted to the work of Canada’s native artists. And you mustn’t overlook the African and photographic collections either, or a special temporary exhibition of disturbing images related to nuclear power, explosive and utilitarian.

Get a slice of this…

Atomic Cake-lo

The AGO is also a monument to generosity, and its fabric is as labelled as its contents. Indeed the labels are larger. You’re passing from one room to another through the ‘Rosy Tannenbaum walkway’, the roof is supported by the ‘Wasabi Family supporting girder’, the ‘Helen Battersby’ door sits snugly in ‘the Mary Minder door frame’, and the paintings are kept in good condition by ‘the David Clark and family humidifier,’ and so on. I presume the lavatories too are named, but I didn’t feel the need to check.