The Supply Chain of Everything: What You Should Know About Air Travel, But Probably Don’t
Who doesn’t like to travel? The joy of experiencing something new, someplace unfamiliar is always exciting. Add International travel to that mix, and you get more than what you ask for! The culture, food, people, and place, all become part of an experience that is hard to forget.
I have been fortunate to travel with my family, to a number of really cool places. Additionally, my role as a Supply Chain Consultant, requires that I frequently travel to support the needs of my clients. Although I do get around via trains, boats, buses and cars, most of my travel is by air. Booking air travel can be cumbersome, not just for us frequent travelers, but also for the people working behind the scenes.
I am no authority when it comes to air travel, so to get you a credible behind the scenes look, I have partnered with an expert in the travel field, Carissa Cummings.
Air travel has become a major (in many cases primary) mode of transportation for many travelers. For travelers, the process looks something like this:
In some cases, travel is booked months in advance – sometimes travelers are required to get on a plane at a moment’s notice.
From a Supply Chain (SC) perspective, air travel follows some of the basic fundamentals of – , Source, and Deliver, with the ever-frequent element of change.
1) Destination & Reservations
As with nearly every supply chain, it all begins with the customer (you, the traveler). Let’s say, you decide to fly from your nearest airport to Nairobi, Kenya or Paris, France. Whether you book through a travel agent, a call center or at the ticket counter, reservations are made via a Global Distribution System (GDS). This system is a network that enables automated transactions between travel service providers, agencies and air carriers. The primary GDS’s are Sabre, Worldspan and Amadeus. The GDS is used to view flight availability and for most carriers and allows agencies to book a reservation directly on a particular airline. The GDS is different from a Computer Reservation System (CRS) which is the reservation system primarily used by 3rd parties such as Expedia or Travelocity.
2) Ticket Pricing
Reservations take into account on a number of factors including travel dates, carrier routes, traveler preferences and price considerations. Fare class is also a determinant – fare class rules are one of the more confusing topics related to buying a ticket. There are multiple levels for each fare class, based on flexibility and restrictions. For example, if you purchase a 1st class seat, there are four fare classes that could affect the price. Prices are a function of demand for specific carrier routes (i.e. SFO to Paris direct vs. SFO to London to Paris) and the availability of tickets at each fare class. The greater the availability at lower fare classes, likely the lower the ticket price. Keep in mind that many lower fair classes come with restrictions, such as the inability to reserve specific seats prior to the day of travel.
3) Seat Availability, Changes and Delays
An area of curiosity for many of us is, given there are only so many seats available on an airplane, why do flights end up overselling? Overselling seats on flights is a common practice that allows airlines to ensure that as many of the seats (preferably all) are occupied. The more open seats, the less profitable the flight. High demand routes regularly oversold. Furthermore, given the amount of last minute passenger flight changes, air carriers often have enough seats to accommodate passengers.
In the event that the flight is truly oversold (more passengers are booked and show up for the flight than there are seats available), airlines typically offer vouchers at increasing dollar amounts, to entice passengers who have flexible schedules to take alternate flights. This is typically done prior to passengers being assigned seats and boarding the plane. If there are still more passengers than available seats, passengers are “bumped” based on a number of factors. Passengers on standby, those with lower fare class seats, those with lower loyalty status and those who booked via 3rd parties, are often bumped first. Sometimes, it’s worth it to pay for a higher fare class ticket – especially on a popular route.
In the case of a delayed flight, although there are a number of factors, the two primary ones that contribute most are weather related and mechanical issues. These delays have a significant impact on the air carrier’s ability to deliver passengers to their destinations on time. Moreover, a single delay can cause a ripple effect on the entire network of planes, which could take DAYS for the air carriers to work through. Fascinating and Frustrating!
Despite these challenges, the airline industry – travel agents, air carriers and the myriad employees who work behind the scenes, do a good job working through the complexities of the supply chain, to routinely get millions of travelers to their destinations.
So, the next time you are planning air travel, consider the supply chain that allows you to get to/from your destinations, safely.