Then they sold their terminal and started leasing it, and now suddenly, no more free coffee and free cookies. I don't know if the free beer is still around but for a while we had everyone complain on how "they no longer have free cookies". And then we just stopped hearing about it because people just didn't care about Porter anymore, you would just get the cheapest flight and that would typically not be them and it's not like they were offering something special anymore.
It looks to me that this was probably not a super huge expense that was probably giving them a much higher ROI than the pure $ value of what it cost them.
That route was the best, BTW; I'd leave my house at 6:30am or so by taxi, get an early morning flight to Newark, take the train to Penn station, walk from there to the office and still arrive before many of my NY coworkers were at the office. Once we got bought by Google I found I could still make it to the Google NYC office in time for breakfast service. Memories :-)
So they weren't free. They were just priced into your ticket.
note: I'm not saying they didn't generate good will. Just say if the flight was more expensive then a competitor then you were actually paying for those things and it was just fiction that they were free.
The airlines are masters at A/B testing and figuring out what works best, as the industry is notoriously low margin and very cut-throat. You can bet that they price things this way because it works better.
BTW, people pay a lot extra for first class tickets and love the "free" drinks. Different classes is how the airlines optimize profits from different market segments. They're very good at this.
It's one of the primary reason airlines have moved so much of the total cost out of the ticket price, and on to additional fees: luggage, food, seat selection, printing a boarding pass, etc.
"No two people paid the same price" is a myth, most certainly not true. Ever book 2+ seats at the same time?
Airlines do use yield management techniques, however, which results in pricing that changes for the same resource over time. That's not A/B testing, and like anything that relies on a lot of forecasts as inputs, bad forecasts up front often lead to sub-optimal revenue totals.
economy+ class
business class
first class
> Ever book 2+ seats at the same time?
Ok, ya got me there. Ever book 2 seats not at the same time?
> often lead to sub-optimal revenue totals
Airlines are not stupid with their operations management, and expend a great deal of effort optimizing revenue.
I never said airlines are stupid, I stated an opinion they are not "masters of a/b testing". You've not provided any evidence to convince me otherwise.
I read it some years ago in an article about airline operations management and how they optimized their fares, which varied constantly through the day and the days of the week. Then there are all the various discounts people can get, frequent flyer prices, rebooking fees, etc. It's all based on heavy use of statistics, which is a more complex version of A/B testing.
> I never said airlines are stupid
You suggested they often make bad forecasts, implying they didn't know what they were doing.
But you may believe whatever you like.
Currently air travel is a completely homogeneous service. There is basically no difference from one company to the other, so it makes no sense not to go with the cheapest (even then, the flight schedule matters). That is not reason for a company to not differentiate itself.
(But I am very skeptical that a free drink would be enough of a difference.)
Where are you getting this? Tons of airlines provide varying levels of service/amenities. Only thing that is homogeneous is that you get from A to B.
I think you are onto something there, but you should have phrased it another way.
E.g. I think airlines were caught in a devils agreement with air travel search engines.
They gave them access to their flights, and the search engines had to find the simplest qualities to compare fares on. That usually meant price.
So you have tons of airlines with no clear value proposition differences in a search result, and it leads to the equilibrium being a devastating fight for lowest price.
It's gonna be interesting to see the growth of new airlines now that COVID is a thing.
Low prices seem to be a given, but customers are expecting service that accommodates their new fears related to air flight.
Even on the same airline, often there are partnerships. For example JAL/American and ANA/United I'm make sure to book the fight run by the Japanese partner not the American partner and the experience will be night and day. The Japanese plane will be clean the USA plane will be less clean. The Japanese staff will be friendly and service oriented. The USA staff will make me feel like I'm a burden on them and they'd rather be doing anything than their job. The food, even though it's airplane food, will be higher quality on the Japanese airline. Etc...
They aren't going to advertise "Flight has an 80% chance of having power outlets". And likewise, they don't want to deal with customers complaining that a power outlet flight did not, indeed have power outlets.
Southwest has a pretty loyal following since you can "refund" a ticket for Southwest credit good for a year.
Alaska and Delta don't charge for bike fees (they're just priced like ordinary luggage).
And aside from maybe 1K members, I don't know anyone who enjoys flying United.
Long before that point, I start looking at other factors like departure and arrival times and whether I like the airline.
For example, I just did a quick search, and for $25 more total round trip, I can get nonstop flights both ways. I didn't specify nonstop as a search filter (since there are few nonstop flights between these two cities), but now that I know it's only $25 more, I'd pick that.
International flights are also significantly more profitable than short haul, so that might have some impact too.
Alcoholic drinks are free on every one of the ~100 long-haul international flights I've ever taken, even in cattle class.
For people like me a paid-alcohol policy is a feature, not a bug.