The Air Show – "Revenue Management 201"

Host: Shayr Media
Guests: Jon Ostrower, Brian Sumers, Brett Snyder
Date: December 19, 2025

Episode Overview

The last Air Show episode of the year brings together aviation business experts Jon Ostrower, Brian Sumers, and Brett Snyder for a deep dive into the nuances and evolution of airline revenue management (RM)—with Brett at the helm. Prompted by Doug Parker’s recent appearance on "Airlines Confidential," the trio discuss the transformative impact of Basic Economy fares, the evolution of RM strategy from mere fare fences to sophisticated segmentation, and the ongoing arms race in pricing and technology. They challenge the assertion that Basic Economy is the most transformative industry development since deregulation, advocating instead for a more nuanced view of airline business model evolution.

Key Discussion Points & Insights

1. Setting the Stage: Why Revenue Management, Why Now?

• Brett introduces the topic (00:50):

  • Inspired by Doug Parker’s “Revenue Management 101” episode on "Airlines Confidential."
  • Brett, drawing on his early RM days, intends to provide a more advanced perspective ("RM 201").
  • Emphasis on the complexity behind RM decisions, as opposed to oversimplification.

• Humorous tone set early:

  • Playful jabs at each other’s credentials and the nerdiness of RM dinner talk.
    • "I just wanna say I love all my commercial children equally. Revenue Management, Network. I love them all." – Brett (00:50)

2. Debating Basic Economy’s Significance

• Doug Parker’s view:

  • Claims Basic Economy is “the most transformative event in the airline industry since deregulation.”
    • Brett: "That I just can’t agree with." (03:37)

• What IS Basic Economy?

  • Lowest fare class with fewer perks, punitive restrictions, and as Brett explains, "just another fence" for segmenting travelers (04:11, 05:00).
  • Jon and Brian admit they've never bought it—because they value seat selection and comfort (05:00–05:12).
  • Brett: "It adds more complexity and confusion to the process for travelers, especially since it’s punitive... I would argue that this is just another tool in trying to segment the traveler and nothing revolutionary.” (05:31)

• Is it transformational?

  • Brian challenges Doug’s reasoning:
    • "Haven’t Delta and United shown that going up market has shifted share?" (09:15)
  • Brett acknowledges differentiation:
    • These carriers have succeeded in boosting yields without solely relying on aggressive fares.
    • Revenue management is about maximizing revenue within the “box” defined by network capacity, but enhanced segmentation is crucial. (09:15–10:26)

3. The Evolution of RM & Product Segmentation

• History lesson:
  • Airlines moved from just two physical cabins pre-deregulation to a dizzying array of fares and optionality.
    • “The whole point back then was basically…if we could fill the rest of those seats that would go empty with people who aren’t willing to pay that much but are willing to pay something, it’s better than going empty.” – Brett (10:46)
  • Modern RM uses technology and a myriad of price points to maximize yield (11:16–11:34).
  • Premium products and unbundling began before Basic Economy:
    • United’s Economy Plus (1999); American’s “More Room throughout Coach”; bag fees introduced before Basic (12:34).
    • Basic Economy seen as an evolution, not a revolution—initially a tactical response to ultra-low-cost carriers (ULCCs) like Spirit.
      • "Basic Economy was just an evolution of that, not the start of a revolution. And really Basic Economy was just a tactical response to Spirit in the beginning that got legs." – Brett (13:26)

4. Basic Economy: Panacea or PR Move?

• The reality of Basic Economy:

  • Not "beloved" by most travelers—seen as punitive and confusing (15:14).
    • "People actually hate Basic. I think we can agree if you’re a traveler, that’s fair." – Brett (15:14)
    • Different airlines implement it differently, adding to confusion.
    • Did allow legacies to compete with ULCCs on price, but not a silver bullet.

• Segmenting within a box:

  • For Basic Economy segmentation to work, you need enough seats to offer—it coincided with capacity increases and aircraft upgaging (17:23).

  • Upgaging (shift to larger jets) allowed legacies to absorb more traffic and push ULCCs into a corner ("airplanes that are too big" and "not enough passengers") (17:23–18:15).

    • Jon: "I think you are making a phenomenal point here. And look, this is why regional jets in the United States are dwindling...It really is about the number of seats and the composition of those seats against the feed going into these hubs. This is huge." (18:15)

5. RM Tools: Old & New

• Fences are alive and well:
  • Not just Basic replacing fare fences—many fare rules (21-day purchase, roundtrip requirement, etc.) remain.
    • “Let’s be clear that BASIC does not replace anything. It’s just more segmenting that they can add in here.” – Brett (19:48)
    • Example: 91 regular economy fares filed for a single route; only 12 are one-way fares with no advance purchase (19:43).
• Premium upselling and bag fees pre-date Basic. (21:13)
• Continuous/AI pricing:
  • Delta and others now aim for "continuous pricing" and "AI"-driven price points.
  • "What they’re trying to do is figure out what are the right price points to have at the right times...it’s more informed and can in theory provide a more accurate price point...It is not, at least not so far, what people have suggested—that this is about, you know, creating a different price for every person that exists." – Brett (22:48–24:03)

6. What Was Really Transformational?

• Brett’s pick for #2 (after consolidation): Loyalty programs (22:14)
  • "For me, it’s the loyalty game. This has turned into such a powerhouse for the big airlines. It gives them a huge revenue boost while also creating a completely uneven playing field versus the smaller guys, that they can never close that gap. It’s created this incredible fortress that has completely altered the entire industry. And that, to me, dwarfs the impact of Basic economy." – Brett (22:14)

7. Key Quotes and Exchanges

• “It adds more complexity and confusion to the process for travelers, especially since it’s punitive...I would argue that this is just another tool in trying to segment the traveler and nothing revolutionary.” – Brett (05:31)
• “I flew economy a couple of weeks ago from LA to Dallas Fort Worth on a American, no less. And I survived.” – Brian (10:28)
• “If we can keep the business travelers ... what if we could fill the rest of those seats ... with people who aren’t willing to pay that much but are willing to pay something? It’s better than going empty.” – Brett (10:46)
• “Basic Economy was just an evolution of that, not the start of a revolution. And really Basic Economy was just a tactical response to Spirit in the beginning that got legs.” – Brett (13:26)
• “People actually hate Basic ... it ended up becoming a de facto fare increase for a lot of people ... every airline implemented BASIC differently, so people were just confused and mad about it.” – Brett (15:14)
• "Let’s be clear that BASIC does not replace anything. It’s just more segmenting that they can add in here." – Brett (19:48)
• “For me, it’s the loyalty game. This has turned into such a powerhouse ... It’s created this incredible fortress that has completely altered the entire industry. And that, to me, dwarfs the impact of Basic economy.” – Brett (22:14)
• "What they’re trying to do is figure out what are the right price points to have at the right times when they’re selling seats ... It’s still all about maximizing revenue. This is just another tool that airlines can try and use." – Brett (22:56, 24:03)

Timestamps for Important Segments

• 00:50 – Brett introduces the topic & his RM background
• 03:37 – Brett frames the “RM 201” response to Doug Parker
• 05:00 – Defining Basic Economy; discussion on fences and segmentation
• 09:15 – Delta/United’s differentiation & shifting share
• 10:46 – Fare segmentation “in the old days”
• 13:26 – Basic’s true legacy as an evolution, not revolution
• 15:14 – Traveler confusion and frustration with Basic Economy
• 17:23 – Link between Basic Economy, upgaging, and competition with ULCCs
• 19:43 – Complexity of current fare systems: “91 fares filed”
• 22:14 – Loyalty identified as the true “second big thing”
• 22:48 – AI and continuous pricing: the next evolution
• 24:03 – AI as just another step in the arms race for price optimization

Memorable Moments & Tone

• Playful banter:

  • "I deem you now, Professor Cranky." – Jon (03:31)

• Frequent gentle jabs at Doug Parker:

  • “He’s not a revenue management guy ... that was always Scott Kirby’s domain.” – Brett (01:21)

• Relatable traveler frustrations:

  • “...the thought of not being able to select a window seat before the flight literally gives me a deep sense of existential dread.” – Jon (05:00)
  • “People actually hate Basic.” – Brett (15:14)

Summary

This episode offers an accessible yet in-depth critique of prevailing RM strategies, especially the overhyped status of Basic Economy. The takeaway is clear: while product segmentation and technological advances matter, the real airline industry revolutions have been driven by loyalty economics and capacity strategy. Basic Economy may have shifted the game, but only as another step in a long evolution—punctuated by plenty of complexity, confusion, and, above all, relentless pursuit of profit.