There’s a timeless romance written on every airline ticket. Four letters in the tax box spin a tale of vital airline revenue: YQ and YR. If your fare analysis skips Yankee Queen (YQ) and Yankee Romeo (YR), you’re missing half the story.
Who are the players?
Airline carrier-imposed fees which include fuel, insurance, and other cost recovery fees that are ticketed using codes YQ and YR are married together in ATPCO’s Carrier-Imposed Fees solution. Airline pricing analysts use different terms to refer to this content, but one thing they all agree on is that carrier-imposed fees are responsible for a lot of revenue.
How big are their roles?
Global airline revenues are estimated at USD 736 billion by IATA. Just how much revenue is captured through Carrier-Imposed Fees? One pricing analyst told me, “We sometimes have $1 base fares and make it up on YQ/YR.”
Is 5% a decent estimate? 10%? Could it be up to 50% in certain markets? “Sometimes the YQ is over half the ticket revenue on a leisure ticket sale, and during the low season it can be significantly higher,” said another analyst.
Airlines may never share the true figure, but one thing is certain: when a ticket is sold, only the base fare on a ticket accounts for more revenue than the carrier-imposed fees. With so much revenue at stake, pricing analysts need to incorporate carrier-imposed fees (YQ/YR) into their workflows.
Who is the villain?
Pricing analysts told us they need to analyze pricing data at a total price level, including airport taxes and rule surcharges, but the tools they have are inefficient or insufficient for conducting a proper analysis of the complete pricing structure. What ends up happening is competitive carrier-imposed fees are assumed or summarized and then checked for changes on a periodic schedule.
It’s not surprising, though: these fees are generally controlled by broader geographic application, applying according to cabin, fare family, or RBD (reservation booking designator). Most critically, carrier-imposed fees vary by the specific route paths in a market, or sometimes even by specific itineraries.
Revenue from both fares and fees must be incorporated and merged together into a single, seamless analysis process to allow for a complete, accurate portrayal of an airline’s competitive position. A summarized, general understanding of competitors’ Carrier-Imposed Fees may have been sufficient in the past, but now fees are controlled at detailed market levels and specific RBDs.
With the volume of filed fares continuing to increase as airlines seek to maximize revenue through more specific, targeted offerings, competitive analysis without incorporating the applicable Carrier-Imposed Fee is inherently flawed.
Where’s the happy ending?
Every day, pricing analysts research fares so they can maximize their pricing decisions, but too often their analysis must leave out the contributions of the all-important power couple of YQ and YR data.
Fare data and fee data each contribute significantly to an airline’s bottom line; yet how often are they holistically analyzed together in an efficient, comprehensive workflow? Putting this data at the fingertips of pricing analysts allows for a better marriage of competitive analysis and decision-making, ultimately leading to fruitful revenue generation for the airline.
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