Obama Inauguration: A ‘Revenue Premium’

Posted by: Justin Bachman on January 05

Washington D.C. will soon take center stage for the planet’s focus as Barack Obama becomes the 44th U.S. president on Jan. 20, amid a dizzying array of inauguration celebrations. Millions of people would love to attend such an historic event – and that presents unique opportunities for airlines and Amtrak, which is adding train service to the capital around the festivities.

It’s notable that U.S. airlines aren’t just scheduling extra flights but also “upgauging” to larger models. For example, Delta (DAL) will operate four flights from Reagan-National to Atlanta the day after the Jan. 20 inauguration on Boeing 767-300s, which seat 262 people instead of the 142 on the MD-88s normally used for those flights. US Airways (LCC) plans 27 extra flights to the three DC-area airports, and 16 additional flights departing those three airports on Jan. 20 and 21. “We’re also upgauging some flights to accommodate the additional demand from our customers for this historic event,” spokeswoman Michelle Mohr said in an e-mail. American (AMR) is also adding a few extra flights to Reagan-National from its Chicago and Dallas hubs. Southwest (LUV) is adding 26 extra flights from Jan. 17-23 to Baltimore and Washington Dulles, or nearly 3,600 additional seats. Overall, Delta is adding 5,000 extra seats to the Washington market from Jan. 16-21, mainly from its hubs in Atlanta, Detroit, Memphis, and Minneapolis.

Moving large international planes like Delta is doing can represent an enormous logistical effort – yet one with an equally large payoff. For example, a weekend trip from Atlanta to Washington D.C. for the inauguration celebrations Jan. 17-21 will cost anywhere from $718-$1,293, a massive premium over typical coach fares on the route. Most nonstops from Chicago to D.C. that weekend are priced over $1,000, while nonstop flights from Los Angeles to Dulles now top $1,900. United Airlines’ (UAUA) Jan. 5 daily news posting for employees offers some insight from Rob Longhini, an aircraft scheduler, about the company’s DC changes during this period.

We adjust capacity for all kinds of special events where we believe we can get a revenue premium over typical aircraft missions. This can include the Kentucky Derby, the Indianapolis 500, the Super Bowl, the Ironman triathlon in Hawaii, the annual Furniture Mart in North Carolina – even the opening of pheasant season in Sioux Falls.

We decided to add nine flights and upgauge 35 segments for inauguration weekend, beginning Friday, January 16, and ending Wednesday, January 21. On the weekends, we don’t fully utilize our slot positions at Reagan Washington National (DCA), since demand is typically lower, but in this case, we decided to bring the Saturday and Sunday schedules back up to daily business-traffic-level capacity.

The United posting notes that it’s usually easier to sell the seats to a major event than it is for the return flights. “In some special cases, we only expect to be able to fill the aircraft one way,” Longhini says in the post. “To make money, we either have to be able to fill the aircraft both ways or ensure we can command a revenue premium on the outbound segment. In the case of the Super Bowl in Tampa … thankfully there’s a lot of traffic in and out of Florida in the winter.”