American Airlines offers lots of legroom

[BillLumbergh]

[SPAN class=headline][A href=http://rd.yahoo.com/finance/external/cbsm/*http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B6EF1F795%2D6A87%2D404C%2DAE6E%2D802692284883%7D][external] American Airlines offers lots of legroom[/A][/SPAN]

 

[Doctor Zaius]

Um, yeah... Bill...yeah.. I've noticed the increased media buys out there in the newspapers and magazines, yet I wonder how long American can afford MRTC.

Unless American can get more money for each of those seats, MRTC will be as successful as Comfort Class was for TWA.

I have a lot of respect for the marketing muscle and media blitzing ability of American, but the Comfort Class experiment at TWA showed that even though people said they wanted more room, they weren't willing to pay more for it.

And in this post 9/11 yield environment, MRTC may not be worth the extra seats we would've sold on each segment. I just hope the powers that be pull the plug in time if this doesn't pay for itself.

Comments? (Need a fill-up on that coffee, Bill?)

 

[WingNaPrayer]

What they really need to do is [STRONG]W I D E N[/STRONG] the seats for all those chunky butts that invade your seat space....but that's a topic that has been done to death!

 

[Oliver Stone''s Apprentice]

At this point, it would probably cost more to put extra seats in. IIRC, many of the seats removed have actually been sold. Not to mention the labor cost of putting them back in...

 

[j7915]

If the flights are not sold out what difference does it make? The alternative is to be a cattle car, and none of the big three can adapt to that business plan, not without giving up connections, international flights etc.

SWA does not fly outside of the the US for a reason, and they don't try to connect many markets, they can't without becoming another big carrier.

 

[oztwaa]

[blockquote]
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On 11/18/2002 4:34:22 PM mrman wrote:

MRTC is the reason I choose AA over say CO, NW.
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[/blockquote]

Do you pay a premium or restricted fare? And if you are travelling on business, does your firm have a contract with AA that further reduces the fares?

People loved Comfort Class but wouldn't pay extra.

Dan

 

[mrman]

MRTC is the reason I choose AA over say CO, NW. Note also you are assuming that WN has less room than full service carriers. In my experience, they have more with the exception of MidWest and AA. WN has more room (especially in the new 700's than DL, CO, NW. Also as I fly AA alot, how do they get away with MRTC-you will only find on AA, when MidWest has been giving MRTC for years.

 

[MiAAmi]

People are not paying extra for more room

 

[will fix for food]

[blockquote]
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On 11/18/2002 5:16:54 PM MiAAmi wrote:

People are not paying extra for more room
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[/blockquote]

Given identical fares though I bet MRTC would sway most people to AA. That's a butt on an AA plane and not UA or CO etc.

 

[kirkpatrick]

TWA's experience showed people will go for the cheapest fare regardless. Even though some will choose AA for the room, that has to be balanced against the revenue lost when the plane is full and could have taken more people if it had more seats.

MK

 

[KCFlyer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/19/2002 6:16:05 AM kirkpatrick wrote:
[P]TWA's experience showed people will go for the cheapest fare regardless. Even though some will choose AA for the room, that has to be balanced against the revenue lost when the plane is full and could have taken more people if it had more seats.[BR][BR]MK[/P]----------------[/BLOCKQUOTE]
[P][/P]With AA's new pricing test, it'll be interesting to see if the planes fill up. Because with a reasonable fare AND MRTC, my guess is that the decision will be a no brainer. Companies do shop for price, but if the price difference is less than a hundred bucks on an advance purchase fare, they don't tend to balk about the extra dollars, and might just book AA as a perk to their travelling employees. If that advance fare covers costs, it's a win/win. More importantly, with a reasonable unrestricted fare, AA stands to see thier planes really full. Sure, the could make more with more seats, but you've got something that differentiates AA from the others. I don't need to remind you that SWA planes have fewer seats than most of the others...and they still make money. Something to ponder.

 

[mrman]

Agree, my firm will make me select on price...However most of the time price is the same on CO, NW, AA, DL...so who gets the business AA with MRTC

 

[TomBascom]

[blockquote]
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On 11/19/2002 6:16:05 AM kirkpatrick wrote:

TWA's experience showed people will go for the cheapest fare regardless. Even though some will choose AA for the room, that has to be balanced against the revenue lost when the plane is full and could have taken more people if it had more seats.

MK
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[/blockquote]

Will the balance show that the number of times you could have put a few more people on the plane exceeds the number of people who choose AA over the competition due to MRTC?

My guess is no. Even a very small percentage of people making that choice is going to win -- especially with loads being as light as they are.

 

[MrMarky]

What's not being discussed here is that MRTC improves RASM.

RASM is the total amount of money collected from all passengers on a given flight, divided by the total number of ASM's on that flight. Provided you have less than 100% load factor and didn't have to turn any revenue away, flying fewer seats will mean dividing the revenue by a smaller number (fewer seats = fewer ASM's) resulting in higher unit revenue, or RASM.

The flip side is that at least in theory, CASM will also go up, because you are dividing your costs by fewer seats. If you go on the assumption that costs to operate any specific airplane/flight are in rough parity regardless of the number of seats in the plane, and regardless of the number of tusches in those seats, then MRTC is a winner.

Throw in value pricing and you have a shot at inching up your RASM numbers, once you have cut costs everywhere possible and bottomed out your CASM numbers. At that point you've got things pointed in the right direction.

 

[kirkpatrick]

[blockquote]
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On 11/19/2002 7:01:05 PM MrMarky wrote:

What's not being discussed here is that MRTC improves RASM.

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[/blockquote]
You're joking...right?

MK