busdrvr-
Duditz makes one of the points as to why larger aircraft should pay more for airport facilities -- it simply costs more to build facilities which can accomodate larger aircraft. Would DIA have been as expensive if they weren''t building every runway to handle 747''s (and if they hadn''t needed all the land to do that)? Airports in the early 1970''s incurred significant costs upgrading facilities to handle the then-new 747''s; estimates of the total infrastructure costs needed for upgrades to handle the A380 run in the billions. Who should pay that? In comparison with a 737, a 747 needs larger gate areas, possibly an additional jetway, more ticket counter space, more ramp space, more baggage claim/make-up space, etc. In the air, a 747 also requires additional spacing between itself and other aircraft due to wake turbulence. One could even argue that the hub-and-spoke carriers (this would include carriers like AirTran, by the way) ought to pay a premium for bank scheduling, since the aviation infrastructure has to be built to accomodate the peaks in their usage, rather than the more constant usage you see from rolling hubs. Efficient use of airspace and airfields cuts both ways -- the network carriers would get a break on their widebodies, but they''d pay dearly for their regional feed (and should pay congestion pricing). Do you think this would help United compete better at airports like IAD and LAX?
The greater emphasis on per-passenger and per-segment fees in recent years is at the urging of the network carriers -- hoping to punish the low-cost carriers by shifting a greater burden of taxation over to them. With fares having dropped substantially (and heavy use of hubs for connecting traffic), this has come back to bite the network carriers. Moreover, one could argue that SWA actually paid *more* per passenger mile in taxes (in the first quarter) given that their yield was 11.99 cents versus UAL''s yield of 10.16 cents.
I do agree with you that highly congested airports should be reserved for the highest/best uses; i.e. first reduce the number of operations by small aircraft, then by corporate jets, then RJ''s/turboprops, then narrowbodies, etc. Again, though, given the number of RJ''s and turboprops tooling around places like ORD, LGA, DCA, BOS, LAX, etc. -- this provides no advantage to the large network carriers.
Business travelers in most smaller cities have a choice between very low frequency on larger aircraft or higher frequency on smaller aircraft. Given more-or-less equivalent pricing practices, they overwhelmingly choose the latter, and they overwhelmingly prefer RJ''s/SJ''s to turboprops. But even smaller markets can support a good amount of mainline jet service IF priced properly. Take LBB. Southwest manages 14 daily departures on 737''s. All together, American Eagle, Delta Connection (ASA), and Continental Express manage 13 daily flights on RJ''s and/or turboprops. While WN''s presence at LBB is undoubtedly a result of its origin as an intrastate carrier, they manage that level of service in a metro area which is actually smaller than the Binghamton example I used earlier.
While you can find a few execs (fewer these days than three years ago) who are willing to pay a price premium of several hundred percent for the convenience of service from the small-city airport to a hub, that market is pretty small these days. But it''s funny, one could argue that Manchester, NH is a small market which really doesn''t deserve the level of air service it receives -- aside from the fact that MHT has been well-marketed as a convenient and less expensive alternative to BOS. It''s also funny that people complain about what they don''t have -- in small cities, they complain that there''s not enough air service; in large cities, they complain that there is too much air service and it makes too much noise.
I do understand game theory, and I do understand cartel pricing, but that is beside the point. SWA doesn''t engage in cartel pricing, though, and they don''t charge high fares simply because they can. Compare (2Q02 numbers) a near-monopoly route like BNA-RDU for WN with a near-monopoly route like PHL-CLT for US (they have comparable stage lengths). WN''s average fare was $93; US''s average fare was $288. And, moreover, that was an increase on both airlines from their pre-9/11 average fares. Do you think that US Airways could have stimulated passenger traffic (and not needed to cut as much capacity) had they changed their pricing strategy? Philadelphia and Charlotte are both larger than either Nashvile or Raleigh-Durham, and yet more people traveled between BNA and RDU than between PHL and CLT. I would have used United as an example, but they don''t really have any comparable near-monopoly routes of that stage length (SFO-SAN competes indirectly with OAK-SAN).
Southwest hasn''t followed the cartel moves of increasing change fees and eliminating travel agent commissions (yes, they still pay a commission). And they actually did cut capacity in a number of markets (they just don''t announce that stuff usually). They parked a number of new aircraft in the desert for several months and postponed deliveries from Boeing; they also have not added a city in 19 months (they had been adding a new city every 5-6 months, on average).
If SWA had cut capacity by 10-15%, they''d probably be losing a bit of money because they would probably have kept everyone on the payroll (given their determination to avoid layoffs). Of course, they also wouldn''t have been able to hire folks laid off by other airlines, either. But it still wouldn''t have fixed the problems at the network carriers; WN would simply have sold fewer discounted fares with fewer seats to sell. The hub-and-spoke carriers still wouldn''t have been able to exert pricing power, because people weren''t willing to pay what they were asking. US Airways is arguably the network carrier least exposed to discounters, and yet they were the first into bankruptcy and have asked for some of the deepest cuts.
I don''t believe the root of the problem has been cartel airlines "cheating" by adding back capacity; rather I believe it is that passengers just aren''t willing to play along anymore. The Internet gives potential passengers far better pricing/schedule information than ever before. In an economy where profits are under pressure at most corporations and deficits loom for most governmental entities, travel is one of the first budget items to see the axe. And with the increased hassle of so-called enhanced security at airports (mostly window-dressing, IMHO, since it is un-American to profile), fewer people are willing to fly shorter routes at premium prices (the BOS-LGA-DCA Shuttles are an obvious casualty).
