Finally - somebody does something about revenues

[KCFlyer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/18/2002 934 PM FrugalFlyer wrote:
[P]The disturbing thing, AA would still have to match competitorss sale - I hope AA doesn't, but instead says screw you, we're not matching we're doing things our wAAy! [BR] [BR]----------------[/P][/BLOCKQUOTE]
[P]No, they don't have to match sales - that's what killed Value Pricing. IF somebody wants to fly someone from DFW to LAX and take a loss on it, AA would be wise to let them have those passengers. I'm a pretty frugal flyer myself, and I'll take anything the airlines want to give me. If they want to fly me accross the country and lose $100 on the deal, I'll take them up on it. If they want to break even, I'll take them up on that as well. [BR][BR]I noticed UAL quietly matched the DFW LAX fare...imagine the tough choice of getting more room on any coach seat versus more room in the first few rows of coach. Quite a coup, IMHO. [/P]

 

[FrugalFlyer]

Below is a paragraph from the abovementioned article:
________________

The unrestricted Dallas to Los Angeles fare in late January had dropped to $647 one way from $1,078, he said.

But the cheapest round-trip flight under the new plan is $350, with a 30-day advance purchase, compared with a $258 ticket with a 14-day requirement before the new plan came into effect. There had also been a more limited $228 ticket before the change, he said.

American would still have to match competitors' sales, he said.
__________________

This isn't too bad - the lowest fare increased by $92, which will not exactly break the bank, but the drop in the unrestricted fare - $431 - is awesome. I think this should stimulate travel, and AA will probably find a good way to market this along with MRTC. Good for AA.

The disturbing thing, AA would still have to match competitorss sale - I hope AA doesn't, but instead says screw you, we're not matching we're doing things our wAAy!

 

[KCFlyer]

AA has taken the lead in restructuring the pricing model .[BR][BR][A href=http://biz.yahoo.com/rc/021118/airlines_american_fares_1.html]http://biz.yahoo.com/rc/021118/airlines_american_fares_1.html[/A][BR][BR]IF they give it a chance...IF they don''t give in to the urge to give in to loss leader fare sales...Then I think they are going to be pleased with the results of this little experiment. [BR][BR]This is the right thing to do...look for ways to increase demand while they are looking for ways to cut costs. Bravo AA.

 

[NewHampshire Black Bears]

KCFlyer;
Like you,(and we've tossed this around, wondering when this would finally happen), I definitely think that this a stellar move on DC's part.

Like grandma always said, Rome was'nt (re)built in a day !!!!!

NH/BB's
(GOP, 24 months and COUNTING) !!!!!!!

 

[mga707]

[blockquote]
----------------
On 11/18/2002 1049 PM NewHampshire Black Bears wrote:

Like grandma always said, Rome was'nt (re)built in a day !!!!!

NH/BB's
(GOP, 24 months and COUNTING) !!!!!!!
----------------
[/blockquote]


The big question is, will the red-tailed Viking from the north be the barbarian at the gates, like he was a decade ago (Value Pricing, take 1)...

 

[KCFlyer]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/18/2002 11:40:48 PM mga707 wrote:
[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/18/2002 1049 PM NewHampshire Black Bears wrote: [BR][BR]Like grandma always said, Rome was'nt (re)built in a day !!!!![BR][BR]NH/BB's[BR](GOP, 24 months and COUNTING) !!!!!!![BR]----------------[BR][/BLOCKQUOTE][BR][BR][BR]The big question is, will the red-tailed Viking from the north be the barbarian at the gates, like he was a decade ago (Value Pricing, take 1)...
[P][/P]----------------[/BLOCKQUOTE]
[P][/P]mga707 - I think it'll be different this time...Crandall's not there to teach them a lesson. The problem wasn't NWA's fare sale...the problem was that AA capitulated to a money losing fare sale, due in large part to Crandall's ego. I maintain, if NWA want's to fly folks at a loss - let them. The red tailed Viking might be facing a revolt from the citizenry in MSP should they become aware that folks in another fortress aren't being raped and pillaged.

 

[FrugalFlyer]

[blockquote]
----------------
On 11/18/2002 9:30:20 PM KCFlyer wrote:

No, they don't have to match sales - that's what killed Value Pricing. IF somebody wants to fly someone from DFW to LAX and take a loss on it, AA would be wise to let them have those passengers. I'm a pretty frugal flyer myself, and I'll take anything the airlines want to give me. If they want to fly me accross the country and lose $100 on the deal, I'll take them up on it. If they want to break even, I'll take them up on that as well.

I noticed UAL quietly matched the DFW LAX fare...imagine the tough choice of getting more room on any coach seat versus more room in the first few rows of coach. Quite a coup, IMHO. [/P]
----------------
[/blockquote]

I'm also a price sensitive traveler, but in the example from the article the unrestricted fare from DFW to LAX dropped from about 4X the cheapest fare to about 2X the cheapest fare. So, if I'm a customer in DFW and need to get to LAX I may have the following choices:
1) direct on AA, DL and UA
2) one stop on other carriers
Chances are that the one stop fare will be the cheapest, but might not be that convenient in terms of departure/arrival time and total flight time due to layover(s). So that leaves me a super duper cheap but heavily restricted fare on UA/DL, a restricted and slightly more expensive fare on AA, OR the more affordable unrestricted fare on AA.

This type of fare structure that AA is offering gives the customer the preceptrion of VALUE. Throw in MRTC, AAdvantage, and all the other bells and whistles, and AA could potentially significantly improve their revenue in the market(s) that the new fare structure is offered by selling more of the unrestricted fares and still retaining a good number of the restricted leisure fares.

 

[Tango-Bravo]

[blockquote]
----------------
On 11/18/2002 934 PM FrugalFlyer wrote:

Below is a paragraph from the abovementioned article:
________________

The unrestricted Dallas to Los Angeles fare in late January had dropped to $647 one way from $1,078, he said.

But the cheapest round-trip flight under the new plan is $350, with a 30-day advance purchase, compared with a $258 ticket with a 14-day requirement before the new plan came into effect. There had also been a more limited $228 ticket before the change, he said.

American would still have to match competitors' sales, he said.
__________________

This isn't too bad - the lowest fare increased by $92, which will not exactly break the bank, but the drop in the unrestricted fare - $431 - is awesome. I think this should stimulate travel, and AA will probably find a good way to market this along with MRTC. Good for AA.

The disturbing thing, "AA would still have to match competitorss sale" - I hope AA doesn't, but instead says screw you, we're not matching we're doing things our wAAy!


----------------
[/blockquote]

My own recent choice offers a case in point. In checking online for a PHX-MSP and return flight three weeks ago, I found a fare at $218.00 on HP (after apparent web discount $20.00) and $238.00 on the red-tailed airline of the North for the dates I planned to travel. The very next day, the very same flights on the very same dates had climbed to $311.00 on both airlines -- I had been over 14 days out but less than 21 days when I first priced the flights, and was still over 14 days when I found the fare to be considerably higher.

All of which leads up to my point: I would have happily paid $311.00 for the flights of my choice [i]had it not been[/i] for the absurd inconsistency that the very same product and service was being offered for nearly $100.00 less just one day earlier. As it was, I said no thanks and used some of my accumulated stash of FF miles earned at inflated rates (double-miles and no-cost bonus miles).

The fare of $311.00 is altogether reasonable IMO -- and I [i]would have[/i] paid it [i]had it not been[/i] for the flagrant inconsistency in that is all too typical of airline pricing. The airlines will do well, as KCFlyer and others have stated, to stop the loss-leader fares (even if it means a few empty seats) and get past the illusion that they can fleece business travelers to cover the revenue shortfall. For sure, business travelers are not cooperating; and the airlines might be surprised (perhaps even shocked) to discover that leisure travelers (if I am typical) actually [i]will[/i] pay higher albeit reasonable fares like the real life example I've given [i]if[/i] they will stop playing the pricing games that are an insult to their customers.

 

[Diversion]

I realize that there are many factors affecting the pricing of airline tickets, but this does strike me as a move in the right direction. Assuming an adequate demand exists, charging a fair price that is above the cost of the seat makes perfect sense. No company can stay in business selling it's product below cost, and nobody's buying the product when it's priced at the old rates...and from the look of things, that fact will not likely change.[BR][BR]This has seemed to work well for America West. Let's hope this is the answer to the revenue side of the business model. [BR]