It's the Fares, Stupid---STILL

[ngneer]

As another example of what Art is saying, I just found out that I have to go to upstate NY (the Binghamton area) on Monday on business. According to Travelocity it will cost $948 round trip ISP-BGM on US Airways. (I would have to connect in PHL.) It's just a little cheaper from LGA ($806 R/T). I guess I'm driving.

 

[ngneer]

$350, maybe up to $400 would be acceptable. Paying more than twice that is hard to justify. I wouldn't really save any time by flying because of the connection via PHL, but I would save some wear and tear on myself.

Last fall, three of us had to go there for the day so we hired a limo to drive us up and back. It was much cheaper than flying at these airfares and total travel time is about the same.

 

[Doc]

I have so much to add to all of this that I don't have the time.

SO I WILL JUST TAKE ANOTHER PAY CUT SO WE CAN SELL SEATS EVEN CHEAPER.

 

[Art at ISP]

I have so much to add to all of this that I don't have the time.

SO I WILL JUST TAKE ANOTHER PAY CUT SO WE CAN SELL SEATS EVEN CHEAPER.

Doc,

You need to stop feeling sorry for yourself and READ what we've been saying. I never said that the employees should take another pay cut. I even said at some point they should get raises. You don't need to gouge the customer in order to be profitable. You need a FAIR fare structure, with RATIONAL fares on both the low AND high ends.

If you were reading, my point was that with RATIONAL fares, revenue would increase, therefore adding profitability, not reducing profitability. The company would then be stronger financially and in a better position to give MORE to the employees.

The pay cuts are history, get over it. WE hope for more pay for the employees just as you do, and we propose a PROFITABLE way of getting there.

My best to you all...

 

[SoftLanding]

As another example of what Art is saying, I just found out that I have to go to upstate NY (the Binghamton area) on Monday on business. According to Travelocity it will cost $948 round trip ISP-BGM on US Airways. (I would have to connect in PHL.) It's just a little cheaper from LGA ($806 R/T). I guess I'm driving.

ngneer,

agreed! Those fares are on too high, and that's one of the reasons JetBlue is coming into some of our core markets, though not BGM. (Even AirTran is trying, starting ROC-BOS within the next few weeks.) They're all looking for higher yields...

BTW, have you priced JetBlue from JFK-SYR, and I believe an hour and a half drive to BGM?

SoftLanding

 

[qwerty]

Of course these fares are not sustainable given the encroachment of the low fare model. But the suggestion here is to lower fares across the board without direct competition...why?

To appease the long time customer that "kept the lights on" all those years? Give me a break, this is business. You'll get your miles and your club and your upgrades, and if you are so pissed off to leave - someone wil be right there to pick up the slack. Why would any company not charge exactly what someone is willing to pay? Delta tried it and they barely survived. Throwing out exapmles of one fare in one market just doesn't cut it - do you think there is a reason maybe every airline pays an army of analysts to squeze out every dollar? Let's price ISP-BGM $400 and maybe pick up 2 incremental customers (and give a nice $548 discount to the other 8 people that paid the full fare.)

It's simple supply and demand people. Period.

 

[Flying Titan]

Do you really think there are eight people willing to pay $948 to travel from ISP to BGM on any day of the week??? Or any week of the year???

I would bet that easily 90% of the people making that trip for business look at that fare and choose to (or are ordered to) drive.

Put a RATIONAL fare in the market and you could probably pull half of those people out of their cars. Start doing the math with those ratios and the net income figures look a whole lot better, not worse.

 

[qwerty]

90% would drive even with a $200 fare, even with a $100 fare.

The idea here is to maximize revenue, by controlling supply and price, at the end of the day you end up with the most cash possible. On many routes there will always be customers that pay outrageous fares at the last minute. Why give them a discount just to fill up the plane - when at the end of the day you incur more cost and end up with less cash?

There may be a time when folks won't pay these fares, but believe me for now they are out there. You can speculate that the airline is not pricing for maximum profit, but I am betting those that do this for a living probably have a better idea of the numbers.

 

[Travels2mch]

SO I WILL JUST TAKE ANOTHER PAY CUT SO WE CAN SELL SEATS EVEN CHEAPER.

We have a volunteer...........

 

[jimcfs]

90% would drive even with a $200 fare, even with a $100 fare.

The idea here is to maximize revenue, by controlling supply and price, at the end of the day you end up with the most cash possible. On many routes there will always be customers that pay outrageous fares at the last minute. Why give them a discount just to fill up the plane - when at the end of the day you incur more cost and end up with less cash?

There may be a time when folks won't pay these fares, but believe me for now they are out there. You can speculate that the airline is not pricing for maximum profit, but I am betting those that do this for a living probably have a better idea of the numbers.

Wait a second... you mean you would rather charge a high fare and have many seats go empty instead of charging a rational fare and fill the seats? The costs are basically fixed either way.

I look at the fares into my local markets (BLF/BKW). These are contracted express flights with Colgan. Would US rather have empty planes with the high fares they are asking on these routes or just let Colgan collect their EAS payment and what little US pays for them to take that route? I have never seen more than 8 people on these B1900s (or J31s) out of BLF in over 10 years. Then again at the BloFares(tm) US asks, it's not a surprise why folks around here go to CRW, GSO, ROA, TRI or even CLT, RDU or PIT to fly. I personally have not flown a paid ticket out of here in almost 15 years... does that not tell you something? I'll drive 90 minutes minimum to get a more realistic fare.

To the OP driving instead of flying... I feel your pain, buddy.

 

[qwerty]

So a sub 50% load factor and yet they still fly it? You think maybe they are making money on it? (At the least more than using the plane on a non-EAS route.)

No, I don't think they want a full plane. I think they want to serve the handful of people that will pay (almost) regardless of price and collect the EAS.

 

[JAFA]

:glare:

The least expensive was CLT, and it priced out at $767 or thereabouts. Considering that the COST in terms of CASM is approximately $65 and I am being generous, this is outrageous.

Let's see, so if ISP-CLT was still a nonstop flight it would be 575 miles each way and we both know it no longer is so even if it was you're trying to make us believe that ANY airline could do this for a CASM of 5.7 cents?? As is it is we both know this mean going thru PHL maing it now 578 miles each way so now we go down to 5.6 cents per mile. So which airline has a CASM of 5.6 cents??

Sorry, but airlines MUST make a profit, period the end. No profit means no air travel. So now let's use something realistic like say a CASM of 11.83 cents Morningstar - PR Newswire: US Airways Group, Inc. Reports Fourth Quarter and Full Year 2005 Results. So now using 578 miles each way at 11.83 cents we get a cost of $133.29 or actually double what you claimed. :glare:
So now instead of the BS you tried to shovel of price gouging we have a walk up fare of less than 7 times the cost, considering I have spent that much to fly ISP-PIT on several occasions on US I really can't say that twice the distance and a connection for the same money is gouging. Maybe you can, but I cannot. Oh yeah did I mention nonstop, so we both know this was at a minimum of 7 years ago. Refresh my memory, how much has the price of practically everything else on the east end gone up in those 7 years?? :jerry:

 

[Art at ISP]

JAFA,

I hope you're not a pilot because you would have flunked math.

Also if you read, I am talking LGA-CLT, which is 538 miles. At 11.83 cents which is an aggregate CASM, the trip would cost $63.64 in round numbers. Add PHL to the mix, ISP-PHL is 130 miles, PHL-CLT is about 440. Allow for a 15 cent CASM due to commuter flying and PHL, the trip still only costs about $85.00. The point is that the airline is entitled to make money, but not to gouge the customers.

Qwerty you're dead wrong, the number of people willing to pay those fares is dwindling to a precious few. Again you miss the main point. Even if they can sell those few seats, those people will probably feel hosed and will look elsewhere for their next trip. Just because there's no competition is not justification for airway robbery (term used generically). There is a compounded risk of losing that customer's future business, which, while it can't be totally quantified, is substantial. Refer to my Airtran example. A less loyal customer than myself would wonder how much he wasted and if he had a satisfactory experience with Airtran might not be back. Why would I pay US $800 when I can get there on Airtran for $450? OR why would I pay US $700 for a transcon, while UA has a product geared for the business traveler, and charges the same if not less (not even thinking about PS right now)?

Sure there is differentiation, but the advantages offered by US in service, amenities etc. are dwindling. As far as the club, WE PAY FOR THAT. The main reason we stayed is thanks to your colleagues, who are the best in the business. Tie their hands, remove more options and their ability to solve problems for us, and that's one more piece of the puzzle gone.

If the airline RATIONALIZED fares, which means RAISING the low end to sustainable levels, so perhaps only 10% of your inventory prices below cost, and lowering the high end to TOLERABLE levels, you will see a ripple effect--more people flying because of the tolerable fares, and higher AVERAGE fares which translate directly to more revenue overall. Delta could not sustain their pricing because of their costs--they did confirm that overall revenue went up as a result of simplifares. ALSO, HP became profitable after simplifying their fare structure--the question is why they haven't spread their pricing to East--and the answer just may be greed. It won't last. With Jet Blue coming into CLT and RDU, if the attitude is hose them now while we can, that will come around to bite you later...

The business traveler is sick and tired of subsidizing Ma and Pa Kettle who want to fly cross country for $69. As Bob and I have said, Ben Baldanza told me to my face once that if he could raise bottom fares by only $20, he could lower top fares by $300. With the price of oil, I could see raising $25 and lowering $200, but it's a start.

You really don't know your customer, and that sir or madam is the underlying problem in a nutshell. Tempe has yet to reach out to the customer group to find out what we expect, or what's important to us. Keep cutting services and perks while maintaining high prices, and you'll be back before the judge in no time at all.....remove VALUE from the proposition and lo and behold, there will be no customers--except for Ma and Pa Kettle. Good luck with that.

To the wonderful front line employees of Airways, you are still the best, but it has to make financial and practical sense for us to stay around. Let's hope the Sand Castle gets that message soon...

My best to you all....

 

[Art at ISP]

And here's another thing I just noticed. The US web site appears to have had a helpful feature removed from its pricing tool. When you click on flights on a given itinerary, it gives you the price for those specific flights, but the functionality where it points out possible less expensive itineraries has been removed. I checked a number of trips at a number of times, and it no longer points to cheaper flights.

It may be a glitch, then again it may not....

 

[Hope777]

Art, do you want to talk about High Prices? In LGA, the Landing Fees alone Kill You and that does not include Rent of Facilities or Labor. The Landing Fee for the Baby Bus, the 319, is over $1300.00 per landing. Which is an example of why WN goes into smaller airports. We all kid that the Port is the Leagalized Mafia. The Airlines are in the Business to make money, and not all routes that we fly are profitable so we must make it where we can. I do agree, that there should be a MAX System Wide Fare as with WN. One for Coach and one for Wide Seat Class. And along with Fares, there are just too many. Maybe a Max of FIVE FARES per market would be easier for both the Passegners and Customer Service Employees to handle.