It's The Fares, Stupid

[RDUSWF]

JS,

You are an example of what is wrong with the airline industry. AS long as people like you keep your heads in the sand we, the american people, will have to continue to bail out this bloated industry. In no other industry are the best customers treated the worst.

Your examples of industries where pricing has no relation to cost is dead wrong. Cable, telephone, oil etc, were all bad examples, in fact there really isn't another example outside of the airline industry. You say it is supply and demand, I say WRONG. Put airline tickets out in the open market, like oil, and you will get a true taste of what supply and demand really is. Oh, by the way we have examples of that: Priceline and Hotwire.

Why is it that the only airlines making money are the so-called LCCs?

I don't want to hear that it is labor costs or government subsidies, because that is not true.

Maybe you should look at the obvious, "the pricing model".

I can fly last minute RDU-ATL, for $250-$300 almost all the time. But for RDU-IAD or RDU-DCA it is usually $600-$700, WHY. WHY WHY. So what do I do, even though I am Platinum on AA and Silver Preferred on US ? I fly into BWI on WN and pay $250. Though I prefer both AA or US over WN there is no way in hell I can justify the price difference.

Wouldn't it be better for US that the kept the pricing slightly higher then WN, say $50 p/ RT and receive 12 last minute travelers at $300 rather then three at $700??

Regards,

 

[ngneer]

JetBlue may be cheaper than U, but the first flight from JFK-SYR leaves 9:35 AM and arrives in SYR at 10:35 AM. The last flight back leaves SYR at 5:00 PM. That doesn't leave much time for work if you want to make it a one-day trip, so it's not a very appealing option. US's schedule from LGA is much better; you can go up and back in a day and have plenty of time for work, but it's expensive. According to Travelocity, US wants $541 for LGA-SYR R/T booked a couple of days in advance. (CAL has a fairly reasonable schedule from ISP-SYR for a day trip, but you have to change planes in ALB and it costs about the same as US.) The other option is simply to drive. It costs a lot less and you can do it all in a day. It's hard to justify paying an extra $500 or so to fly.

 

[JS]

Wouldn't it be better for US that the kept the pricing slightly higher then WN, say $50 p/ RT and receive 12 last minute travelers at $300 rather then three at $700??

How do you know there are three $700 passengers who could be 12 $300 passengers (assuming there are 9 available seats)?

What if there are actually five $700 passengers who could be 11 $300 passengers? Only US knows, and they aren't going to tell us.


Speaking of fares only somewhat higher than the LCC's -- check out FLO-LGA. There are only two carriers that serve FLO (Florence, SC), US and Delta. Yet, they both charge only $178+tax roundtrip to LGA with a 14 day advance purchase and Saturday night stay (no day/time restriction). This is unusually low for a market in which there are just two legacy carriers. No Saturday night stay? Only $348+tax roundtrip.

Try that out of GSP (nearest airport to my home), or any airport that doesn't have discount competition. Out of GSP, the equivalent fare basis to the FLO $178 fare is $407 roundtrip, with the only advantage being more availability (H versus V). I almost never fly out of GSP; it's horribly expensive! There's no low-fare carrier, but there are six airlines flying here, four more than at FLO.

Maybe FLO is a test subject for a new fare structure. Or maybe US and DL are trying to keep AirTran or JetBlue at bay (seems odd given FLO's tiny size). Who knows?


Anyway, when I need to fly somewhere on short notice or with no Saturday night stay, I do my research and figure out a way around it. There will always be people who want non-stop flights out of a particular airport. I'm happy to drive 100 miles and change planes. Keep the status quo!

 

[tadjr]

Speaking of fares only somewhat higher than the LCC's -- check out FLO-LGA. There are only two carriers that serve FLO (Florence, SC), US and Delta. Yet, they both charge only $178+tax roundtrip to LGA with a 14 day advance purchase and Saturday night stay (no day/time restriction). This is unusually low for a market in which there are just two legacy carriers.

I believe the FLO-LGA example is not an accurate comparison because there is competition from both Spirit and HootersAir from Myrtle Beach to LGA and EWR. Myrtle Beach is only about 50-60 miles from MYR and those flights are nonstops. You said you'd be happy to drive 100 miles and change planes, but in the FLO-LGA example, you could drive 60 miles and be on a nonstop jet.

 

[RDUSWF]

JS, as a business traveler, I do not enjoy the luxury of A) doing a bunch of research before each flight or B) be able to drive 100 miles to catch a lower fare.

You keep using 7, 14, & 21 day advance purchase as examples of your pricing, but what I and most of the business travelers are talking about are the short notice purchases. The walk-up, two day, no saturday night stay type fares are the ones in question. This is where the huge disparity exists, why? Is it because of more choice? Better service (That is a joke)? Better FF perks? None of these are enough to justify the raping of the business traveler.

But like I said earlier, as long as the majors (exclude WN) and yourself keep your heads in the sand, the quicker the end will come to carriers such as US.

 

[JS]

Usually my travel can be booked with advance notice, but not always. When I do have short notice, I still do my fare research and I have always found something reasonably priced.

In most markets, every airline will rip you off for a trip with short notice, including the discount carriers. The trick is to find that gem of a city pair, airline, fare basis code, and flight having the required availability for a good price on short notice.

The discount carriers might not rip you off as much as the majors, but even on a Southwest flight, it would not be unusual at all for two people to be sitting next to each other, one paying three times as much as the other.

 

[RDUSWF]

Well that is good for you, but it doesn't work for most of the business travelers, which also happen to be your best customers.

Here are examples of what I am talking about.

Flying out in the morning on the 21st of Nov. and returning in the evening of the 21st of Nov. I picked a couple city pairs to illustrate my point.

1) RDU-Chicago (MDW or ORD) the R/T on WN was $287, AA it is $702, on US $693 (one-stop), and on FL $360 (one-stop).

2) RDU-Washington (DCA or BWI) the R/T on WN was $172, US it is $832, and on AA $793

3) RDU-MIA the R/T on FL was $404, US $1119, AA $1056, and on DL $991

This is what I am talking about, how can the LCCs make money and charge at least 50% less, and the majors lose their ass and charge so much more.

Anywhere that there is low fare competition we can see the same examples, and as far as number of flights for all of these examples the numbers are comparable. In fact on two of these, US has the least amount of flights available.

 

[Art at ISP]

RDUSWF,

You seem to have found additional examples which confirm my point. Look at the LCC's offering fares at or around $300 for a same day round trip while the majors are in the $700 or more range. There's absolutely no justification for it. NONE.

JS your use of advance fare quotes does not apply to this discussion because we are talking about last minute walk up fares. Remember I am talking about a same day round trip NYC-SYR in my case: $536 on US for a buzz bucket vs. $218 on B6 for a new A320.

Now let's go a step further--other "major" carriers who have rationalized fares. HP did it and they made a profit last quarter. AA did it in some markets (max $299 each way coast to coast) and they made a small profit (and had the best performance of DL, UA, US, etc.) I think that in these cases the AVERAGE fare paid rises, therefore revenue is up, therefore profits improve.

It is time for the managers to manage...to get their heads out of the sand and do something. They could make money at $250 round trip for a walk up fare in my case--about $50 more than Jet Blue, but still profitable--by a good margin.
Like I said before, I decided to drive this time---but if Jet Blue's schedule matched mine I would likely try them. Now I am sure I am not the only business traveler who is often in a similar situation. The difference is, with one who is not as loyal as I am, if he tries Jet Blue, he may not be back. How much revenue do you stand to lose then?

On that note I believe I have made my point. I am curious to see what the next month or two brings.....

 

[JS]

Originally posted by Art at ISP:

JS your use of advance fare quotes does not apply to this discussion because we are talking about last minute walk up fares. Remember I am talking about a same day round trip NYC-SYR in my case: $536 on US for a buzz bucket vs. $218 on B6 for a new A320.

I think it's relevant. Consider this -- five years ago, if you wanted to fly LGA-DFW without a Saturday night stay, it didn't matter how much advance purchase you had, the fare was $1,800 round trip on any carrier (except ATA, something like $600). Fares were just ridiculous back then. Today is quite sane in comparison.

Speaking of LGA-DFW, I just did a fare quote, and US will sell you a roundtrip ticket for only $228 with no day/time restriction, no minimum stay, and a 14 day advance purchase (the only disadvantage being that you have to change planes).

This could be just a short-lived AA-attack fare (you can't tell by looking at fares for just one day), but if not, then it looks like US wants a piece of the mid-week business going to AA -- smells like competition to me!

Now let's go a step further--other "major" carriers who have rationalized fares. HP did it and they made a profit last quarter. AA did it in some markets (max $299 each way coast to coast) and they made a small profit (and had the best performance of DL, UA, US, etc.)

HP rationalized their fares partly because there was not much of a reason to choose HP. The other airlines have a good size crowd of loyal followers.

Check out SJC-SBA on HP, leaving tomorrow and returning Friday. How rational is $540 for a trip like that? That is ridiculously expensive, and you get crammed into a CRJ on the PHX-SBA flights.


AA as well as all the other major airlines match the fares of discount carriers on most routes. That's not news. Price out DFW-PHX on AA leaving tomorrow and returning Friday. It's $421 each way, and DFW-PHX is nowhere near a "coast-to-coast" length flight. AA isn't stupid. They're not going to compete with a discount version of themselves.

 

[RDUSWF]

JS,

That was then this is now, and has been the case for several years.

Is it just coincidence that HP is now making a profit since changing their pricing model (eventhough they do not have a large following), while others like US, AA, NW, CO (who have a large following) etc. are still NOT. How ridiculous is your reasoning sounding now?

Then you talk about a cramped CRJ, while in an earlier post you were singing the praises of a cromped, noisy, and slow Dash 8.

You need to have better reasoning and some logic would help behind your assertions.

 

[JS]

JS,

That was then this is now, and has been the case for several years.

Is it just coincidence that HP is now making a profit since changing their pricing model (eventhough they do not have a large following), while others like US, AA, NW, CO (who have a large following) etc. are still NOT. How ridiculous is your reasoning sounding now?

Then you talk about a cramped CRJ, while in an earlier post you were singing the praises of a cromped, noisy, and slow Dash 8.

You need to have better reasoning and some logic would help behind your assertions.

I don't know enough about HP to say how they make money when others can't. I will take a stab at lower labor costs and lower operations costs flying mainly in the southwest US (i.e., sort of like the old Southwest Airlines).

Also, note that HP's pricing model, while more "rational" than the others, is not across-the-board, like Southwest's (see SJC-SBA example). Southwest simply won't enter a market at all if they have to charge high fares (e.g., serving dinky little places like SBA).

As far as my comment on the CRJ is concerned, allow me to clarify. The CRJ is the most uncomfortable passenger aircraft I have ever been on. It's a small, circular fuselage, with four seats per row (wide enough for only 3.5 seats IMO), with a floor that is too high and the windows too small and too low. It is my most undesirable aircraft.

The ERJ, Dash-8, Dornier 328, EMB-120, J41, hell, even the B1900, are more comfortable than a CRJ, in my opinion. I am more comfortable in a middle seat in the last row of a 757 than any seat on a CRJ.