Load Fators....

[JS]

One thing to note is that it is possible to get the systemwide load factor up really high without seriously overbooking flights. How?

1) Lower e-fares further and put them on lightly loaded flights leaving tomorrow instead of the following weekend.

2) Accept all Priceline bids for lightly loaded flights leaving tomorrow.

This would obviously decrease average revenue (who cares), but total revenue, which is what matters, might be higher. The only thing is that US may be afraid that potential walk-up customers will buy the e-fares or Priceline fares instead. That''s probably why they let off-peak flights go empty rather than selling the seats for $25 or so.

 

[Hope777]

Why would you accept a priceline bid that is less then what it costs to transport a passenger per seat mile?

 

[mbmbbost]

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On 5/27/2003 2:53:54 PM PHL wrote:

Why do people keep talking about high loads as if that automatically equals profit!??

The domestic flights, packed as they may be, are not necessarily making money. They''re just keeping the customer base. Keep announcing new Carrib and Europe service, because that''s where your profits will be.

$298 PHL-SEA roundtrips aren''t helping anyone.

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When Southwest and jetBlue are regularly offering similar flights for around $198 (transcons I mean), I would hope US would manage to squeak out a little profit at $298. And it would be dangerous to ignore the importance of keeping (or actually restoring in some cases) good service on some routes like this. There are a lot of bargains being offered to the Carribbean it seems, I wonder how profitable it is? It seems to me that Carribbean (or most any leisure-focused) travel would always have lots of peaks and valleys in demand..It will be interesting to see how it all turns out.

 

[JS]

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On 5/28/2003 157 PM Hope777 wrote:

Why would you accept a priceline bid that is less then what it costs to transport a passenger per seat mile?

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The marginal cost to transport another passenger is awfully low. Something like ten bucks?

 

[PITbull]

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On 5/23/2003 10:33:13 AM DLFlyer31 wrote:

Keep in mind that US''s loadfactor''s wouldn''t be so great if US hadn''t chopped capacity by so much. Imagine if US had the same capacity in April 2003 as they had in April 2002, would the loadfactor be the same? I don''t think so.

The number of people who boarded a USAirways plane in April 2003 compared to Aprile 2002, declined by 18.5%.

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But the downsizing resulting in decreasing capacity of the airline had nothing to do with the Iraq war, had to do with 9/11... and we gave two concession packages for that!

 

[motnot]

A couple thoughts:

1. Higher load factors do not necessarily translate to profits, as has been mentioned, but higher load factors are definitely better than lower ones.

2. Priceline is part of the problem. If I were running any major airline that does business with Priceline, I would immediate seek to stop. If overcapacity is a problem, then you can start to "right-size" your airline by stopping selling tickets on Priceline.

When you''re selling tickets at a loss, you''re trying to crazy stimulate demand. But airlines have no trouble selling seats for less. They need to do better at selling them for more. It''s one thing to match a fare sale to be competitive, but selling your seats on Pricline is TRYING to lose money.

Look at AWA, which stopped using Pricline a year ago. Before that, they received about 8 percent of revenues from those tickets. Given the low prices of those tickets, you figure that was maybe 10 percent of all passengers. When AWA cut out Priceline sales, they essentially raised fares for the lowest-priced 10 percent of passengers.

In a good economy, you can perhaps justify flying money-losing seats in order to supplement frequencies and lure more high-paying travelers. But those times are long gone, and struggling airlines need to cut capacity.