The State of US Airways

[DLFlyer31]

[blockquote]
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On 10/28/2002 1027 PM KCFlyer wrote:
Rather, they are the ONLY major airline that is doing anything to increase revenues. $299 max for a one way fare. Here's some news....it's drawing travellers. They are making a profit, and it ain't all because of costs.
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[/blockquote]

Actually, it's NOT really drawing a lot of travelers judging by WN's loadfactors. Considering that WN flies to mostly high volume markets and WN has low fares (both walk-up and advance purchase), WN's loads are pretty weak. If those low last minute fares were drawing so many pax, then why are WN planes so empty?

The only thing keeping WN in the black is its cost structure. Slap on two cents to WN's CASM and they'd be losing just as much (if not more) than the likes of CAL and NW whose CASM's are in the 9 cent range.

Unfortunately, lowering last minute walk-ups just doesn't stimulate a lot of demand when the demand simply isn't there. The bulk of people who buy last minute fares are business pax and they're just not buying them...whether the fare is $299 or $899. Where I work, it almost requires an act of god in order to get authorization to make a last minute trip. All trips must be planned in advance (14 days) or even more preferable is video conferencing. WN is fortunate...they can make money on the 14-day advance purchases because of the cost structure. US can not make money on these purchases.

I'm not arguing against a more rational fare structure. It is needed. However, I don't think it will work for US. Even if US lowers walkups and does manage to stimulate a little more demand. The other airlines would match immediately (at least in the markets US serves) and chew away most of US's gains.

Bottomline, the market is extremely weak. There is way too much capacity out there in comparison with the demand. This is evident by the fact that even the low-fare carriers are struggling. Until either the economy comes back (which will likely take a while) or some serious capacity is removed, the industry will continue to struggle.

 

[AOG-N-IT]

[blockquote]
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On 10/29/2002 9:32:39 AM Lakeguy67 wrote:

AOG, they make a ton of money on the cargo going to SJU, that is why PHL uses a 330 and CLT a 767 for cargo volume
----------------
[/blockquote]
Lakeguy67....According to Hope777's comments..frieght ain't getting it either!!

Remember it's a soft economy..production of non-durable goods like that , that comes in and out of Puerto Rico is not selling well either.

I worked for an Air Frieght Company doing load plans on DC-8 Frieghters a number of years ago..we were flying textile 'Piece Parts and sewing equipment at a rate of 115,000 pounds per flight to SJU and SJO from CLT and GSO.

Labor was cheap enough to justify 2 flights a day X 5 days a week, sending the stuff south for the sewing...then return it to CLT and GSO as completed Hanes products.

I'm very aware of what the origional intent was with the A330...but like the other planes we couldn't justify flying...how can we justify this in an alike fashion?

Then what you fail to accept is the gross stupidity of flying , supporting/maintaining two entirely different aircraft types.

I'll bet money you are still wondering why we are bleeding money too?

I can tell you without fail...It may not be the bullet of a possible war with Iraq that dooms us...it will be the steady self-inflicted trickle from our own pores that will seal the deal.

Stupidity and Short-sightedness seems to be as rampant as the Ebola Virus in the darkest corner of Africa here.

I think I'm going to let this mess fester on it's own for awhile...maybe not watching the approaching ground , will lesson the pain in the end?

 

[Lakeguy67]

AOG, they make a ton of money on the cargo going to SJU, that is why PHL uses a 330 and CLT a 767 for cargo volume

 

[ITRADE]

That is my understanding as well.

 

[UAL777flyer]

deelmakur,

The entire industry is out of its depth in this situation. There isn't an airline in existence that can accurately forecast operating trends right now. Nobody knows where bottom is. Nobody can predict when the economy will rebound. There is simply too much uncertainty to make anywhere near an accurate prediction.

 

[KCFlyer]

[BR][BR]
[BLOCKQUOTE][BR]----------------[BR]On 10/29/2002 948 AM DLFlyer31 wrote:[BR][BR][BR]
[BLOCKQUOTE][BR]Actually, it's NOT really drawing a lot of travelers judging by WN's loadfactors.  Considering that WN flies to mostly high volume markets and WN has low fares (both walk-up and advance purchase), WN's loads are pretty weak.  If those low last minute fares were drawing so many pax, then why are WN planes so empty?[BR][BR]The only thing keeping WN in the black is its cost structure.  Slap on two cents to WN's CASM and they'd be losing just as much (if not more) than the likes of CAL and NW whose CASM's are in the 9 cent range.[BR][BR]Unfortunately, lowering last minute walk-ups just doesn't stimulate a lot of demand when the demand simply isn't there.  The bulk of people who buy last minute fares are business pax and they're just not buying them...whether the fare is $299 or $899.  Where I work, it almost requires an act of god in order to get authorization to make a last minute trip.  All trips must be planned in advance (14 days) or even more preferable is video conferencing.  WN is fortunate...they can make money on the 14-day advance purchases because of the cost structure.  US can not make money on these purchases.[BR][BR]I'm not arguing against a more rational fare structure.  It is needed.  However, I don't think it will work for US.  Even if US lowers walkups and does manage to stimulate a little more demand.  The other airlines would match immediately (at least in the markets US serves) and chew away most of US's gains.  [BR][BR]Bottomline, the market is extremely weak.  There is way too much capacity out there in comparison with the demand.  This is evident by the fact that even the low-fare carriers are struggling.  Until either the economy comes back (which will likely take a while) or some serious capacity is removed, the industry will continue to struggle.  [/BLOCKQUOTE][BR][BR]----------------[/BLOCKQUOTE][BR][BR]I beg to differ - first off, systemwide load factors on a high frequency point to point operation are not indicative of overall profitability. Southwest lowered last minute fares to a point where they can make decent money on them and still turn a profit. Everybody's load factors are down, but Southwest is apparently getting a fair number of people buying their $299 tickets. Heard that from a buddy who is in a position there it know. It is stimulating demand..albeit not enough to get load factors up to 90%, but show me a year where LUV has ever had a 90% load factor. It's getting people to fly at fares that are making money. [BR][BR]It's an act of Congress to get last minute fares where you work...understandable. But the 14 day advance fare on the others is laden with restrictions that can end up costing a company far more than they were wanting to pay. And U (and others) have 21 different fares for the same route, and 15 of them apparently don't make any money. Get rid of those 15 money losing fares and charge a fare that can make some money. [BR][BR]But why not limit the fares buckets and try this...lets say CASM's are .10 cents. A 1000 mile round trip at 11 cents a mile is $110. There's your 21 day advance purchase fare. Make the 14 day advance fare .16 a mile. There's $160. Seven day advance is .21 cents per mile - there's $210 and walk up is .35 per mile ...$350. Note that all of the prices covered the costs to fly the seat. And tell me that your company would be so adamant about 14 day advance when the only difference in fare was $150...In other words, if your meeting runs long, it'll only cost the company $75 more to get you home. Think they'd fly? And no, these fair fares don't have to last forever...it's just a thought to get butts in seats at a profit and help stimulate profitable revenue to pull you thru these rough days. What's better, an aircraft that seats 200 carrying a total of 50 passengers, 40 of whom bought the loss leader fare and 10 who paid a somewhat profitable fare? Or an aircraft that holds 200 carrying 180 people, each and every on who paid a fare that covered the cost to fly in that seat? [BR][BR]Very simplistic here, but:[BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]Passengers [?xml:namespace prefix = o ns = urn:schemas-microsoft-comfficeffice /][o][/o][/FONT][/P][/TD][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]Group[o][/o][/FONT][/P][/TD][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]Fare[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: windowtext 0.5pt solid; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]Revenue[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: windowtext 0.5pt solid; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]40[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]21 Day Advance[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$110[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$4,400[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: windowtext 0.5pt solid; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]50[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]14 Day Advance[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$160[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$8,000[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: windowtext 0.5pt solid; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]60[o][/o][/FONT][/P][/TD][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]7 Day Advance[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$210[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$12,600[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]0[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]Full Y class[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$350[o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$0[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman][o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman][o][/o][/FONT][/P][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 110.7pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=148][BR]
[H1 style=MARGIN: 0in 0in 0pt][FONT size=3][FONT face=Times New Roman]Total Revenue[o][/o][/FONT][/FONT][/H1][/TD][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$25,000[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]200 seat aircraft[o][/o][/FONT][/P][/TD]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman].10 ASM[o][/o][/FONT][/P][/TD][BR]
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[H1 style=MARGIN: 0in 0in 0pt][FONT size=3][FONT face=Times New Roman]Total Cost [o][/o][/FONT][/FONT][/H1][/TD][BR]
[TD style=BORDER-RIGHT: windowtext 0.5pt solid; PADDING-RIGHT: 5.4pt; BORDER-TOP: #ece9d8; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; BORDER-LEFT: #ece9d8; WIDTH: 114.3pt; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 0.5pt solid; BACKGROUND-COLOR: transparent; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt vAlign=top width=152][BR]
[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$20,000[o][/o][/FONT][/P][/TD][/TR][BR]
[TR][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]1000 mile roundtrip[o][/o][/FONT][/P][/TD][BR]
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[H1 style=MARGIN: 0in 0in 0pt][FONT size=3][FONT face=Times New Roman]Total Profit[o][/o][/FONT][/FONT][/H1][/TD][BR]
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[P class=MsoNormal style=MARGIN: 0in 0in 0pt][FONT face=Times New Roman]$5,000[o][/o][/FONT][/P][/TD][/TR][/TBODY][/TABLE][BR][BR]The flight breaks even with a 63.5 load factor. And that assumes that NOBODY bought a ticket within 7 days. And that isn't counting any first class seats. Why not charge $500 for the FC compartment and drop the freebie upgrades for the folks who didn't pay full coach? There's 50 seats at full coach (and my numbers are admittedly simple - the number of fares could certainly fluctuate). Would your company be wiling to book one of those fares, were they available? Do you know any family of vacationers who would rather drive to Disney from Charlotte rather than pay $110 bucks? Any business who would have to go to Congress to approve a $350 business fare? But....gotta cut those costs. My suggestion won't end the recession, but it just MIGHT increase revenues while costs are being decreased, and you might find that magical 7% easier to attain than you would by laying off 90% the employees and cutting the fleet down to 60 planes.

 

[MarkMyWords]

Chip,

I have a question for you. It was not very long ago you were on here touting the fact that ALPA members were able to maintain their pensions because they paid for it in other ways in their contract. Maintenance was able to keep R & D, because they paid for it in other areas of their contract. Doesn't it then stand to reason that if our problem is not W2 wages, but productivity and pensions, then those people that are the problem need to pony up the money to continue to keep them?

Let's say that when ALPA was negotiating their concessionairy contract there was a pension shortfall of 1 billion dollars. Now, because of the continued spiral in the economy, there is a 1.2 billion dollar short fall in their pensions fund. Shouldn't ALPA members be expected to pony up the additional 200 million in concessions?

Just something to think about. You were the one defending the fact that you paid to keep your pension. If your pension continues to be the problem, then YOU come up with the funds to continue to keep it.

 

[DLFlyer31]

[blockquote]
----------------
On 10/29/2002 10:39:52 AM KCFlyer wrote:
But why not limit the fares buckets and try this...lets say CASM's are .10 cents. A 1000 mile round trip at 11 cents a mile is $110. There's your 21 day advance purchase fare. Make the 14 day advance fare .16 a mile. There's $160. Seven day advance is .21 cents per mile - there's $210 and walk up is .35 per mile ...$350. Note that all of the prices covered the costs to fly the seat. And tell me that your company would be so adamant about 14 day advance when the only difference in fare was $150...In other words, if your meeting runs long, it'll only cost the company $75 more to get you home. Think they'd fly? And no, these "fair fares" don't have to last forever...it's just a thought to get butts in seats at a profit and help stimulate profitable revenue to pull you thru these rough days. What's better, an aircraft that seats 200 carrying a total of 50 passengers, 40 of whom bought the "loss leader" fare and 10 who paid a somewhat profitable fare? Or an aircraft that holds 200 carrying 180 people, each and every on who paid a fare that covered the cost to fly in that seat?

Do you know any family of vacationers who would rather drive to Disney from Charlotte rather than pay $110 bucks?
----------------
[/blockquote]

Your example might work, but here's the problem. The moment US drops its fares to these levels, other carriers will match....they always do. All of the sudden, the route gets flooded with cheap capacity. Then with so much capacity out there, one carrier goes under the $110 to $105...in order to steal a few more pax. This starts a vicious cycle downward until nobody makes money...except those with the low cost structures that can endure the downward spiral of fares.

As for the $110 fare to fly CLT-MCO...that actually stinks. For a family of four, it would be $440 then add tax and you get about $520. That's no bargain for a family....especially in the current environment.

How profitable can we really expect the majors to be when even WN is warning of possible losses in the months ahead....especially when WN has a 30-40% cost advantage? If WN's low walkups were so stimulating why are WN's loads some of the worst in the industry? YTD loads on WN are 66.9% which isn't bad and it works within WN's cost structure. However, loads that low on the majors will not work given their current cost structures and weak demand.

 

[repeet]

[P]blockquote][BR]----------------[BR]On 10/29/2002 10:37:49 AM UAL777flyer wrote: [/P]
[P] There isn't an airline in existence that can accurately forecast operating trends right now.[BR]----------------[BR][/blockquote][/P]
[P]I may be justa mechanic, but how about this?[/P]
[P]Consumers' Confidence Pummeled in October[BR][A href=http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=2&cid=568&u=/nm/20021029/bs_nm/economy_consumers_dc]http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=2&cid=568&u=/nm/20021029/bs_nm/economy_consumers_dc[/A][/P]
[P]Faced with less time off, workers take more[/P]
[P][A href=http://story.news.yahoo.com/news?tmpl=story&ncid=676&e=4&cid=676&u=/usatoday/20021029/ts_usatoday/4572328]http://story.news.yahoo.com/news?tmpl=story&ncid=676&e=4&cid=676&u=/usatoday/20021029/ts_usatoday/4572328[/A][/P][FONT size=2]
[P]We the rank and file need a bonus, the type of bonus that will give our customers a bonus too. We don't need raises (well ok, but we'll wait), we need more numbers. We need more Res. Agents so that our customers won't have to sit with a phone on their ear till it hurts. We need more Ticket Agents to keep our customers from waiting in any more lines, and spending anymore time there than necessary. We need more gate agents to board our customers quickly and courteously. This is the type of bonuses that we the rank and file expect. So that as we look our customers in the eye each day, we can know that we are actually helping them and not herding them. That they are experiencing Air Travel, and not enduring it.[/P]
[P]How many front line workers would the Management Bonus have paid for? I belive enough of them to make a difference with our customers.[/P][/FONT]

 

[Art at ISP]

I just started a topic of fare rationalization....these ridiculously low fares cannot even sustain a carrier like WN-the greyhound of the skies.

This is in my opinion the best area to start the overhaul--raise the bottom a little but lower the roof alot. The averages will work out better.

 

[autofixer]

How about this for your consideration. U will keep the same amount of airplanes and reduce the amount of flying. Does this not drive UP the unit cost??? I do think that management is in over their head.

 

[LDKIAM]

test

 

[Hope777]

Guys, I wish I could say the cargo volume was there. Yes, on some days there is a lot of cargo but a B767/B757 or A321 can handle it normally. Today flight 1854 had more cargo then normal with 17500lbs of freight, but 126 heading back North only had 745lbs and a very light load. We can use our Assets better then we are.

 

[JonC]

The problem with cheap fares is that they are subsidized by the higher ones. The reason why an airline can offer $99 New England to Florida specials is because there are people paying $800 for the same trip. Now that everyone wants the $99 special, we have a big problem.

I think this extends to the low cost carriers as well. Have you ever tried to get a bargain fare on WN? It's just as hard as it is on US Airways. Very limited availability and rather restricted. Often they seem to be sold out months ahead.

The inventory control system of charging a hundred different fares for the same flight may have reached its limit. It worked just fine when people were willing to pay $800 - $1000 for the oft-cited GSO-DCA flight, now they aren't. However, rationalizing fares means raising the cellar fares as well as cutting the business ones - unfortunately, I don't think any airline wants to be the one to first take the plunge. But it needs to be done, as we're dealing with a pricing structure that doesn't work.

Honestly, if the United States wants to maintain any type of aviation infrastructure; some form of regulation may be needed. It's obvious that the airlines are looking to put everyone else out of business and the likely outcome of a hands-off approach will be an oligopoly where there are only two or three big players, who dominate the industry with an iron-fist. It may not be a monopoly in actuality, but in practice. The international market very quickly could go that way if a war breaks out and US and CO reduce international travel.

There is also the economic impact of having a few carriers with this many talented people out of work. The downward pressure on wages could be catastophic on the economy. Remember that every person who takes a pay cut or loses his job affects many, many more people.

It's time for some sense to this insanity. In Europe, there would have already been a general strike or the like by all the carriers to protest the current state of the industry.

I'm a generally conservative person politically, I don't like the government meddling around. However, when you have an industry that is vital to national security and economic well being, teetering on the edge of annihilation. Doing nothing isn't an option. Nor is letting most of the industry collapse and leave a few players standing who can dictate and control the market. I know that's what Delta would love to see and probably NWAC as well.

Bush is a great President. Thankfully, we didn't have Al Gore in office over the last year. He'd be out with the peaceniks prostesting our war against terrorism. However, Bush needs to realize the wreck that the airline business is.

Because of high operating costs, it is impossible to offer good service to many locations, at rock bottom prices. (Those costs would be primarily fixed, not labor, by the way.) True, WN offers good service cheaply. But, how many places do they fly to? They have no desire to service small cities in rural areas, they have no interest in international flying, nor do they want to service big cities with huge air capacity problems. If the government wants reliable, widely available air transportation, we are not headed down the right road.

 

[KCFlyer]

[BR]DLFlyer31- Southwest has never had loads much higher than the mid 70's even in the good times. Plus, Southwest didn't reduce any capacity...that's going to drive load factor numbers down as well. So load factor isn't indicative of the effect of them dropping full fares to $299. And when times improve, I doubt you'll see Southwest maintain the $299 fares...they'll go up as demand goes up. But they are going against the grain and trying to spur demand today.[BR][BR]If someone else wants to fly another airline who's operating at a loss...let them. OR...sell them on your airline. Why not appeal to the O&D customers in PHL, DCA, CLT and PIT by doing those airfare drops there? After all, if they are going to undercut your super-de-duper 21 day highly restricted leisure fares to a level that won't let them show a profit - then they are going to have to make it up with....super de duper high unrestricted business fares. If they match you there, they lose money (because they were selling advance seats at below cost) and you make money(because you weren't). Do you think a business in CLT is going to jump on a Delta flight to Orlando with a highly restricted advance purchase fare and connect in Atlanta when they could get an unrestricted nonstop flight for $150 more? That's money well spent to a business. [BR][BR]You said yourself that your travel folks strongly urge you to plan 14 days in advance. Do they ask you to stay over a Saturday? Because CLT-MCO with a Saturday stay is $218. Without a Saturday stay, it's $846. Walk up is $892. Is your company willing to send you, or will they ask that you stay over a Saturday...or will they look for a videoconference alternative? And suppose you find two days before you are scheduled to leave that your client would need you to stay over one more day? There's a hundred bucks to change your ticket and we're sorry, but that $218 fare isn't available, the next available fare bucket is $800. You're company just paid $718 to save money. Imagine if someone had the cajones to try what I suggest...14 days in advance, yep there's some seats available - $160. Heck, in that case you're company might just send two people. Plans change 2 days in advance? No problem...no penalty, just come up with another $190 per person and your on your way. $350 per person, versus $800 or more. No...you're not going to get record profits this way, but you will get profits because you will be doing something for your most valued customer - the business flyer. [BR][BR]I'm just playing with numbers...you could charge 6 to 10 cents more per mile for each fare bucket and still look like a cross between a low fare leader and the businessmans special. My point is, the only effort to increase revenues at most all the other airlines is targeting the mom and pop leisure traveller, when your bread and butter business traveller is still being gouged as if the economy is going full tilt. Seems like the business community stuck by you by paying those riduculously high airfares in the good times, perhaps you can stand by them by lowering them to a level that they can afford to fly their employees. It does a company absolutely no good at all to hear We are 'shrinking to profitablity' because the shrinkage is assuming that you can force the businesses to pay a higher fare on the remaining flights. if your bread and butter customer can't afford to fly you, you might as well cut the service entirely. [BR][BR]