$110 to fly CLT-MCO is a real bargain, considering that the *lowest* round-trip fare available in the market right now is $218.00 including taxes and fees. And that's a non-refundable ticket with all the restrictions and penalties which accompany one of those these days. Compare that to WN's *highest* round-trip fare for RDU-MCO: $240.00 including taxes and fees. Totally refundable, changeable, etc. The big disadvantage is they only have one daily flight so you can't really standby for an earlier or later flight.
Not surprisingly, US is happy to match WN's lowest discount fare from RDU to MCO (roughly $150 round-trip) and fly you through CLT on your way there and back. But no one ever said airline pricing was logical beyond trying to wring every last cent out of increasingly unwilling passengers.
The network carriers are all being squeezed at both ends -- revenue and unit cost. Passengers aren't willing to fly because of a weak economy, lingering fears of war, and inconvenience caused both by increased security and airline cutbacks. The network carriers have cut capacity by grounding planes and furloughing workers, but that has increased unit costs since the seniority system protects the jobs of the nost senior, highest-paid employees. The fact that airlines face significant fixed costs regardless of capacity has also increased unit costs. US has been hit especially hard because it has historically relied on the highest unit revenues in the industry to support the highest unit costs in the industry. Problem is, those high unit revenues were made on short-haul flights which have seen the most significant drop-off due to a weak economy and passengers opting to travel by road or rail.
The thing is, though, the airlines have finite liquidity. While cuts made to unprofitable routes may weaken the remaining profitable routes, cash burn must be brought down to a survivable level (or turned into positive cash flow). Revenue, short of a massive overhaul of the company's pricing structure (which, while I agree that this would be beneficial in the long term, is highly risky in the short term given the possible response by competitors), doesn't show any signs of coming back before 2Q03. The only place left to look is at costs.
Not surprisingly, US is happy to match WN's lowest discount fare from RDU to MCO (roughly $150 round-trip) and fly you through CLT on your way there and back. But no one ever said airline pricing was logical beyond trying to wring every last cent out of increasingly unwilling passengers.
The network carriers are all being squeezed at both ends -- revenue and unit cost. Passengers aren't willing to fly because of a weak economy, lingering fears of war, and inconvenience caused both by increased security and airline cutbacks. The network carriers have cut capacity by grounding planes and furloughing workers, but that has increased unit costs since the seniority system protects the jobs of the nost senior, highest-paid employees. The fact that airlines face significant fixed costs regardless of capacity has also increased unit costs. US has been hit especially hard because it has historically relied on the highest unit revenues in the industry to support the highest unit costs in the industry. Problem is, those high unit revenues were made on short-haul flights which have seen the most significant drop-off due to a weak economy and passengers opting to travel by road or rail.
The thing is, though, the airlines have finite liquidity. While cuts made to unprofitable routes may weaken the remaining profitable routes, cash burn must be brought down to a survivable level (or turned into positive cash flow). Revenue, short of a massive overhaul of the company's pricing structure (which, while I agree that this would be beneficial in the long term, is highly risky in the short term given the possible response by competitors), doesn't show any signs of coming back before 2Q03. The only place left to look is at costs.
