Fares are going up yet the fare increases have not resulted in reduced demand, so why didnt they raise the fares sooner?
Everytime airfare is increased, the quantity demanded decreases. You may not have seen it on the flights you have flown, but AA and Eagle combined fly about 3,600 daily flights - that means you have seen the inside of very few of them. Same thing with me. My flights are full, but load factors were down late last year from the prior year, and so far in Jan and Feb, I think load factors have been slipping from 2010 Jan and Feb numbers. Higher fares mean less passengers. That's almost universally true: higher prices for anything means you'll sell less of it and, of course, lower prices mean you'll almost always sell more of it.
If anything higher fuel prices means less disposable income for potential passengers. So the fact that the increases have not curbed demand probably means that capacity is where it should be but the prices are still too low.If there were lotts of empty seats then maybe they should cut capacity. I dont see that though, I see full airplanes. I understand the theory, cut capacity create scarcity and then you can raise prices even more, well what if there already is scarcity? Will making it more scarce produce higher prices or will people alter their spending patterns?
AA adjusts fares on each flight and the allocation of inventory to each fare bucket perhaps thousand of times in the 331 days it is on sale before departure. If you see full planes, it's probably because AA has done everything it can do to maximize the revenue while selling as many seats as it can, even if it meant discounting some of the seats more than it would like.
Maybe go to the Cattskills instead of St Thomas because its so hard to get a seat and if you do the price is so high. To me it doesnt make sense, why not just see what the market will bear pricewise at current capacity then as load factors fall cut capacity to follow the fall in demand?
Is the idea to make flying something for only the rich again?
Basically, yes. Fuel costs for full-year 2011 are expected to be more than five times higher than in 1998-99. At those fuel prices, airfare must be substantially higher than it is today if the airline is to recover all of its costs (including the costs of airplanes - which is depreciation).
Either that or airline employees will have to take intolerable paycuts of 50% or more, which I'm certain you and everyone else would find unacceptable.
The poor and middle class won't be able to afford to fly to vacation destinations as often as they used to if fuel stays at $3.00/gal or goes higher. The rich will have no difficulty paying the fares. Our nationwide air travel network is far too large right now to produce profits with $3/gal fuel. Wanna make some guesses how much smaller the network has to get if fuel goes to $4/gal or $5/gal? Or how low wages will have to go to subsidize the current-sized network?
Our country had a good 30 year run with cheap airfare post-deregulation. Except for some temporary fuel spkies, fuel was affordable and fares constantly fell. WN grew from three 737s to about 550 737s, all while offering fair fares. Not always the cheapest, but usually less money than the legacy walkup fares, and often substantially cheaper than the legacies prior to WN's entry in the market. People like low fares, and WN's domestic victory is proof of that.
Whats really comical is that you come here saying that Delta is a success story, tell that to the people who owned Delta before they filed for bankruptcy.
Agreed. I rode some DAL all the way to $1/sh thinking it would avoid a Ch 11 filing. Delta has turned in one big profitable year out of the last 10 and WT is here crowing every day (after a several year absence from this forum while things didn't look so good for Delta) about how Delta is going to win because it is so much larger than AA and because its costs are so much lower than AA's costs. As to the second point, I agree with him, but it's the way he conveys the message and dances the victory dance that can be annoying.
If DL pays about $3/gal for fuel for full-year 2011, I doubt that DL will turn in a profit for 2011, but I may be mistaken.
As I've posted before, I suspect that AA will file a peition in Ch 11 within the next couple of years, most likely in response to a work stoppage (eventually some group will be released and will think AA can break open a secret piggy bank and restore the pre-2003 contracts, so they'll exercise self-help). Many will cheer that filing as it will give AA a chance to abrogate contracts and leapfrog beneath the labor costs of its legacy competitors (UA and DL), just as labor costs at UA and DL are finally catching up to AA's current numbers. If AA survives, it will likely be staffed with 14,000 different FAs (not the current ones) who are happy to fly at jetBlue wages, 8,000 different pilots who are happy with Eagle or jetBlue wages and the planes will be fixed by different people than today but who earn about the same wages you make right now. The planes will be overhauled, of course, in IND, Alabama, SAL, HKG, SIN and perhaps various other cities in China and around the world.
