Not true! They don't sell all their seats at the same price. There are very few of the super cheap seats and as the price goes up the seat count goes up. There are plenty of restrictions on the low fares. One can see this by looking at any city pairs they fly to and what fares are sold and what is avialable. Read the fine print when booking and you can see the restrictions. The only thing that isn't restricted on WN is the number of bags of peanuts you get.GadgetFreak said:
What Are Customers Willing To Pay?
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Ahhhh......"A sucker is born every minute" as PT Barnum would say.
The public has been inculcated with the notion that WN is the cheapest deal in town. I don't even think that the traveling public as a majority bothers to check into the fares offered prior to their choice to fly WN.
Just look at the impressions created by the media of any air carrier for that matter.....incidentally, WN spends TONS of money on advertising. And who does the advertising??? The media. :blink:
The public has been inculcated with the notion that WN is the cheapest deal in town. I don't even think that the traveling public as a majority bothers to check into the fares offered prior to their choice to fly WN.
Just look at the impressions created by the media of any air carrier for that matter.....incidentally, WN spends TONS of money on advertising. And who does the advertising??? The media. :blink:
I think part of the Legacy carrier problems are non-airline competitors.
Fractional ownership. The reality is that fractional ownership (i.e NetJets) is the penthouse at the Grand Hyatt. (A personal aircraft would be owning a summer home in France...) The issue here is that the entry price point for NetJets has come down in recent years. Also, the "hassle" factor of the commercial airlines has increased the perceived cost of airline travel to top end travellers. Therefore, fractional ownership doesn't have to be for the extremely elite anymore, just the fairly elite. Furthermore, the larger the market, the more intense the effect, IMO. I.e. NYC will foster many more NetJet users than RDU, for example. This is true because, not only is their a concentration of wealth and power, but the airport/airline system is more difficult to use, and therefore more costly to the elite traveller. So the cost of airline travel to the extremely time sensitive traveler has increased, even though the fares are only at "traditional" levels.
Telecommunications. Video conferencing, et al, reduces the need to travel. While face-to-face communications are still important in business, video or audio conference calling can substitute for some meetings. Even Dave Siegel, CEO of an AIRLINE, has used this when the "cost" of travelling was not as great as the perceived benefit of "being there". These technological advances decrease demand for last-minute high fare travel.
These two items, I believe, are reducing the number of high fare passengers in the airline market. Since the airline pricing model is based on high fare passengers subsidizing low fare passengers, this is an issue which needs to be addressed.
Fractional ownership. The reality is that fractional ownership (i.e NetJets) is the penthouse at the Grand Hyatt. (A personal aircraft would be owning a summer home in France...) The issue here is that the entry price point for NetJets has come down in recent years. Also, the "hassle" factor of the commercial airlines has increased the perceived cost of airline travel to top end travellers. Therefore, fractional ownership doesn't have to be for the extremely elite anymore, just the fairly elite. Furthermore, the larger the market, the more intense the effect, IMO. I.e. NYC will foster many more NetJet users than RDU, for example. This is true because, not only is their a concentration of wealth and power, but the airport/airline system is more difficult to use, and therefore more costly to the elite traveller. So the cost of airline travel to the extremely time sensitive traveler has increased, even though the fares are only at "traditional" levels.
Telecommunications. Video conferencing, et al, reduces the need to travel. While face-to-face communications are still important in business, video or audio conference calling can substitute for some meetings. Even Dave Siegel, CEO of an AIRLINE, has used this when the "cost" of travelling was not as great as the perceived benefit of "being there". These technological advances decrease demand for last-minute high fare travel.
These two items, I believe, are reducing the number of high fare passengers in the airline market. Since the airline pricing model is based on high fare passengers subsidizing low fare passengers, this is an issue which needs to be addressed.
BoeingBoy
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I think for the most part it is perception rather than loyalty. Folks just don't think of US, AMR, DAL, etc having low fares. Of course, they have reason - how often do the network carriers offer WN-like fares until they have to compete with them.
And before WN_EL_Paso or somebody jumps on me, every airline has loyal customers, even US. I'm just not sure they make up the majority.
Jim
And before WN_EL_Paso or somebody jumps on me, every airline has loyal customers, even US. I'm just not sure they make up the majority.
Jim
Jim, you're right. Loyalty isn't the word I should have used there. What I really meant to say is that the brand association is so powerful...
Which brings up an interesting question. I wonder how "sticky" WN's customers really are? If, say, B6 came to directly compete on a long-running WN route, who would win?
Which brings up an interesting question. I wonder how "sticky" WN's customers really are? If, say, B6 came to directly compete on a long-running WN route, who would win?
GadgetFreak
Advanced
When I was saying that Southwest sold the whole plane at those fares I wasnt talking about the discount ones, I was talking about the full fare. Even those are a deal compared to US. I want to note however, that US has cut their prices dramatically recently (since last fall at least not sure when it happened). Even after the price cut there is still a difference. For people to say this is just advertising is really a bit much. I looked as an example to see what it would cost to fly from NY to LA tomorrow and back the next day. It is actually about the same, but the Southwest fare is refundable and the US fare isnt. By the way, on that same route, JetBlue is half of what either US or Southwest is charging. JetBlue wouldnt be into LAX but it would be out of JFK, not ISP or LGA and it would be the only non-stop in the group.
BoeingBoy
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"B6 came to directly compete on a long-running WN route, who would win?"
All else being equal, I'd give it a "two thumbs up" - a tossup. B6 has a somewhat superior product due to the IFE, but if WN had been in the market a long time, they would have developed some brand loyalty with the ff program if for no other reason.
B6, in theory, has the CASM advantage but that is mostly segment length dependent so on the same route the costs should be about the same. (It's pretty amazing how much CASM comes down with longer segment length)
Jim
All else being equal, I'd give it a "two thumbs up" - a tossup. B6 has a somewhat superior product due to the IFE, but if WN had been in the market a long time, they would have developed some brand loyalty with the ff program if for no other reason.
B6, in theory, has the CASM advantage but that is mostly segment length dependent so on the same route the costs should be about the same. (It's pretty amazing how much CASM comes down with longer segment length)
Jim
