Airlines and Increasing Fares

[ComplexHiAv8r]

From another Thread!

Yeah, I think it was 2 weeks ago, I think a couple of airlines tried to raise their fares by $5 and it was all over the news. They ended up not doing it.

What's the big deal, $5!! I'm not rich by any means but I don't think I would not buy a ticket because it was $5 more. I just bought a ticket for $372 to go from DCA to New Brunswick, CA. I would still have bought the ticket if it were $377. :whatever:

Sure it's just $5, but if the other airlines refuse to match the raise (which is what happened) then when people are looking on orbitz or travelocity and see a price that is $5 cheaper they are more likely to book it. Johns right, if ticket prices were doubled people would still fly, but everybody doesn't play along then the cheapest one (even by $5) will sell more seats. The question of course is are they actualy making more money on the airplane going out full with low fares or half empty with high fares? They pay people good money to figure that stuff out.

We use to have AirTran doing CAK-LAS non-stop. Everyone dropped pricing as to fly with them you had to connect somewhere. Costing finally got the better of AirTran and they stopped the service. Below is the costing graph (link, I cant ge the picture), anyone what to guess when this happened?


http://www.farecompare.com/search/year?departure=CAK&destination=LAS





Once they stopped flying, rates went up. They didnt have to compete with the non-stop flight. Now, could AirTran kept the flight operational at the new rates?

 

[CapnJim]

Once they stopped flying, rates went up. They didnt have to compete with the non-stop flight. Now, could AirTran kept the flight operational at the new rates?

Of course! But only if they were the only carrier on that route. If there were competition, they would have a price war, looser go home, then rates abck up to pay for the price war. This is SOP from the airline playbook, and old as the hills

 

[I_Money]

I am flying from Boston to Denver for the weekend - cost of my ticket $150 - I do not think an airline has made money on me in many years.

 

[kellwolf]

Once they stopped flying, rates went up. They didnt have to compete with the non-stop flight. Now, could AirTran kept the flight operational at the new rates?

Now here's the sad thing. I'm sure passengers would pay MORE for a non-stop flight than one with connections. What gets me is that AirTran was offering the non-stop service at a price that the connectors had to LOWER theirs to meet. As you said, pricing finally got the best of them, which makes me think that AirTran was trying to get market share and taking a loss to do it. When the other guys lowered their fares, it shorted out their plan. Unfortunately, it also shorted out the profits from the guys that lowered their costs. AirTran might be out of that market route, but the damage was done. Now we've got people saying "Man, that much? I remember when it was a LOT cheaper...."

 

[derg]

"Predatory Pricing".

If Air Tran does it, it's a revolution in savings for the traveling public.

If "Big Southern-based Airline" does it, it's 'trying to cut the throat of the little guy and McCain's gotta do something to stop it, NOW'

 

[flyover]

Now here's the sad thing. I'm sure passengers would pay MORE for a non-stop flight than one with connections. What gets me is that AirTran was offering the non-stop service at a price that the connectors had to LOWER theirs to meet. ..................... Unfortunately, it also shorted out the profits from the guys that lowered their costs.

Why do so many of you feel that if a hub airline lowers it's price to attract customers away from a non-stop that it's automatically a loser for them? They would not be offering the fare if they didn't have seats on the schedule to fill. An empty seat costs almost as much to move as a filled one. This type of pricing was a big part of the profits of the 90s. During the highest profit years there were many many seats sold below their literal cost of production. If the airlines get back to consistent profitability they will do it by selling some seats below the actual cost of flying that seat.

The only thing that can alleviate that type of price competition is having fewer hubs so that every friggin' airine doesn't serve every friggin' city-pair.

 

[CFIse]

I am flying from Boston to Denver for the weekend - cost of my ticket $150 - I do not think an airline has made money on me in many years.

Which is fine - but don't think they don't know that. So when the flight cancels, and nobody tells you, or the gate agent is rude, or you end up standing in a 100 person line at "customer service" waiting for one of the 2 "customer service reps." to tell you they'll list you standby on tomorrows flight but it'll probably be 3 or 4 days before you can get to Denver...

DON'T COMPLAIN - be happy, because you're getting all the service you paid for.

There is a VERY small percentage of the flying public most airlines care a damn about, and it knows who they are. So when THOSE people's plans get screwed up THEY get taken care of. The other 95%, the airline could care less, they put as much money into taking care of them as they put into their ticket.

The airlines are providing the service the public wants - and that's low cost, everything else be damned.

 

[CFIse]

Now here's the sad thing. I'm sure passengers would pay MORE for a non-stop flight than one with connections.

I disagree - a few people would rather have point to point service, but for most people it's price alone. They'll take a ticket for a trip that's 3 hours longer and changes planes twice to save $5. Otherwise SouthWest wouldn't be successful.

Right now it's ALL about price (and for the forseeable future). No area of service has any factor at all in the bulk of people's decisions on flying.

 

[kellwolf]

Right now it's ALL about price (and for the forseeable future). No area of service has any factor at all in the bulk of people's decisions on flying.

I'm betting there are some passengers that would disagree with you there. Food on the flight isn't a factor? Remember back when airlines actually served a meal (or in XJT's case still does)? That was only about a year or two ago. SWA had plenty of people that didn't fly them b/c they only got a "sack pack." What about inflight entertainment? I doubt jetBlue would have been near as successful without the "wow" factor of DirecTV at each seat. AirTran is experimenting with XM Radio. Even SWA has discussed getting into the inflight entertainment. If money was the only factor, why wouldn't they just lower fares some more with that extra cash on hand? Frequency of departures? I know a lot of people that won't fly at 6 AM, even if that is the cheapest flight available. I don't think it's 'ALL about price.' I think price has a lot to do with it, but it's not the only thing. There was an article in the local paper not too long ago (can't find it right now) about so-called "marathon passengers." These passengers would rather pay a higher fare for a non-stop flight instead of risking missing a connection or dealing with running across terminals in order to make their second (or in some cases) third connection.

Even if you look at SWA's schedule, they're adding more non-stops. BWI-LAX was a big one when I was there, and people were screaming for an MCO-LAS non-stop so they wouldn't have to change planes in HOU or MSY. Passengers were DRIVING to TPA b/c they had a non-stop from TPA-LAS.

 

[tonyw]

McCain's gotta do something to stop it, NOW'

But, but, but, I thought McCain was a conservative and all about the free market!

And Kellwolf, you've got it right. I'm one who doesn't mind paying more for a non-stop flight. I don't mind paying quite a bit more to spend more time on vacation instead of transferring planes and sitting in the airport. I'm sorry, but if the idea is to go somewhere to enjoy myself, the shorter the journey, the better. And if I'm travelling for business, I'm not paying so I don't care.

 

[jon1424]

I'll agree. I just got the sets of new fares for destinations I'm in charge of as far as the vacations dept. goes, and they're a lot higher than I expected. I did get some good base rates for Vegas though, especially from major cities including PHX.

 

[I_Money]

Well my $250.00 flight to London was very good, infact I can not think of a bad flight in the past 5 years.

 

[meritflyer]

But, but, but, I thought McCain was a conservatie

Closet liberal

 

[Mahesh]

BobDDuck is right, there are a lot of operations researchers who work for airlines who figure out the ticket pricing versus volume stuff. I work with a lot of them too. But still, I find it hard to comprehend that someone will go to Orbitz, Travelocity and whatever other site is out there to find the fare that is $5 cheaper, and then go to Starbucks and have no problem getting a cup of coffee for $4.

I have an idea, why not ALL airlines raise their fare by $5. That way, people have no choice but to pay the extra money. But I guess there will be some airline that who won't do it, so then the rest can't do it either for fear of losing customers.

Preadatory pricing is evil. All my friends were so happy that they could get dirt cheap fares on Independence Air out of IAD to NY and elsewhere. Now they are sad that the airline disappeared. They miss the countless blue-tailed RJs flying over Northern Virginia (I got them all into identifying planes in the sky). I think they all finally realize the consequences of ridiculously cheap prices.

 

[fo4ever]

But, but, but, I thought McCain was a conservative and all about the free market!

Yes Tony, he is! <sarcasm thingy>

The problem with Washington is they want competition to lower fares, but they don't want anyone to WIN.

Imagine if every football game ended in a tie!

The real goal is a low fare, public transportaion system by air.

Anyone remember the CAB? Back then you could only compete with SERVICE.

 

[derg]

We don't want service, FO! We want low fares, and then to go to the internet and bitch about how the airline doesn't have Fresca... And for the gub'mint to fix it because it's an election year by golly!