Originally Posted by
Grumble
That hypothetical $10 hike in fares, would lead to a decrease in PRASM. It really is that volatile. In a world where passengers will pick one airline over another to save literally a dollar, a $10 hike can take your ticket sale from being #1 on (insert travel website here) to #12 on the list.
There are very smart people (ya laugh all you want, but wrap your head around the complexity and fluidity) that have written very sophisticated algorithms that are constantly adjusting the price of a ticket for a given flight, for a given day, for given demand, second by second. A very minor flaw in one of those formulas cost our company (so they say) several hundred million in revenue in 2013. We still made a profit, but it would have been more. When they looked back at why we were so far behind they found the algorithm was a few minutes behind the competition in adjusting fares.
True, I totally understand that fluidity. You can't have just one carrier raise prices. It would have to be across the board. Therein lies some of the difficulties that some of the more bloated carriers with regionals struggle with over other airlines like Southwest which has a very streamlined product.
A duplication of many employee roles spread out among regional airlines makes it effectively more expensive overall, and the pilots are taking the big hit for that in order for a regional model to make sense to the mainlines.
Southwest (just using them as an example, I realize there are others...) has one set of dispatchers, crew schedulers, HR department, Training department, management, etc.
Now for each airline you need duplicates of all those things, and therein lies extra costs and inefficiencies. These costs need to be made up somehow. Either the regionals have to charge more for their services, or all the employees working there get paid less than they are worth.