Originally Posted by
RP4242
It really does not. The take rates for ancillaries along with the average fare when you look at systemwide O&Ds varies greatly based on a number of factors with distance being in the #1 spot when you average out market anomalies. Secondly, We've been doing distance based pricing on fees for a while now on a limited basis. BFS anyone?
Besides the BFS we are not doing anything. There is 4 BFS on the new planes. Hardly meaningful. None of the other charges were adjusted as of now. They are entertaining the idea.
Originally Posted by
RP4242
For your theory to work the average fare would have to multiply evenly based on distance and take rates for ancillaries would have to also do the same. Not the real world.
No it does not have to multiply evenly and I realize it does not. You are balancing:
- fuel, time on the airplane, cycles, etc. many variables
vs
- fixed fee system (except BFS) + base fare + fuel charge (when there is one)
This is a complex formula. But it is to be noted that on one side of the equation the fixed fees take 40% of the total. That is almost 1/2 the equation on that side! Very significant. There is a golden number for segment length. I don't know what it is. But we were told in initial that long legs are not where the business is at. And that was when we had only a handful of fees. I.e. the much publicized carry on fee came years later.
At Ryan Air average segment length is 1.2 hours, at Easy it is 1.6 or so. That could be in part because Europe is not nearly the size of the USA.
I can't say I know. But I strongly feel shorter legs are the way to go. Unfortunately.
Originally Posted by
RP4242
If its not efficient what are you proposing? That we run a high frequency/low # of city (comparative to fleet size) network like Southwest has been historically...trying to capture market share? That is a losing proposition for any ULCC whether we are taking about NK, FR or DY etc. That is what is needed to achieve those sorts of efficiency you are alluding to.
I am not proposing anything. The company stated that we are going to increase frequencies in 2015. Connecting the dots. Not my idea.
Adding
some frequency will not turn us into a network carrier. It is not like we will fly 6 flights a day to everywhere, or else we don't serve that destination at all. Again, there is a golden middle. Less than one leg a day per destination is definitely not, otherwise we would be announcing more destinations for 2015. But we are not. They are increasing frequency instead.
Originally Posted by
RP4242
SWA has almost 0 operational flexibility when it comes to network design because it is constrained via just about every department you can think of whether it is flight ops, ground ops, network planning or even revenue management and marketing. For the last 4-5 years they have been trying to figure out how to achieve levels remotely similar to ours so they can squeeze out optimum market times and aircraft flows system-wide and not try to make up various inefficiencies with power-margin markets like Intra-TX/CA. For the record, SWA does not really want to just be like us when it comes to this flexibility, they want to be like anyone else but them...and they are taking baby steps to achieve that level.
They have issues because they had this explosive growth that was partially fueled by the hedges. They gained significant market share during those times which was awesome for them. Now they will have to trim and/or shift things around. After they fine tune it, they will find their spot. They are certainly not short of talents over there.