visceral

In the era of sort by the lowest price, you think consumers are willing to pay a premium for a jet on a 1.2 hour flight?

BeenThere

Yes, given the choice between a jet and a turboprop they will usually pay a small premium for the jet, but not much. Depends on schedule, frequent flyer loyalty, and a few other factors. Unfortunately we have conditioned the mareketplace to expect premium service at WalMart prices, and they raise all kinds of hell if we don't deliver. Maybe we should double the fares. If the load factor went down 50% we'd still have the same revenue, burn less fuel, and commuters could get to work & back!

champ42272

ASUPILOT/MOLSON 247,

I believe you are both right, except what would be wrong with slightly lower load factors in the majors (now over 80%) and taking more revenue? Answer: It is not about revenue, it is about market share, always has been, always will be.

Joel Payne hit it right on the head, the object of the game is to be the last one standing after consolidation. That day, or re-regulation of the airline business (if Congress ever really had to fly the airlines) is soon upon us.

Just my opinion, I could be wrong.


Champ 42272

Character is Destiny

smee

Wow! Airlines--seemingly as a rule--don't make money... they GENERATE it. I completely agree with ASUPILOT in that prices need to go up if costs go up. Ask anyone who works--or tries to work--a balance sheet for an airline what their target demographic is and I will guarantee you that the emphasis is on the Business traveler (for the Legacies anyway...). As for the leisure traveler, you get what you pay for. There are fewer and fewer people with any loyalty what-so-ever to any particular airline. It is simply a function of what was cheaper when they plugged some basic info into a search engine.

Air Travel is a luxury and used to be treated as such. I'm happy to pay the premium to fly American, Delta or United (now that there's no TWA, have to divide my loyalty). While Air Travel definitely isn't what it used to be, if you want to fly on a bus, that's now an option as well. Just don't complain about it when you're herded through multiple ques and have to pay extra for a sick sack...

scardini1

The idea of scaring away passengers is B.S.

Business 101: if you're selling out of your product (seen many empty airplanes lately?), you RAISE your prices! Sure you're going to lose some customers, but you'll probably have more profit. If that happens - YOU RAISE YOUR PRICES AGAIN, and keep doing it until you reach a point of diminishing return. NOW you know what the right price is for your product. Sure, some may go to the competition, but how many available seats do YOU see for them to go?

After an MBA presentation on yield vs. load factor, I asked the professor, "so Dr. Murphy, WHAT should the airlines do?" After he checked the veracity of my data and sources, he sat back and said, "WHAT A BUNCH OF IDIOTS! THEY NEED TO RAISE THEIR PRICES!" I rested my case.

You can raise prices 25%, lose 20% of your passengers and make more money. Why? Because, even though that's a break even point, you're burning less fuel to carry fewer folks. You also need fewer reservationists, baggage handlers, etc.

One economist even said, "The idea of over capacity has been relegated to urban legend."

Well so much for THAT soap-box.

Ciao

TheNid

"By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 12/04/07"...original post

Wow...this thread sure had some new life breathed into it...

texaspilot76

I think mergers are the way to go. Less airlines and airplanes will make for less supply, which will drive prices up. The higher prices will bring more revenue, and then maybe paychecks will go up. Example: I bet some of those stranded American passengers would have paid big time money for a way to get home. Less supply gets more money. I wish airlines would lesson the supply, maybe form a sort of cartel or alliance among each other like the oil companies. Then profits would be huge.


In addition, less airplanes in the air might help contribute to lower oil prices since there will less fuel consumed.

jsled

You mean like forming unions? Careful, you might become some liberal, France loving Democrat. "Cartel....Alliance"...those are not the words of a Republican Texan.