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Old 04-05-2006, 11:15 AM   #1  
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Default Any airlines gone this direction?

I remember hearing years ago that United Airlines decided to remove one olive from the salads they would serve on their flights. This saved them $30,000 per year.

Have any airlines looked into

1) Raise all fares by $10-$20. That is not a lot from a consumers stant point. I don't think too many would have a problem paying $210, instead of $200 for a ticket, for example. Of course, I would assume all of the airlines would have to do this to really make it work, but why not? If an airline has 1,500 flights per day, with an average of 100 passengers per flight, $10 extra per ticket could make $1, 500,000 per day, and $547, 500, 000 per year.

2) Stop serving drinks, and snacks on all flights that are less than 1.5 hours. I find it ridiculous sometimes when on a flight that is 45 mins and they are serving drinks. By the time they serve them all, we are landing. I would imagine it would save a lot of money to do away with that service on short flights. Leave the drinks and snakcs for longer flights, over 2 hours, for example. Afterall, I don't buy an airline ticket to get served drinks, I buy an airline ticket to get me from point A to point B.

3) Charge some kind of fee, like $1 or $2 per bag you check. That is not a lot of money, again, from the consumers stand point. But considering the large quantity of checked bags, that could be great revenue. If an airline has 1,500 flights per day, for example, and an average of 100 people on each flight, and 70 of those people check at least one bag, at $1 per bag, that could be $105,000 per day, and $38, 325, 000 per year for just charging $1 per checked bag.

Adding #1 and #3 together equates to about $585, 825, 000 per year, plus what ever the savings of #2 would be. Maybe I am missing something, or am calculating something wrong, but overall a passenger checking at least one bag would pay $11 extra ($10 fare increase, and $1 for the bag), and it makes the airline over half a billion per year.
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Old 04-05-2006, 11:27 AM   #2  
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Quote:
Originally Posted by ChrisH
I remember hearing years ago that United Airlines decided to remove one olive from the salads they would serve on their flights. This saved them $30,000 per year.

Have any airlines looked into

Stop serving drinks, and snacks on all flights

Charge some kind of fee, like $1 or $2 per bag you check.
It was American with the olive in the salad trick.

American LCCs such as Song, America West, and other carriers chage for food and booze. Soft and drinks are still served free of charge.

On LCCs in Europe if passengers want food soft drinks or booze... they pay for it. Very expensive too may I add.

On these European LCCs, if you want to check your bag, it will cost you by the kilo too.
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Old 04-05-2006, 12:51 PM   #3  
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I can understand offering complimentary snacks, and beverage for long flights. For short flights, they should either be done away with altogether, or charge for them.

Charging $1 for each checked bag. That could potentially make an airline a lot of money. I think I've heard American has around 2,000 flights per day, with 200,000 passengers. That is around 100 passengers per flight, average. I don't know what the percentage is of passengers who check baggage, but if half of those 100 on each of the 2,000 flights checked one bag, at $1 per bag, that makes American $36,500,000 per year. Of course those numbers would vary per the size of the airline, and per the number of passengers that check bags. I would assume more than 50% check bags, and that many check more than one. Thus, that 50% of passengers is a conservative number.

The $10 fare increase seems reasonable too. Not many people would fret over $10. Taking American as an example. 2,000 flights with an average of 100 passengers per flight paying $10 extra per ticket, makes American about $730,000,000 per year.

Seems rather simple. I think if all of the airlines in the United States got together and did this, it would make them a lot of money, and help solve some of the financial problems they are having. If you are a passenger checking a bag, it only costs you $11, but makes an airline of American Airline's size nearly $1 Billion per year.

Also, most or all of the airlines allow you to purchase tickets online. I know Continental allows you to even check in and print your boarding pass online. I'm not sure if others allow this or not. What about all airlines doing this, and encouraging passengers to print their own boarding passes online by charging a $1 fee for those who get their's printed by the airline. This either makes the airline money from those who want their paper ticket from the airline, and/or it encourages people to print their boarding passes at home, thus saving the airline money on paper, ink, etc.

Just seems like their are some relatively simple things that are inexpensive to the passengers, that can make an airline a lot of money.
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Old 04-05-2006, 01:09 PM   #4  
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Originally Posted by ChrisH

Just seems like their are some relatively simple things that are inexpensive to the passengers, that can make an airline a lot of money.
But it makes more sense to not raise fairs, complain to the unions and judges that you can't make money, get concessions from employees and lock them into new, low paying, long term contracts, and then raise fares.

Once they beat the hell out of labor, then you will see the fares increase.
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Old 04-05-2006, 01:20 PM   #5  
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I wrote a pretty long and good response to this, and unforunately my session timed out and I could not recover the response. Anyway, this response will be brief but I will try and make my point.

1. Airlines have tried to raise fares by $5 to $10 MANY times in the past 4 years. The problem is all the other major airlines have to match the increases, otherwise your product is more expensive than everyone elses.
Think about it. If you raise prices by $5 on a $300 ticket, and another airline does not, and JUST ONE passenger flys on the cheaper airline, you lost your $5 gain from 60 people! It just doesn't work unless ALL airlines raise their prices. Usually one airline raises prices, and the other carriers either follow their lead, or they do not raise fares. All it takes is ONE carrier to not raise their fares, and then everyone else is forced to rescind their increases. This is the smartest way, but you need full compliance from other carriers to raise fares.
Southwest would almost never follow suit. Fortunately, their fuel hedges are running out, and they actually accepted a $10 increase earlier this year. Using this strategy, airfares are up 10% from Feb 05 to Feb 06. However they are still 16% below their pre-9/11 levels. As Southwest's fuel hedges run out, I think you will see a return to pre-9/11 airfare levels.

2. I completely disagree with your idea on soda. Soda is cheap. Let me say that again. SODA IS CHEAP!!! Fountain soda costs like $.02 cents for an 8oz glass. You would not save that much money by not serving sodas on short flights. Neither would you make that much. American Eagle tried charging $1 for sodas, and they immediately stopped when they heard all the customer outrage. This will anger more customers, hardly save you anything, and generate almost no revenue.

3. I also disagree about the bags for a similar reason. You will anger too many people and not make that much additional revenue. Currently, airlines charge money for extra bags, and they charge for bags that are extremely heavy. This makes sense as this will increase their fuel costs. But I see no reason to charge for bags.


Adding small fees and milking EVERY customer for a few extra bucks will not solve the problems. We need to get creative. Remember when I told you how cheap fountain sodas are. Canned sodas are probably 3 times more expensive. What if beverage carts had a fountain soda machine on them. This would cut your soda bill in 1/3. Lets say an airlines soda bill is $15 million a year. They could cut that to $5 million if they use dirt cheap fountain soda. What does it matter? Airlines just open the cans and pour them in plastic cups anyways. Ideas like this is what is going to save an airline money.

Furthermore, I do not think any airline will be successful with charging new fees for old products (soda, checking bags, etc...). Where I think the key lies is new services. Wireless internet on airplanes? Things like that can increase revenue.
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Old 04-05-2006, 01:39 PM   #6  
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Here's a perfect example from yesterday and today.

United raises First class/Business class, and full price coach fares by up to $50. (Fares paid by last minute travelers, almost always business travelers who get reembersed from their companies). Delta, Northwest, and Continental all quickly followed suit, but American decided they did not want to possibly lose some business travelers to low cost carriers.
(business travelers are key to legacy carriers, because most of them will pay a few extra bucks for things like meals, pillows and blankets, and extra leg room which you can't get on low cost carriers.)

EVERY airline then was forced to rescind their fare increases. But then again today, Delta tried to increase the same fares by up to $50, and Northwest followed suit. But I bet it won't last unless United and American match them.

It is a tough business because you have so little control over the price of your product. People complain about airline execs, but they do a job that I could never do!
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Old 04-05-2006, 01:53 PM   #7  
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. People complain about airline execs, but they do a job that I could never do!
What........... you don't think you could screw your employees and run an Airline into the ground?
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Old 04-05-2006, 03:59 PM   #8  
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I
2. I completely disagree with your idea on soda. Soda is cheap. Let me say that again. SODA IS CHEAP!!! Fountain soda costs like $.02 cents for an 8oz glass. You would not save that much money by not serving sodas on short flights. Neither would you make that much. American Eagle tried charging $1 for sodas, and they immediately stopped when they heard all the customer outrage. This will anger more customers, hardly save you anything, and generate almost no revenue.
I kinda diagree with that. It is not necessarily the drink price but the fixed price for catering to hookup to the airplane. If they only had to hook up once a day thin of all the extra money thata could be saved that did not go to catering.

I suggested to our D.O. that we charge a $1 surcharge as a "Crew Fee" and with 173 seats that would have almost doubled the entire crew's salary. And of course all i got was a nasty look.

At AA I met a guy that was in the "Idea Dept". I wonder home many people are in that dept and how much many they actually waste.
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Old 04-05-2006, 04:22 PM   #9  
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Originally Posted by ryane946
I wrote a pretty long and good response to this, and unforunately my session timed out and I could not recover the response. Anyway, this response will be brief but I will try and make my point.

1. Airlines have tried to raise fares by $5 to $10 MANY times in the past 4 years. The problem is all the other major airlines have to match the increases, otherwise your product is more expensive than everyone elses.
Think about it. If you raise prices by $5 on a $300 ticket, and another airline does not, and JUST ONE passenger flys on the cheaper airline, you lost your $5 gain from 60 people! It just doesn't work unless ALL airlines raise their prices. Usually one airline raises prices, and the other carriers either follow their lead, or they do not raise fares. All it takes is ONE carrier to not raise their fares, and then everyone else is forced to rescind their increases. This is the smartest way, but you need full compliance from other carriers to raise fares.
Southwest would almost never follow suit. Fortunately, their fuel hedges are running out, and they actually accepted a $10 increase earlier this year. Using this strategy, airfares are up 10% from Feb 05 to Feb 06. However they are still 16% below their pre-9/11 levels. As Southwest's fuel hedges run out, I think you will see a return to pre-9/11 airfare levels.

2. I completely disagree with your idea on soda. Soda is cheap. Let me say that again. SODA IS CHEAP!!! Fountain soda costs like $.02 cents for an 8oz glass. You would not save that much money by not serving sodas on short flights. Neither would you make that much. American Eagle tried charging $1 for sodas, and they immediately stopped when they heard all the customer outrage. This will anger more customers, hardly save you anything, and generate almost no revenue.

3. I also disagree about the bags for a similar reason. You will anger too many people and not make that much additional revenue. Currently, airlines charge money for extra bags, and they charge for bags that are extremely heavy. This makes sense as this will increase their fuel costs. But I see no reason to charge for bags.


Adding small fees and milking EVERY customer for a few extra bucks will not solve the problems. We need to get creative. Remember when I told you how cheap fountain sodas are. Canned sodas are probably 3 times more expensive. What if beverage carts had a fountain soda machine on them. This would cut your soda bill in 1/3. Lets say an airlines soda bill is $15 million a year. They could cut that to $5 million if they use dirt cheap fountain soda. What does it matter? Airlines just open the cans and pour them in plastic cups anyways. Ideas like this is what is going to save an airline money.

Furthermore, I do not think any airline will be successful with charging new fees for old products (soda, checking bags, etc...). Where I think the key lies is new services. Wireless internet on airplanes? Things like that can increase revenue.
In my first post I did state that for this to work properly, all of the airlines would have to do this, not just one. If just one, or just a few did it, it wouldn't work. Passengers would probably not notice the $10 increase if it were done by all airlines, but if they begin noticing several, or even one that is $10 cheaper, that airline will get the business, and not the ones that increased their fare.

Soda is cheap, but .02 cents can add up. Olives are cheap, yet American Airlines saved $30,000 per year by keeping just one off of each salad. If you can cut costs by not serving sodas on a 45 minute flight, rather than cut pay, I go for the cut in soda.

I do think it may cause somewhat of a hassle to charge $1 for checked baggage, at first. At first there will be passengers that will be angry about it, and passengers that will claim not to have $1 on them, or who knows what else. But if all of the airlines did this, and began making it part of their policy, in time passengers would catch on. An easier way to do this is to ask when passengers are purchasing tickets online, or by phone if they will be checking baggage. If they answer yes, they get an additional $1 charge to their fare. If they say no, yet show up to the airport with baggage needing to be checked, they will be charged the $1 at the airport. Like SouthWest who charges the $1 fee for showing up and making changes to your reservation. Sure it is normally a free service, but $1 isn't exactly much for a passenger to pay, to potentially make the airline millions per year.
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Old 04-05-2006, 05:18 PM   #10  
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Like SouthWest who charges the $1 fee for showing up and making changes to your reservation. Sure it is normally a free service, but $1 isn't exactly much for a passenger to pay.
You just came up with a perfect point for me. One dollar for changing your reservation? I have seen people so ****ed off about this that they swear they will never fly Southwest again. You get people so angry about the fact they need to pull a dollar out of their wallet. IT IS JUST NOT WORTH IT!
This is exactly my point with respect to sodas on flights and checking bag fees.
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