Sniper,

First have you heard a couple of phrases like "no free lunch" and "raise prices we are having a sell'? It appears that you are a SW pilot? You have had some great years the last decade or so and set the price floor at a lot of places because you can. Most carriers have been decimated since 9/11 and are looking to capture profits within reason.

The tax holiday idea is weak. I, as a consumer, can choose not to participate, Its that simple. If I want, I can find the cheapest product for the price too under free market theory as well. What the market bears directly reflects the current market conditions.

 

Hey, don't tear yourselves apart over whose company is pocketing all the money, because we all know that none of your companies are pocketing enough money, with the exception of management.... and their friends...I work for a "non-profit" and it's the same way. In Wisconsin, there's a minimum markup law of 6% on gasoline to "protect" local gas stations from being undercut by massive corporations. They don't need it at all. Why? The massive corporations figured out a long time ago that without formally "fixing" their prices, they could just set their local price of gas based on whatever the primary local service station wants to charge, assuring themselves a markup of 8-15%, depending on the city. So if the local guy in whatever town really wanted to screw people over, the big companies take the extra cash without creating a price war! So don't seem surprised if your employers do the same....feel happy! If my wife & I can fly cross-country round-trip cheaper, faster, & more conveniently than driving, then your company is definitely screwing no one. That's what TSA & Avis are for.

 

Seems to me that managers at AS are trying to increase their profits the same as managers at AA, DAL, USAir, LUV, and all the other airlines who jumped on the "raise fares to match tax cuts" bandwagon. Or at least, they're utilizing their knowledge of basic Microeconomics

Total Revenue = Price x Quantity Demanded

The Law of Demand states that as price decreases, consumers demand more of the good. By implication, as price increases, consumers demand less, and as price remains the same, so does demand.

Therefore, if AS charges a lower fare relative to their competitors, or at least makes it appear as if they are, then the demand for their services increase. Conversely, services provided by other airlines who raise their fares will decrease. In either case, revenue could increase or decrease dependent on the market power of the airline and the magnitude of the price change.

Alaska probably passed the savings onto consumers because their demand is slightly more elastic than most of the other Legacy carriers. Plus, the loyalty they will gain from consumers for this seemingly altruistic act will likely secure an increased revenue stream in the future.

 

No taxes and no FAA. Things might really be turning up for the airlines!

 

Sigh . . . I suppose if I went on an economics forum, I'd find the contributors debating the best way to fly aircraft.

My comments deal with brand marketing and consumer expectations (do consumers recognize that some low cost carriers raise prices while some trunk carriers don't, etc.), not economics.

If you want to have a economics dual, then lets set some ground rules: the main quad of your alma mater or mine, @ 5 paces, we both wheel around, throwing our economics textbooks @ each other. Repeat until one of us cries 'mercy' or 'Milton Friedman and John Keynes are liars'!

I've never heard the phrase 'raise prices we are having a sell' though. Learn something new every day, huh?

 

Sniper,

How about this. Either quad will be fine as long as it is during football season; preferably a SEC school. Once at the quad, take one pace an then drink a beer, another pace another beer. Once we've gone 5,7, whose cointing paces. We can then turn and yell about the invisible hand is making me do this and then drink more beer. Maybe toss in a walmart sucks and globalization is killing America and then go watch some football. Only way to enjoy college in my opinion.

 

From the July traffic numbers press release:

Alaska Air Group also reported a significant increase in its bookings near the end of the month after Congress failed to reauthorize funding for the Federal Aviation Administration and certain transportation taxes and fees expired on July 23. Alaska and Horizon immediately passed these savings on to customers. In the first seven days after the expiration, new bookings for the two airlines increased 26 percent compared with the week before the expiration.