AA increases fares

[Hopeful]

Good move...The price of Everything Everywhere is going up, why not airfares.


http://www.reuters.com/article/idCNN2121716520100122?rpc=44

 

[MERV]

Good move...The price of Everything Everywhere is going up, why not airfares.


http://www.reuters.com/article/idCNN2121716520100122?rpc=44

Its hard when you have competition. AA has competition in majority of the cities they fly in and out of. AA has about 26 different fares compare to WN that has 13 different fares. AA has prices in some cities that are very high to offset any loses from any other cities its mainly the smaller cities that suffer. Its crazy what they charge for flying in some areas. I use to tell my friends that its cheaper to purchase a tickets than flying standby NYCMIA don't make any sense when airlines charges between 79-150 per leg that doesn't include LCCs. The only way they'll increase fare is when their competitors increase and if it sticks. That why they've Fees and fuel sub-charges and many other charges on their tickets. Next time you purchase a ticket look at all the fees. This is meant to offset some of their cost.

 

[Bob Owens]

Its hard when you have competition. AA has competition in majority of the cities they fly in and out of. AA has about 26 different fares compare to WN that has 13 different fares. AA has prices in some cities that are very high to offset any loses from any other cities its mainly the smaller cities that suffer. Its crazy what they charge for flying in some areas. I use to tell my friends that its cheaper to purchase a tickets than flying standby NYCMIA don't make any sense when airlines charges between 79-150 per leg that doesn't include LCCs. The only way they'll increase fare is when their competitors increase and if it sticks. That why they've Fees and fuel sub-charges and many other charges on their tickets. Next time you purchase a ticket look at all the fees. This is meant to offset some of their cost.

Its also a way of hiding the real price of the tickets and its one of the factors that distorts the CPI. The CPI understates real inflation because all the Fees are not included in the price. It seems everywhere you turn there's fees and surcharges, in reality its just a sneaky price increase.

 

[eolesen]

Partially correct, Bob. Some of the add-on charges aren't captured, but some are:

The CPI uses the SABRE reservation system to follow prices of airline fares. This is the same system used by much of the travel industry for accessing flight information and issuing tickets and is an excellent source for up-to-the-minute price information on virtually all regularly scheduled airline flights. Using this system, prices are obtained for the sample of quotes. For those areas that the CPI prices monthly, the CPI obtains prices every month. The remaining cities are priced bi-monthly, with approximately half in even months and half in odd months. Prices include all applicable taxes, domestic and international. Airport, Security, and Fuel Surcharges are also included. Care is taken to spread pricing evenly throughout the month to give appropriate representation to price trends occurring within the month. Each price reflects the purchase date of the ticket rather than the flight date, which, in the case of discount service, is typically a minimum of 1 to 4 weeks after the purchase date.

So fuel surcharges and anything else collected on the ticket purchase are captured.

What's not captured are any fees paid at the airport or on the aircraft.

Merv, one reason you've got more fare types for AA is international and premium cabins. That's going to add to the list.

 

[MERV]

Partially correct, Bob. Some of the add-on charges aren't captured, but some are:



So fuel surcharges and anything else collected on the ticket purchase are captured.

What's not captured are any fees paid at the airport or on the aircraft.

Merv, one reason you've got more fare types for AA is international and premium cabins. That's going to add to the list.

I read it in a article a few years back comparing WN fare structure to rest of airlines. They're but they fall under a different revenue category. Congress is trying to change that to see what they're really earning from those fees. Two congressmen from NJ. I can't understand why congress wants to get involve in this. What airlines can't make a profit or create new revenue to cover their operating cost.

 

[eolesen]

If you look in the current health care bill (that's hopefully seen its last vote), Congress is targeting anything they can possibly tax to cover the bill for all the stuff they've mandated, but realize they can't pay for out of current tax revenues... They're doing the same thing in other corners of the economy, especially things that are easy targets... Certainly ATA will speak up on this, but this also won't go unnoticed by the corporate business travel associations...

Currently, the government can collect 7.5% on domestic airfares, and flat fees on international tickets. I've seen international tickets which were taxed at 30% when you add in the international taxes, surcharges.

Continental's CEO used to quip that on a dollar basis per user, air travel was taxed higher at the Federal level than cigarettes and alcohol... (both wind up taxed higher on a percentage basis when you factor in State and local taxes, but the overall dollar value per purchase winds up higher for air travel)

Some states also charge sales tax on tangible item sales (things you can physically retain after the travel, e.g. bike boxes, kennels).

What's ironic is if they don't raise the tax burden on airlines, they'd stand a better chance of getting revenue via corporate income taxes...

 

[Bob Owens]

What's ironic is if they don't raise the tax burden on airlines, they'd stand a better chance of getting revenue via corporate income taxes...

Yea, and we are more financially secure by working for less, Money is not a motivator, the check is in the mail and we can make more money by selling our seats for less.

The fare increase is a good sign, its about time, but I have to wonder "what's changed?" Why would a fare increase stick now and not a year ago? I dont see where consumers are flush with money and wanting to travel all of a sudden (every flight I've been on has been pretty much full for the last year). One interesting thing is I got a postcard in the mail yesterday for $55/ night at the Hacienda Hotel in LAX.

 

[jimntx]

What has changed is that everyone, including Southwest, has seen the need to raise fares. Also, and this goes with the reason you continue to see full planes, everyone has cut capacity successfully. There are fewer seats available; so, the people who want or have to travel are willing to pay more. There isn't a cheaper deal down the street anymore. Well, there is, but convenience and schedule issues make a lot of the cheaper deals unattractive.

For instance, my sister who lives near Birmingham, AL was looking for a flight from BHM to LAS (where her grandchildren live). She found that the most reasonable fare was on AA through DFW--one change of planes. She found a cheaper fare on Expedia or Travelocity on another airline (not WN), but it involved flying on an RJ on 1st leg from BHM (she doesn't like rjs), changing planes twice and taking something like 10-12 hours more than the AA flight.

Interestingly, though. I suggested that she non-rev on my passes BHM-DFW and DFW-BHM, then confirmed ticket DFW-LAS. When we looked at that option, we found that a confirmed space ticket BHM to LAS through DFW roundtrip was about $335. DFW-LAS roundtrip same days of travel on same flights to/from LAS was $550?????? It's pricing like that which makes the public (and me) crazy!

 

[MERV]

What has changed is that everyone, including Southwest, has seen the need to raise fares. Also, and this goes with the reason you continue to see full planes, everyone has cut capacity successfully. There are fewer seats available; so, the people who want or have to travel are willing to pay more. There isn't a cheaper deal down the street anymore. Well, there is, but convenience and schedule issues make a lot of the cheaper deals unattractive.

For instance, my sister who lives near Birmingham, AL was looking for a flight from BHM to LAS (where her grandchildren live). She found that the most reasonable fare was on AA through DFW--one change of planes. She found a cheaper fare on Expedia or Travelocity on another airline (not WN), but it involved flying on an RJ on 1st leg from BHM (she doesn't like rjs), changing planes twice and taking something like 10-12 hours more than the AA flight.

Interestingly, though. I suggested that she non-rev on my passes BHM-DFW and DFW-BHM, then confirmed ticket DFW-LAS. When we looked at that option, we found that a confirmed space ticket BHM to LAS through DFW roundtrip was about $335. DFW-LAS roundtrip same days of travel on same flights to/from LAS was $550?????? It's pricing like that which makes the public (and me) crazy!

I agree on WN and other airlines sticking to the fare increase.

Rick Seaney, CEO of travel company FareCompany.com, said Southwest fare increases are important because they let the bigger, so-called legacy airlines raise prices on routes where they compete against Southwest.

"When Southwest hikes domestic prices, legacy airlines break out in a sly grin," he said

Southwest, Continental profits raise recovery hope
http://www.forbes.com/feeds/ap/2010/01/21/...?partner=alerts

On the subject purchasing the same day I disagree their are limit amount of seats sold under that fare and many restrictions apply to those fares.Those are the money makers for the last min customer, 1st class and premium customers are ones that pay most of the operating cost. Most airlines are removing few rows of the 1st/premium cabins because the majority of the paxs are upgrades its a lost for airline because the ticket price what those customer are paying are between 200-400. The airlines just rewarding their customer for their loyalty.

 

[Bob Owens]

What has changed is that everyone, including Southwest, has seen the need to raise fares. Also, and this goes with the reason you continue to see full planes, everyone has cut capacity successfully. There are fewer seats available; so, the people who want or have to travel are willing to pay more. There isn't a cheaper deal down the street anymore. Well, there is, but convenience and schedule issues make a lot of the cheaper deals unattractive.

Well the capacity has been down and the planes have been full for at least a year. Why didnt they raise the fares a year ago? A year ago I was told that the only reason the planes were full was because the airlines were offering deep discounts, I didnt buy it, people dont all of a sudden jummp on a plane midweek because the fares are cheap. If SWA sold all their seats at the cheap rate then everyone else who wanted to go would have no choice but to pay AA's higher price.

 

[FWAAA]

AA's fare hike failed when US (and perhaps others) failed to match:

http://finance.yahoo.com/news/Airlines-dro...ml?x=0&.v=2

Delta gave up on the increase before AA retreated, according to Tim Smith of AA.

 

[MERV]

AA's fare hike failed when US (and perhaps others) failed to match:

http://finance.yahoo.com/news/Airlines-dro...ml?x=0&.v=2

Delta gave up on the increase before AA retreated, according to Tim Smith of AA.

That's what sucks about this industry they can't keep fares up to make a profit. The industry needs to control itself on pricing if not their will be many carrier in bankruptcy court again.

 

[Bob Owens]

So the fare hike failed. What exactly does that mean? Airline fare hikes arent like subway fare hikes. Its not like every fare goes up the same amount or it it supposedly went down $16 today that it wont cost $40 more tomorrow. Ever try to book a ticket these days? The prices change constantly, look at the fare at breakfast time and it could be $100 more, or less by dinner time. Maybe instead of having 10 seats available at $169 now they only have 5. Its like playing a slot machine! With so many variables how can they say that a fare increase failed? Sure it makes something the media can report and it gives the company fodder for negotiations, "We,ve attempted to raise fares but our competitors refused to follow so we were forced to cut them again". I dont buy it. If you fly less people and brought in more revenue real fares went up, thats really the only way to see whats going on.

 

[BoeingBoy]

That's what sucks about this industry they can't keep fares up to make a profit.

The problem is two-fold. First, the lcc's set the low end of fares in markets where they operate (which are growing in number) and the legacies feel that they have to compete with those fares or lose customers. The second is that one or two legacies don't go along with a fare increase hoping to have an edge on the other legacies.

Jim