It looks like Delta and Northwest have reinstated their $5.00 fare increase.
http://biz.yahoo.com/rb/050322/airlines_northwest_1.html
http://biz.yahoo.com/rb/050322/airlines_northwest_1.html
Aa, Dl, & Nw Join Co's 3rd Fare Increase
- Thread starter USA320Pilot
- Start date
BoeingBoy
Veteran
- Nov 9, 2003
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USA320Pilot said:
My guess? If they stick, no more than $40 million a month from all 3 increases. Of course, there'll be some lag for the full benefit to take effect, so call it something like $1.5-$2 million next week with the full effect coming in about 1-2 months.
Regards,
Jim
- Thread Starter
- #34
BoeingBoy:
If your estimate of $40 million per month in additional revenue is accurate, that amount would equal about $20 per month ($40 million) in additional crude oil price increases for jet fuel.
It's my understanding that US Airways' Transformation Plan version 3.2, which is about 6 weeks old, supported a crude oil price of about $43 per barrel. The company is seeking additional cost cuts, which would support a higher crude oil/jet fuel price, although its unclear how much additional savings can be obtained.
Thus, if your estimate is accurate, the additional revenue could support a crude oil price in the POR of about $65 per barrel.
Here is some additional information on airfares:
See Story
Regards,
USA320Pilot
If your estimate of $40 million per month in additional revenue is accurate, that amount would equal about $20 per month ($40 million) in additional crude oil price increases for jet fuel.
It's my understanding that US Airways' Transformation Plan version 3.2, which is about 6 weeks old, supported a crude oil price of about $43 per barrel. The company is seeking additional cost cuts, which would support a higher crude oil/jet fuel price, although its unclear how much additional savings can be obtained.
Thus, if your estimate is accurate, the additional revenue could support a crude oil price in the POR of about $65 per barrel.
Here is some additional information on airfares:
See Story
Regards,
USA320Pilot
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
Aside from the little detail that I said at most $40 million, there's a little more to consider before US can be successful with $65/bbl oil.
Your comment was "I would like 700UW, DellDude, ClueByFour, BoeingBoy, Funguy2, and Lark (maybe that "mystical" 25-year vet can help too), to do a quantitative analysis in what the fare increases mean for US Airways' future revenue."
I took that to mean how much future revenue would be higher with the fare increases than without. That is different than asking how much higher revenue will be in 1Q06 than it will be in 1Q05.
The difference between the two questions is the underlying fare erosion that is ongoing. PHL is illustrative - between 3Q03 and 3Q04, average yields from PHL dropped 4.6 cents. More broadly, just look at what's happened to US yield - it dropped 0.6 cents from 2003 to 2004. That trend will continue - the price of having industry leading yield to start with and further to fall - and eat up significant parts of the additional revenue the fare increase provides.
Respectfully
Jim
Your comment was "I would like 700UW, DellDude, ClueByFour, BoeingBoy, Funguy2, and Lark (maybe that "mystical" 25-year vet can help too), to do a quantitative analysis in what the fare increases mean for US Airways' future revenue."
I took that to mean how much future revenue would be higher with the fare increases than without. That is different than asking how much higher revenue will be in 1Q06 than it will be in 1Q05.
The difference between the two questions is the underlying fare erosion that is ongoing. PHL is illustrative - between 3Q03 and 3Q04, average yields from PHL dropped 4.6 cents. More broadly, just look at what's happened to US yield - it dropped 0.6 cents from 2003 to 2004. That trend will continue - the price of having industry leading yield to start with and further to fall - and eat up significant parts of the additional revenue the fare increase provides.
Respectfully
Jim
I'll try to contribute here by repeating something that Gerald Grinstein (Delta's CEO) said today. He said that the industry fare increases would compensate, in his opinion, for at most 25% of the run-up in fuel costs, and that airlines would have to find other ways to compensate for the rest.
