AA is cheaper to fly than WN!

Aug 20, 2002
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Valhalla
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Southwest...even with its low-fare pricing system, passengers on WN actually paid more, per mile, to fly than did AA passengers. WN''s average fare per mile was 12.25 cents, 4.5% higher than AA''s 11.72 cents. Yet WN''s unit costs were 30% lower than AA at 7.47 CASM compared with 10.73 CASM.
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This info was published today. I don''t expect the flamethrowers to have a reasonable answer, other than to blame it on management.
 

SVQLBA

Senior
Aug 20, 2002
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This is a reflection of the fact that the network carriers are paying the piper now for having broken the link between perceived value and price to the customer from years of gouging via archane pricing structures and revenue management tools. Southwest, whether someone likes them or not, has a very clear value proposition that customers understand, and people are prepared to pay the price they ask for their offering. Hence why SW makes a profit on less than 60% load factors.

This week's PlaneBusiness newsletter had a very good discussion of how most carriers completely fail to understand what their passengers value (and what they are prepared to pay for that value).

svqlba
 

KCFlyer

Veteran
Aug 20, 2002
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[blockquote]
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On 1/23/2003 12:54:06 PM whatkindoffreshhell wrote:

"Southwest...even with its low-fare pricing system, passengers on WN actually paid more, per mile, to fly than did AA passengers. WN's average fare per mile was 12.25 cents, 4.5% higher than AA's 11.72 cents. Yet WN's unit costs were 30% lower than AA at 7.47 CASM compared with 10.73 CASM."

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This info was published today. I don't expect the flamethrowers to have a reasonable answer, other than to blame it on management.
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[/blockquote]

In a sense, it is managements fault. Southwest saw that demand was down and responded by trying to do something to increase demand - the $299 maximum one way fare. fully refundable, No strings attached. They still offered advance purchase fares - with very few strings attached (no Saturday stay, tickets non refundable, but no penalty to make changes, no use it or lose it, if ticket was unused, full credit would be applied towards another ticket within a year). As a result, their average fare went up...which tells me that quite a few folks took them up on the $299 offer. I know I did - my wife wanted to go to San Diego to see the Holiday bowl. Flights out were full fare, return did have a discount. Bottom line, $299 one way wasn't too outrageous for me to send her. Worst case...if she would have cancelled, her MCI-SAN fare would have been refunded, and the discounted fare would have still been available for us to use for one year.

All the other airlines were so focused on cutting costs that they missed the opportunity to try to increase revenues, and instead made many demands to labor to cut costs while offering super-de-duper advance purchase fare sales, you know, the kind that cost the airline more than they make.
 

sfb

Veteran
Aug 21, 2002
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Part of the disparity is also due to adjusting for length-of-haul; AA's average passenger trip in December was nearly 1300 miles; Southwest's was 720 miles. Shorter trips tend to mean higher fares; a HOU-DAL flight which sounds like a great bargain at $35 each way gives a yield of 13.9 cents/mile. Southwest's maximum fare of $299 for BWI-LAX is a yield of only 12.8 cents/mile. Remember also that even though Southwest's full fares are a lot lower than AA's in many cases, they sell a heck of a lot more of them (as a percentage of all tickets sold) than AA does. People are a lot happier to pay $200 round-trip from Chicago to St. Louis with no Saturday stay than to pay $550. And that $200 round-trip is still a yield of nearly 40 cents/mile!

You can make tons and tons of money on very reasonable short-haul fares -- as long as you can keep your per-passenger processing costs under control.
 

Ch. 12

Veteran
Nov 24, 2002
1,355
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Fact is that WN has shorter flight legs. They have fairly high demand on the short segments and with point to point service, they don't fly the BWI-MSY passenger through ORD or DFW (example pulled out of the air, but you get the drift) and therefore...even if you do have 2-3 stops...the mileage is less. Even if they charge the same or slightly less than AA, they will be higher by the mile.
 

AAquila

Senior
Sep 22, 2002
357
0
We've got to keep trying, how about one way free and double for the return.