To try to answer your original question, these tidbits from AWA's annual report:
Revised Pricing Structure
In an effort to maximize revenue and increase business traffic, we eliminated our historic pricing structure in March 2002 and replaced it with a simplified structure, the primary components of which include reduced business fares (typically 40-75% below the walkup prices on major network carriers), elimination of Saturday night stay requirements and more fares available on a one-way basis. At the same time, we significantly reduced the number and level of highly discounted fares available through off-tariff channels. Immediately following the introduction of the new fare structure, higher-cost competitors placed extremely low prices in our nonstop markets and Continental Airlines cancelled its long-standing code share and frequent flyer agreements with us. Despite these actions, we believe our year-over-year domestic unit revenue performance has been significantly better than the industry average since the new structure was introduced and the net effect on revenue of our revised pricing structure has been significantly positive.
In February 2004, we announced another change in our pricing structure to make flying first class more affordable for both business and leisure travelers. This new first class fare structure features nonrefundable first class fares that are up to 70% lower than the industry’s traditional first class fares. We believe that the revised first class fare structure will exploit our competitive advantages over both the major airlines, as their higher cost structures may prevent them from reducing their first class fares to match ours in a profitable manner, and the other low cost carriers, as many of them do not have first class cabins.
Customer Service
In 2003, we continued to find ways to provide customers with choices and make it easier to travel:
• Our day of departure first class upgrade program provided a simple and affordable way to upgrade to first class just prior to departure.
• We introduced our “Low Fare Finder†application on our website, making it easy for customers with flexible travel plans to get the best fare available.
• We expanded the availability of self-service kiosks across our system and, in November 2003, opened a new state-of-the-art automation center for check-in at Phoenix Sky Harbor International Airport with 28 fully-integrated kiosks.
• Working with Arizona State University’s School of Engineering, we created a sophisticated group boarding protocol using back to front and outside-in logic to board passengers faster and in a manner which is more convenient to customers.
Regional Airline Alliance
In 2003, we restructured our agreement with Mesa. The amendment adjusted the firm number and mix of regional jets, reduced the firm number of Dash-8 turboprops, restructured Beech 1900 codeshare flying, created a new model for Mesa-handled station costs and settled outstanding disputed amounts associated with the previous codeshare arrangement. Designed to defer further growth of the regional fleet until 2004, the amendment accelerated five return rights on CRJ-200s to June 2003, eliminated the 15 firm CRJ-700 aircraft entirely by March 2004 and increased from 25 to 38 the firm number of CRJ-900 aircraft.
From 2004 1st quarter report:
• Aircraft rent expense per ASM decreased 6.8% due to the 7.3% increase in ASMs, which was accomplished through higher utilization rather than additional aircraft.
• Other rents and landing fees expense per ASM decreased 3.3% mainly driven by the 7.3% increase in ASMs in the first quarter of 2004 offset in part by increases in landing fees ($0.9 million) and airport rents ($0.7 million).
Jim
