American Matches Much Of Dl's New Fare Structure

[FWAAA]

Value Pricing didn't last long; how long will this last?

American Airlines Announces New Domestic Fares; No Saturday-Night Stay Gives More People More Access to Great Low Fares

Thursday January 6, 1:42 pm ET

FORT WORTH, Texas, Jan. 6 /PRNewswire-FirstCall/ -- American Airlines today broadly matched Delta's new fare structure, reducing the highest fares and lowering fares for last-minute travel in thousands of markets throughout the continental U.S. In most markets, the Saturday-night stay requirements have been eliminated. The new fares make it even easier to check fares and book flights through American's AA.com® Web site.

Here are highlights of American's new domestic fares, available throughout most of the continental United States:

Highest Coach and First Class fares are lower * Saturday-night stay requirements have been eliminated in most markets * There are fewer fare levels in each market * Round-trip discount fares are available with a zero-, three-, seven-,
or 14-day advance purchase; a one-night minimum stay may be required

The new fares apply to flights operated by American Airlines, American Eagle and AmericanConnection®.

"We're giving more people more access to great low fares," said Dan Garton, American's Executive Vice President-Marketing. "Eliminating Saturday- night stay requirements throughout most of our huge domestic route system will appeal to both business and leisure travelers."

http://biz.yahoo.com/prnews/050106/dath050_1.html

Hope it works to increase revenue.

 

[coolflyingfool]

This could have an adverse effect on revenue for a while. I am happy that my DFW-SEA walkup fare is dropping to $499 from over $1200. My company is really happy. I won't be making any more trips, they will just be cheaper.

 

[LGA Fleet Service]

Too funny, I still have some of those "Bringing value back to air travel" buttons from the last time they tried this...

 

[TWAnr]

But the new cheaper flights will have a steep price tag for the airlines,
analysts said. Michael Linenberg, an airline analyst for Merrill Lynch,
estimated that American could lose $600 million this year in revenue if it
adopted Delta's plan. That would be yet another hefty challenge for American,
which has failed to return to profitability despite several years of deep cost
cuts and employee concessions.

"We view it as a negative," Linenberg said in a note to investors Wednesday.

Fort Worth Star-Telegram

 

[bagstacker]

[post="236418"][/post]​

methinks they are making a virtue of neccessity - the legacies aren't selling nearly as many - and never will again - of those full-fares as they once did anyway... the pricing model has to be changed. B)

 

[goingboeing]

In case anyone has not noticed we don't have a problem getting customers on our aircraft.The problem is that management is selling the product cheaper than it cost to produce it.
Fare wars and price reductions are just what we need to fix the problem!
Sell more tickets even cheaper and lose even more money not to mention the daily operational problems that come with more passengers on our aircraft.Longer gate turn times and increased luggage due to more passengers.

We made 1 billion dollar profits per year flying with 67% load factors.Now we fly with 82% load factors and LOSE 1 billion dollars per year.Sounds like a good business model to me.

We could fly every flight with 100% load factors and we would still lose money because management is afraid to INCREASE ticket prices.

If we fly less people because we charge more[what it costs to produce the seat] and make a profit whats the problem?
The legacy airline CEO's are just putting their airlines even deeper into a failed business model.

 

[LD max]

I don't understand the logic of reducing fares. DAL has pulled out of DFW. Now is the time to RAISE fares!

 

[jimntx]

I don't understand the logic of reducing fares. DAL has pulled out of DFW. Now is the time to RAISE fares!

[post="236587"][/post]​

Not with the DFW Airport Authority offering free gate rents and reduced landing fees to any LCC that will take over DL's space. Beside that, DFW is only one airport that AA serves--albeit the main one. There are many other cities where AA competes with DL. It would be just a little too obvious if we matched DL in all those other cities and raised fares in Dallas. Talk about giving away the farm to SWA!

The sad part of this all is that AA and all the other "legacy" carriers should have done this years ago. Having 15-20 fares per market made the rise of the LCCs possible. If you were an infrequent traveler who didn't understand the ins and outs of pricing, which would seem more reasonable?

System A: To travel at the last minute, the fare is $1000 (unless it's a holiday and we have a lot of empty seats or you're an executive platinum, or we just feel like giving you a break). With 14 day purchase AND a Saturday night stay, the fare is $499.63 if you book on the 3rd Tuesday of the month, and there hasn't been any rain in Tucson for at least 35 days, and it is booked directly with us. If booked through a codeshare, it may be $475 with same restrictions unless there have been no more than 5 bags mis-routed in that market within the last 7 days in which case it is $375. :huh:

System B: To travel today, the fare is $300. To travel, 14 days from now, the fare is $150.

 

[mrman]

In case anyone has not noticed we don't have a problem getting customers on our aircraft.The problem is that management is selling the product cheaper than it cost to produce it.
Fare wars and price reductions are just what we need to fix the problem!
Sell more tickets even cheaper and lose even more money not to mention the daily operational problems that come with more passengers on our aircraft.Longer gate turn times and increased luggage due to more passengers.

We made 1 billion dollar profits per year flying with 67% load factors.Now we fly with 82% load factors and LOSE 1 billion dollars per year.Sounds like a good business model to me.

We could fly every flight with 100% load factors and we would still lose money because management is afraid to INCREASE ticket prices.

If we fly less people because we charge more[what it costs to produce the seat] and make a profit whats the problem?
The legacy airline CEO's are just putting their airlines even deeper into a failed business model.

[post="236561"][/post]​

You don't necessary lose revenue by lowering fares as the LCC have found because

1. You sell less super cheap tickets and less $2000 tickets but more middle tickets. Many companies that require WN flying require that they buy full fare which is not much more cash as WN tops their fare for any flght at $299 to ensure flexibiliy and the ability to refund

2. You sell more tickets

 

[Art at ISP]

Mr. Man you have said what I have been saying all along. RATIONAL fares will produce more revenue long term. Most frequent fliers are tired of subsidizing the lowest fares, which we almost never get. I can't stomach paying $1000 r/t LGA-CLT for example, when it helps pay for a leisure traveler who can stay a weekend go LGA-MIA for $150 r/t. What you will see here is a larger percentage of the seats going in the higher range. AVERAGE fares will slowly increase, meaning overall more revenue.

Also, using me as an example again, it will be sensible to fly to cities like ROC, SYR, BUF, BOS, etc. from LGA again. These are all routes I will drive if the fares are ridiculous. Take a couple of thousand like me (we ARE out there) and you will see more people flying.

Now if only US would do it.........

I would have loved to give AA some business after staying away for 4 years, but they pulled out of ISP. Oh well...

My best to you all.

 

[JS]

...
Also, using me as an example again, it will be sensible to fly to cities like ROC, SYR, BUF, BOS, etc. from LGA again. These are all routes I will drive if the fares are ridiculous. Take a couple of thousand like me (we ARE out there) and you will see more people flying.
...

Where have you been? JetBlue has been flying to those places for some time now -- not out of ISP, but from JFK and US usually matches the fares out of LGA. LGA-BOS has never been $1000 roundtrip.

 

[NewHampshire Black Bears]

This is something LOOOOOONNNG OVERDUE !!!!

This is no different than a good ol' game of "TEXAS HOLD EM'(like what's on TV a lot lately.)

We all know WN, and B6 are'nt going anywhere, so what better time to "flush" out the excess carriers(legacy's) out of the system.

If these "cheapo" fares last for a good while, then the first "player to fold" ????

US AIR/CONTINENTAL and mabey UAL !!!!!!!!1

Time will tell

NH/BB's

 

[Art at ISP]

JS,

US usually does NOT match B6 from LGA, I have tried. I have flown Jet Blue--once, and they met my lowered expectations.

And you're right LGA-BOS has never been $1000, but it has been $400, which is every bit as absurd..should cap out at about $250.

Bottom line is it's a good move.

 

[goingboeing]

You don't necessary lose revenue by lowering fares as the LCC have found because

1. You sell less super cheap tickets and less $2000 tickets but more middle tickets.  Many companies that require WN flying require that they buy full fare which is not much more cash as WN tops their fare for any flght at $299 to ensure flexibiliy and the ability to refund

2. You sell more tickets

[post="236682"][/post]​

Selling more CHEAP tickets is not the answer!
SWA has 20-25 minute gate turn times-AA has 40-45 min gate turn times
SWA has all coach cabin- AA has F/C seats that no one wants anymore
SWA has 1 fleet type- AA has 6 [ 7 if you count F-100's]

If AA wants to sell tickets at LLC prices then AA needs to look like a LLC
AA cannot operate successfully as a LLC with the current structure of the airline.

Do you remember what happened to AMR stock prices when they announced they were going to match Delta's fare structure?

 

[777 fixer]

Selling more CHEAP tickets is not the answer!
SWA has 20-25 minute gate turn times-AA has 40-45 min gate turn times
SWA has all coach cabin- AA has F/C seats that no one wants anymore
SWA has 1 fleet type- AA has 6 [ 7 if you count F-100's]

If AA wants to sell tickets at LLC prices then AA needs to look like a LLC
AA cannot operate successfully as a LLC with the current structure of the airline.

Do you remember what happened to AMR stock prices when they announced they were going to match Delta's fare structure?

[post="238308"][/post]​

Agree with you that selling more cheap tickets is not the answer.

Not exactly sure about your point on the number of a/c types in SWA's fleet compared to AA. Obviously flying one aircraft type is not that practical for AA. Try flying a 737 from ORD-NRT or DFW-HNL. Not going to work. Also you cannot count the F100 anymore because AA retired them last year.

As for the first class seats "no one wants" I find this curious because everytime I fly AA first class seems to be full. Once again copying SWA's model might not be practical. Try flying a 777 all coach and see where your biz travlers go.