Another Fare Increase

[BoeingBoy]

Jim,

You don't think that SWA prices below cost when they start markets in our hubs, or that they do not raise prices as much as they would if we were not there?

[post="269803"][/post]​

That's right, I don't think WN prices below cost when they start service in our hubs. What were their initial fares in PHL? PIT? What yield did they work out to? How did that yield (revenue per mile that seat traveled) compare to their cost to move that seat a mile (CASM)?

Now look at markets where WN has a near monopoly:

FLL - TPA 99% share, $80 avg fare
FLL - MCO 93% share, $78 avg fare
Oakland - Reno 100% share, $74 avg fare
BWI - ORF 98% share, $71 avg fare
ISP - PBI 98% share, $101 avg fare
PVD - TPA 83% share, $102 avg fare
MHT - TPA 81% share, $84 avg fare
BNA - Oakland $75% share, $166 avg fare
BNA - PHL 74% share, $175 avg fare

It sure is hard to find a "blofare" there, isn't it? Care to compare with PIT-PHL before WN's entry or speculate on whether US or WN would raise fares if the other left the market?

As for the legacies, all do it. Look at some of the sale fares we've put out there in the last 6 months - 1/3 of cost. You say DL is out to kill US, their people could say that US is out to kill them.

It's a little disingenious to say that other airlines should be investigated for selling seats below cost but it's OK for US to do it.

Jim

 

[TomBascom]

WN is rolling out PHL/PIT service with $29 one way fares. That's $0.0935 per mile. That's not predatory. It's smart -- just enough to more or less break even (if every seat is sold at that price -- and they won't be) but low enough that US cannot match it without losing money.

 

[UseYourHead]

Jim,

I never said anyone should be investigated, we were talking about fare increases and the price of airfares. I floated the idea that part of the volitility was due to the underpricing of seats and so on.

Your data shows that in the case of SWA the fares are not as I precieved, thank you for correcting that misconception on my part.

I have heard that often times SWA fare are more expensive than ours, is that true? (not counting the recent fare mistakes made and also some of the BK sales)?

I continue to believe that we are attacked with capacity at near or below cost from other airlines...but thats business (we did/do it for years too when someone attempted to encroach our network).

Again, I am not suggesting an investigation, and I thank you again for your research (on this and all subjects you pursue).

That's right, I don't think WN prices below cost when they start service in our hubs. What were their initial fares in PHL? PIT? What yield did they work out to? How did that yield (revenue per mile that seat traveled) compare to their cost to move that seat a mile (CASM)?

Now look at markets where WN has a near monopoly:

FLL - TPA 99% share, $80 avg fare
FLL - MCO 93% share, $78 avg fare
Oakland - Reno 100% share, $74 avg fare
BWI - ORF 98% share, $71 avg fare
ISP - PBI 98% share, $101 avg fare
PVD - TPA 83% share, $102 avg fare
MHT - TPA 81% share, $84 avg fare
BNA - Oakland $75% share, $166 avg fare
BNA - PHL 74% share, $175 avg fare

It sure is hard to find a "blofare" there, isn't it? Care to compare with PIT-PHL before WN's entry or speculate on whether US or WN would raise fares if the other left the market?

As for the legacies, all do it. Look at some of the sale fares we've put out there in the last 6 months - 1/3 of cost. You say DL is out to kill US, their people could say that US is out to kill them.

It's a little disingenious to say that other airlines should be investigated for selling seats below cost but it's OK for US to do it.

Jim

[post="269836"][/post]​

 

[UseYourHead]

Okay,

Thanks Tom. The road ahead must be paved with a cost structure, and business plan able to viably compete with this scenario executed by a management team with wisdom & vision.

WN is rolling out PHL/PIT service with $29 one way fares. That's $0.0935 per mile. That's not predatory. It's smart -- just enough to more or less break even (if every seat is sold at that price -- and they won't be) but low enough that US cannot match it without losing money.

[post="269982"][/post]​

 

[TomBascom]

I have heard that often times SWA fare are more expensive than ours, is that true? (not counting the recent fare mistakes made and also some of the BK sales)?

When legacy airlines compete with SWA it is often the case that the lowest fare is not a SWA fare. But that's usually by a fairly small percentage.

The flip side of that is the highest fare. The highest fare is always a legacy airline fare. And it's not just a few percent higher. It's an order of magnitude, or more, higher.

"Lowest fare" comparisons are also generally not an apples to apples comparison -- the legacy fare will carry major restrictions and penalties that the SWA fare will not carry. If SWA fares and legacy fares with similar restrictions are compared SWA suddenly looks much more favorable. Which is one of the reasons that SWA sells way more "full fares" than anyone else.

People happily pay SWA more money. They do so because they know they aren't going to be gouged. They're ok with paying more for a predictably low fare ("low" as opposed to "lowest"...) offered on a rational basis.

 

[funguy2]

All I know is what the articles say, but it appears that for the most part these fare increases (all of them) mostly apply to markets without LCC competition. So the LCC's, with WN having the advantage due to extensive hedging, still have influence in pricing.

I've noticed Southwest TV ads for flights that used to be $39 are now $49.

 

[1ab]

wall street journal online broke a story that discount airlines were raising prices but I could not read the story because I am not a subscriber ..can someone who subscribe summarize please