Art at ISP said:
This is a perfect example of how stupid the current pricing system is. And to make matters worse the trip is on a buzz bucket.
The irony is you could connect to another flight to FL or CA and it would likely be under $200!!!
This is a perfect example of why we need RATIONAL fares...notice I didn't say CHEAP I said RATIONAL. Rational means fair value.
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I suppose if someone has a business meeting in PHL they would want to fly rather than fly - MapQuest shows 2:40 driving time each way for 5:20 round trip. Driving would mean a full day shot where flying could mean only half a day.
Now to the issue at hand - fares....
The quoted fare works out to over $2.80 per mile yield - not exactly a rational fare. Of course, the argument could be made that a few of this type ticket is necessary to offset a lot of cheap tickets that give only 4 cents per mile yield (some of the sale fares to Florida, for example), and that's the traditional airline pricing model.
But let's look at Art's rational pricing for a moment.....
Southwest seems to price their lowest fare at about cost - yield is about the same as CASM (some sale fares and introductory fares are lower). So a 1000 mile flight (BWI/PHL to south FL) is about $75 (there's that $79 fare they sell). Of course, they don't sell every seat at these fares - they'd need 100% LF to break even. So they use agressive yield management, aided and abetted by the fact that their higher fares aren't that much higher. After all, a prospective passenger that can't get the $79 fare is somewhat likely to spring for the $99, $109, even $149 fare. However, if the next available fare is several hundred dollars, they're more likely than not to think about checking other airlines.
Now let's transpose that pricing model over to U. At a CASM of 11.5 cents, breakeven yield is $11.50 per hundred miles - $115 PHL to south FL, $187.50 transcon. In other words, $4 per hundred miles more than WN.
So what would happen if we put in a pricing model like WN. Call it $119 PHL to south FL or $199 transcon. Limit the seats to something like 10% on light segments and 5% on heavier segments (all for coach, of course - something like $100 - $200 more for F/C). Cap the fares at something like 2 or 2-1/2 times the lowest - $239 - $299 PHL to south FL and $399 - $499 transcon. We'd probably lose some of the lowest fare traffic (how much?) but we'd probably sell a lot more ot the top end than we do at current fare levels (like that $2.80+ per mile fare that started this thread).
Like Art, I believe that it's entirely possible that our average yield could increase. And if we're successful in lowering costs, drop the fares to match the lower CASM which should result in less lost traffic at the bottom end and more additional traffic at the top.
Jim
Itinerary Total - US$ 818.90 Flight Fare Rules 
