Bob Owens said:Ch. 12 said:This is a rather simple explanation but no matter how many times it is explained, there are non-believers.
Yes...the airlines have too much capacity.
Bob: And what do you base this claim on? The fact that there is less excess capacity than ever before? Basic economics would lead you to believe that if there is less capacity that prices could be higher.
Ch12: Less excess capacity because it is being filled with $29 fares. Raise the fares...yes, even $5, and there would be much more excess capacity.
Yes...if ALL carriers raised fares (even just $5/route), demand would drop significantly. $5 can be 10, 15% of the current fare...that makes a difference.
Yes...loads are very high...BECAUSE OF FARES.
Bob: Bull, that might be true in the case of goods such as clothes or food but not with airline tickets. As 410ohobe cites a change in $20 is not going to prevent the consumer from dumping $2000 on vacation. Perhaps if you were saying $100 or $200 you may have a point but not $10 or $20, people pay more than that to park their car at the airport. They pay $5 for a cup of coffee or a stale doughnut without the bat of an eye. You are saying that for a difference of $5 thats droves would stay home? Rediculous! No matter how low you make the fares unless the people have some other reason to fly, besides the price of airline tickets, they are not going to fly.As I said before, people dont buy airline seats in order to buy airline seats, they buy them as a means to something else.
Ch12: What 410ohobe cites is an opinion based on his/her thoughts. The truth is that the truly elastic portion of airline travellers are not those that dump $2,000 on a vacation or those that get reimbursed by their companys but rather those that are bunking at a friend's place and being picked up by their relatives. These people are becoming an ever-growing segment portion of all air travellers as business travel is not what it used to be and frac jets are taking alot of that market. So that is "bull" that people are not impacted unless you charge an extra $100 or $200. Just b/c you and 410 maybe have disposable incomes, it doesn't mean that the elastic segment does. The don't and they won't fly if the fares go up much. Again...SUPPLY AND DEMAND.
Yes...capacity would have to be cut back if fares were increased.
Bob: Why? Doesnt basic economics demand that you decrease capacity if prices are reduced and increase it as much as you can when they increase, at least to the point where they cause a decrease in pricing?
Ch12: That's the supply side. Carriers would WANT to increase capacity with higher prices on the pretense that they would make more $$. But they know that they wouldn't make more $$ b/c as price goes up, demand goes down, and flying extra seats only means extra costs.
Price goes up, demand goes down, supply must go down (which it will not in this industry)
Price goes down, demand goes up, and you have 80% LFs are you do now.
Bob: Ok, explain the fact that gasoline prices have doubled but so far demand has not gone down. It seems that your simplified basic law of supply and demand is not a complete explanation for what we see with gasoline. Economics is in fact a science on the study of one part of human behavior and no matter how you try to simplify it it remains complex. It tries to explain what humans will do or explain what they did in the past. But at best is still just educated guessing and by no means foolproof. The fact is that you do not know how the public would react to a $5 increase and the facts dispute your claim. The fact that we already have people paying hugely different rates for the same exact product already shows us that despite your claim that pricing is set, it is in fact very variable.
Ch12: Bob...c'mon now. I can't believe that you and 410 can even be so unreasonable to bring up gasoline. Why can cigarettes cost over $7 a pack in some areas and demand doesn't go down? Why do people continue to pay for electricity when the prices continue to climb and climb? OK...so this is econ 101.5...still the first class but a week or two in. This is elasticity. Gas, cigarettes, electricity, etc, all have highly inelastic demands as people are dependent on them to a great extent. There are no reasonable options so as price goes up, demand stays relatively flat. As I mentioned before, airlines have highly elastic demand b/c customers can choose alternatives including not to travel at all. The high LFs right now are caused by those that normally wouldn't even be taking trips but couldn't pass up the opportunity b/c the fares are so low. Raise 'em and the LFs will drop.
So PLEASE get off the raise fares issue b/c what you don't realize is that airline passengers - in this day and age - are EXTREMELY price sensitive and it's not a matter of changing carriers...it's a matter of flying at all. $5-$10 WILL stop people from flying...trust me.
Bob: Why should we? Its an absurd claim to think that $5, the price of a cup of coffee at the airport, would force a significant number of people to stay home. Would it force you?
Ch12: No further explanation necessary
And yes, Bob, the issue truly is over-capacity.
Bob: No, its the issue of choice that the carriers are chiming in on at the moment.
Ch12: No further explanation necessary. I am using my own mind and experience...not listening to carriers.
B/C there is so much capacity, it needs to be filled and carriers had to lower fares to do this.
Bob: So the airlines create additional capacity so they can lose money trying to get rid of it? How much lower are you talking here? Oh yea, $5 to $10 right? Sorry, I'm not buying it.
Ch12: The airline industry SHOULD have lost demand after 9/11 and they have only kept it up by lowering the fares. In the economic sense, the whole demand curve has shifted left but airlines kept the same # of seats out there meaning that they needed to lower fares. Park planes and fares will go up.
Fix the supply issue and the prices will work their way out naturally. This isn't BS that I feed you...it is reality...and BASIC economics.
Bob: Well the fact is that no single carrier can "fix" the supply issue, I think you mean excess supply, of which is proportionately lower today than ever before.
Ch12: OK Bob...I agree that no single carrier can fix the supply issue. But PLEASE don't make inferences that I mean "excess" supply. I already told you that the LFs are high b/c they had to lower fares to keep seats full. And when a 60% LF used to be breakeven, it is now often over 100%. Show me how to fill a plane over 100% and I'll tell you that you are right...capacity is not an issue. Seems the problem is that you are not paying attention or even trying to see what I am saying. If you take a step back and digest it, it really makes alot of sense. Probably b/c it is based on fact and not opinion.
Bob: According to the way you are presenting the supply and demand theory price and demand have a defined link and that varying one will automatically vary the other. Thats not always true. Demand is limited, and price is simply one of the factors. If I offered richshaw service between Patchogue and Manhattan no matter what price I offered it at demand would likely be non-existant. However if I offered rickshaw service within midtown Manhattan I could probably get a good price for it. In fact the price I could get could vary at different times of the day and different days of the week. The point is that trying apply a basic theory to all applications does not work. Charging less may not always result in getting more business.
Ch12: Again...elasticity. I could sell a gallon of gas for $17 but airline tickets are VERY different.
Let's just use this test: How many out there have bought a ticket over the last 2 years that they would not have bought had the fare been so low? I'm raising my hand...multiple times.
[post="265880"][/post]
Got A Great Idea!
- Thread starter 410OhOne
- Start date
Sure they are adding seats back to aircraft and thus making the aircraft more productive. But to offset adding seats back in, they are grounding another fifteen super 80s (in addition to those already in the desert). They just sold 7 super 80s.Decision 2004 said:
Bob Owens said:
There we go again with the ignorant rebuttal.
Why are tickets so cheap, Bob?
Why are yields falling at nearly every airline, Bob?
I prefer to get my facts regarding industry overcapacity from those who know, not disgruntled wrench-turners. Here's the word on industry overcapacity from Gary Kelly and Colleen Barrett, CEO and President, respectively, of Southwest Airlines, since I'm certain they know more than I do about industry overcapacity (and I'm certain they know more than you do about why prices are low):
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24=
I could post similar statements by management of the legacy airlines as well, but that would be repetitive. And it would be fair, of course, to discount the opinions of the CEOs of AA, UA, DL, NW, CO and US, since, as you said, the legacies have a flawed business model which relies on high prices.
But on what basis would you discount the opinions of WN management? Perhaps you lump Southwest in the "flawed business model, relying on high prices" group. If so, you're probably alone in that assessment.
When the most successful airline (hardly a high-cost legacy airline) says it, I'm thinking there may be some truth to the rumor that there are more domestic seats chasing the paying butts than we need. In short, excess capacity. Even Southwest saw its yield fall in the first quarter, despite raising fares.
That you choose to disbelieve when someone tells you it's raining doesn't mean it's bright and sunny outside. You are free to deny that there's excess domestic capacity, but that don't mean you're right. You may be right, but even WN disagrees.
The legacy airlines continue to try to solve the problem by cutting expenses (primarily wages) even though many expenses continue to increase (like fuel). In an industry without so much excess capacity, the solution would be simple: prices would increase.
Industry overcapacity even impacts JetBlue, as its yields and RASM have fallen over the last couple of years (almost as sharply as the declines in those metrics at USAir over the same period). Were it not for an accounting change in the fourth quarter of last year, B6 would have reported a net loss in Q4 2004. And its first quarter results were hardly anything to be proud of. Simply the results of an overcrowded domestic market with too many perishable seats to allow for healthy pricing.
But the wrench-turner from JFK has spoken: It is BS, he says. All lies, he says.
So tell us, Bob, why are airline tickets so cheap these days? Because the management at ALL airlines are stupid? All of them? Keep shoveling, Bob.
Ch. 12,May 1 2005, 05:49 PM]
Bob: And what do you base this claim on? The fact that there is less excess capacity than ever before? Basic economics would lead you to believe that if there is less capacity that prices could be higher.
Ch12: Less excess capacity because it is being filled with $29 fares. Raise the fares...yes, even $5, and there would be much more excess capacity.
How many tickets does AA sell at $29? Maybe EAgle and SWa on short hops but really now you are taking an extreme example and making it sound like everyone is hoping on planes and flying all over the country for $29. If that was the case then we should just throw in the towel and fold the airline today. I still say that $5 or $10 wont make much of a difference as far as load factors but could be enough to prevent a loss. Apparentlt the airlines agree too as they just did that last week.
Yes...if ALL carriers raised fares (even just $5/route), demand would drop significantly. $5 can be 10, 15% of the current fare...that makes a difference.
I dissagree.
Yes...loads are very high...BECAUSE OF FARES.
Fares are only part of the reason, like I said people are buying tickets for reasons other than taking a plane ride. Sure the cheap fares make it easier but they are not the only reason why people travel. Obviously low fares will attract more travellers but the point is you are saying that even a $5 increase would drive away a lot of travellers. I say that even at $5 to $10 more the fares are still low and the impact would be neglible as far as load factors.
Ch12: What 410ohobe cites is an opinion based on his/her thoughts.
And so are your assertions.
The truth is that the truly elastic portion of airline travellers are not those that dump $2,000 on a vacation or those that get reimbursed by their companys but rather those that are bunking at a friend's place and being picked up by their relatives.
Ok.
These people are becoming an ever-growing segment portion of all air travellers as business travel is not what it used to be and frac jets are taking alot of that market.
Ok, give me the figures. I still say, even for the guy bunking at a friends $5 to $10 isnt going to make a difference. $34 instead of $29 to be taken hundreds of miles away is cheap no matter how you slice it.
So that is "bull" that people are not impacted unless you charge an extra $100 or $200. Just b/c you and 410 maybe have disposable incomes, it doesn't mean that the elastic segment does. The don't and they won't fly if the fares go up much.
"Go up much", thats the key, $5 to $10 is not much. Like I said, it could be the difference between a loss and breaking even for the airlines but it really would not affect load factors.
Ch12: Bob...c'mon now. I can't believe that you and 410 can even be so unreasonable to bring up gasoline. Why can cigarettes cost over $7 a pack in some areas and demand doesn't go down? Why do people continue to pay for electricity when the prices continue to climb and climb? OK...so this is econ 101.5...still the first class but a week or two in. This is elasticity. Gas, cigarettes, electricity, etc, all have highly inelastic demands as people are dependent on them to a great extent.
Thats right, and in some cases the same can be said for transportation.
There are no reasonable options so as price goes up, demand stays relatively flat.
Well it seems that your example assumes there is no competition. Are you saying that there is only one brand of Gasoline or cigarettes?
Lets go back to Gasoline. Lets say OK petroleum decides to sell gas at 10 cents cheaper than Exxon or BP. Will Exxon or BP be forced to lower their price in order to compete with OK petroleum? No. Why? Because OK Petroleum has a limited distribution and supply. OK can seel every gallon they get and Exxon and BP can still charge more because OK can not satisfy the demand, or quantity demanded. Well the same thing goes for Jet Blue. Jet Blue cant force the majors to match them. Jet blue has 60 airplanes, AMR has 1013. The industry is running a 80% load factor. Let Jet Blue have all the $29 fares and AMR can fly the rest. Jet Blue can not fly them all.
As I mentioned before, airlines have highly elastic demand b/c customers can choose alternatives including not to travel at all.
Yes, and people can choose to not smoke, or get a more fuel efficient car or carpool.
The high LFs right now are caused by those that normally wouldn't even be taking trips but couldn't pass up the opportunity b/c the fares are so low.
Fine, but what percentage do these discretionary flyers make up of the total load?
Raise 'em and the LFs will drop.
And at what point would it start to drop? I still say small increases, $5 to $10 would not make much of a difference even if the $5 increase represents a 20% increase in the fare.
Would it force you?
Ch12: No further explanation necessary
Thats not an answer.
Ch12: The airline industry SHOULD have lost demand after 9/11 and they have only kept it up by lowering the fares.
The airline industry lost demand prior to 9-11. Check the number of people lost on the aircraft. The total for the 4 aircraft, each of which could hold around 200 or more people was only around 200, or a load factor of around 25%. The low load factor was due to seasonality and the slow economy.
In the economic sense, the whole demand curve has shifted left but airlines kept the same # of seats out there meaning that they needed to lower fares. Park planes and fares will go up.
Fix the supply issue and the prices will work their way out naturally. This isn't BS that I feed you...it is reality...and BASIC economics.
And like I said before, this is a complex industry where sometimes Basic economic theories do not fully explain what is going on.
OK Bob...I agree that no single carrier can fix the supply issue. But PLEASE don't make inferences that I mean "excess" supply. I already told you that the LFs are high b/c they had to lower fares to keep seats full.
Is that a sound business practice? Remember when the Milk producers dumped the milk down the sewer?
And when a 60% LF used to be breakeven, it is now often over 100%.
Show me how to fill a plane over 100% and I'll tell you that you are right...capacity is not an issue.
Well lets not forget that the planes fly cargo too. So maybe they could sell every seat and not make money off the passengers but still make money with the cargo.Seems that all the cargo carriers are doing pretty good, and these airplanes do move a lot of freight, I see it every day.
Seems the problem is that you are not paying attention or even trying to see what I am saying. If you take a step back and digest it, it really makes alot of sense. Probably b/c it is based on fact and not opinion.
Still waiting for the facts. Lets go back to the original point where you claimed that a $5 to $10 increase would greatly alter load factors. Present some facts on this.
Ch12: Again...elasticity. I could sell a gallon of gas for $17 but airline tickets are VERY different.
Then you are a very good salesman and maybe the airline should hire you to seel tickets.
Let's just use this test: How many out there have bought a ticket over the last 2 years that they would not have bought had the fare been so low? I'm raising my hand...multiple times.
So you are now saying that if they were $5 more, you would have stayed home?
THe fact is that an airplane contains many different customers from the business traveller, to those going on vacation, visiting relatives or countless other reasons. For many of these people had the fare been even $100 more they still would be on that plane, then there is a percentage of people who saw the ad for a super low fare and jumped on it. However these passengers by no means represent the majority of air travellers and if a $29 fare was $34, they would have bought it either way. Figure anything under $50 to fly anywhere is dirt cheap.
Bob: And what do you base this claim on? The fact that there is less excess capacity than ever before? Basic economics would lead you to believe that if there is less capacity that prices could be higher.
Ch12: Less excess capacity because it is being filled with $29 fares. Raise the fares...yes, even $5, and there would be much more excess capacity.
How many tickets does AA sell at $29? Maybe EAgle and SWa on short hops but really now you are taking an extreme example and making it sound like everyone is hoping on planes and flying all over the country for $29. If that was the case then we should just throw in the towel and fold the airline today. I still say that $5 or $10 wont make much of a difference as far as load factors but could be enough to prevent a loss. Apparentlt the airlines agree too as they just did that last week.
Yes...if ALL carriers raised fares (even just $5/route), demand would drop significantly. $5 can be 10, 15% of the current fare...that makes a difference.
I dissagree.
Yes...loads are very high...BECAUSE OF FARES.
Fares are only part of the reason, like I said people are buying tickets for reasons other than taking a plane ride. Sure the cheap fares make it easier but they are not the only reason why people travel. Obviously low fares will attract more travellers but the point is you are saying that even a $5 increase would drive away a lot of travellers. I say that even at $5 to $10 more the fares are still low and the impact would be neglible as far as load factors.
Ch12: What 410ohobe cites is an opinion based on his/her thoughts.
And so are your assertions.
The truth is that the truly elastic portion of airline travellers are not those that dump $2,000 on a vacation or those that get reimbursed by their companys but rather those that are bunking at a friend's place and being picked up by their relatives.
Ok.
These people are becoming an ever-growing segment portion of all air travellers as business travel is not what it used to be and frac jets are taking alot of that market.
Ok, give me the figures. I still say, even for the guy bunking at a friends $5 to $10 isnt going to make a difference. $34 instead of $29 to be taken hundreds of miles away is cheap no matter how you slice it.
So that is "bull" that people are not impacted unless you charge an extra $100 or $200. Just b/c you and 410 maybe have disposable incomes, it doesn't mean that the elastic segment does. The don't and they won't fly if the fares go up much.
"Go up much", thats the key, $5 to $10 is not much. Like I said, it could be the difference between a loss and breaking even for the airlines but it really would not affect load factors.
Ch12: Bob...c'mon now. I can't believe that you and 410 can even be so unreasonable to bring up gasoline. Why can cigarettes cost over $7 a pack in some areas and demand doesn't go down? Why do people continue to pay for electricity when the prices continue to climb and climb? OK...so this is econ 101.5...still the first class but a week or two in. This is elasticity. Gas, cigarettes, electricity, etc, all have highly inelastic demands as people are dependent on them to a great extent.
Thats right, and in some cases the same can be said for transportation.
There are no reasonable options so as price goes up, demand stays relatively flat.
Well it seems that your example assumes there is no competition. Are you saying that there is only one brand of Gasoline or cigarettes?
Lets go back to Gasoline. Lets say OK petroleum decides to sell gas at 10 cents cheaper than Exxon or BP. Will Exxon or BP be forced to lower their price in order to compete with OK petroleum? No. Why? Because OK Petroleum has a limited distribution and supply. OK can seel every gallon they get and Exxon and BP can still charge more because OK can not satisfy the demand, or quantity demanded. Well the same thing goes for Jet Blue. Jet Blue cant force the majors to match them. Jet blue has 60 airplanes, AMR has 1013. The industry is running a 80% load factor. Let Jet Blue have all the $29 fares and AMR can fly the rest. Jet Blue can not fly them all.
As I mentioned before, airlines have highly elastic demand b/c customers can choose alternatives including not to travel at all.
Yes, and people can choose to not smoke, or get a more fuel efficient car or carpool.
The high LFs right now are caused by those that normally wouldn't even be taking trips but couldn't pass up the opportunity b/c the fares are so low.
Fine, but what percentage do these discretionary flyers make up of the total load?
Raise 'em and the LFs will drop.
And at what point would it start to drop? I still say small increases, $5 to $10 would not make much of a difference even if the $5 increase represents a 20% increase in the fare.
Would it force you?
Ch12: No further explanation necessary
Thats not an answer.
Ch12: The airline industry SHOULD have lost demand after 9/11 and they have only kept it up by lowering the fares.
The airline industry lost demand prior to 9-11. Check the number of people lost on the aircraft. The total for the 4 aircraft, each of which could hold around 200 or more people was only around 200, or a load factor of around 25%. The low load factor was due to seasonality and the slow economy.
In the economic sense, the whole demand curve has shifted left but airlines kept the same # of seats out there meaning that they needed to lower fares. Park planes and fares will go up.
Fix the supply issue and the prices will work their way out naturally. This isn't BS that I feed you...it is reality...and BASIC economics.
And like I said before, this is a complex industry where sometimes Basic economic theories do not fully explain what is going on.
OK Bob...I agree that no single carrier can fix the supply issue. But PLEASE don't make inferences that I mean "excess" supply. I already told you that the LFs are high b/c they had to lower fares to keep seats full.
Is that a sound business practice? Remember when the Milk producers dumped the milk down the sewer?
And when a 60% LF used to be breakeven, it is now often over 100%.
Show me how to fill a plane over 100% and I'll tell you that you are right...capacity is not an issue.
Well lets not forget that the planes fly cargo too. So maybe they could sell every seat and not make money off the passengers but still make money with the cargo.Seems that all the cargo carriers are doing pretty good, and these airplanes do move a lot of freight, I see it every day.
Seems the problem is that you are not paying attention or even trying to see what I am saying. If you take a step back and digest it, it really makes alot of sense. Probably b/c it is based on fact and not opinion.
Still waiting for the facts. Lets go back to the original point where you claimed that a $5 to $10 increase would greatly alter load factors. Present some facts on this.
Ch12: Again...elasticity. I could sell a gallon of gas for $17 but airline tickets are VERY different.
Then you are a very good salesman and maybe the airline should hire you to seel tickets.
Let's just use this test: How many out there have bought a ticket over the last 2 years that they would not have bought had the fare been so low? I'm raising my hand...multiple times.
So you are now saying that if they were $5 more, you would have stayed home?
THe fact is that an airplane contains many different customers from the business traveller, to those going on vacation, visiting relatives or countless other reasons. For many of these people had the fare been even $100 more they still would be on that plane, then there is a percentage of people who saw the ad for a super low fare and jumped on it. However these passengers by no means represent the majority of air travellers and if a $29 fare was $34, they would have bought it either way. Figure anything under $50 to fly anywhere is dirt cheap.
FWAAA,May 1 2005, 10:03 PM]
Why are tickets so cheap, Bob?
Why are yields falling at nearly every airline, Bob?
Because tickets are so cheap and fuel is so expensive.
I prefer to get my facts regarding industry overcapacity from those who know, not disgruntled wrench-turners. Here's the word on industry overcapacity from Gary Kelly and Colleen Barrett, CEO and President, respectively, of Southwest Airlines, since I'm certain they know more than I do about industry overcapacity (and I'm certain they know more than you do about why prices are low):
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24=
Well even during the best years first quarter overcapacity is nothing new.
But on what basis would you discount the opinions of WN management? Perhaps you lump Southwest in the "flawed business model, relying on high prices" group. If so, you're probably alone in that assessment.
Again, you are taking a statement regarding the first quarter. In my 25 years in the industry there has normally been a "glut" of seats in the first quarter.
When the most successful airline (hardly a high-cost legacy airline) says it, I'm thinking there may be some truth to the rumor that there are more domestic seats chasing the paying butts than we need.
Says what? Did the statement say that they expected this to be a contining problem through the next three quarters? Did SWA say we need to see USAIR close their doors in order to raise prices?
That you choose to disbelieve when someone tells you it's raining doesn't mean it's bright and sunny outside. You are free to deny that there's excess domestic capacity, but that don't mean you're right. You may be right, but even WN disagrees.
Who said I denied it? In fact I said there is nearly always, and always was, excess capacity.
Industry overcapacity even impacts JetBlue, as its yields and RASM have fallen over the last couple of years (almost as sharply as the declines in those metrics at USAir over the same period). Were it not for an accounting change in the fourth quarter of last year, B6 would have reported a net loss in Q4 2004. And its first quarter results were hardly anything to be proud of.
Is that Jet Blues only problem? Or are its costs rising due to the fact that their airplanes are not all new anymore and workers are still progressing along in pay?
So tell us, Bob, why are airline tickets so cheap these days?
Didnt SWA say they raised fares but yields are down? Why was that? Fuel. Overall, real fares have been declining for over 50 years. The airlines have normally had slim margins, even during regulation, however improvents in technology continue to make airfare cheaper and cheaper. Why are they pricing so low? Because they are in a contest to drive competitors out of business, and yes, its a dumb business strategy. Instead of trying to put each other out of business they should just try and make money.
Why are tickets so cheap, Bob?
Why are yields falling at nearly every airline, Bob?
Because tickets are so cheap and fuel is so expensive.
I prefer to get my facts regarding industry overcapacity from those who know, not disgruntled wrench-turners. Here's the word on industry overcapacity from Gary Kelly and Colleen Barrett, CEO and President, respectively, of Southwest Airlines, since I'm certain they know more than I do about industry overcapacity (and I'm certain they know more than you do about why prices are low):
http://phx.corporate-ir.net/phoenix.zhtml?...CZhdHRhY2g9b24=
Well even during the best years first quarter overcapacity is nothing new.
But on what basis would you discount the opinions of WN management? Perhaps you lump Southwest in the "flawed business model, relying on high prices" group. If so, you're probably alone in that assessment.
Again, you are taking a statement regarding the first quarter. In my 25 years in the industry there has normally been a "glut" of seats in the first quarter.
When the most successful airline (hardly a high-cost legacy airline) says it, I'm thinking there may be some truth to the rumor that there are more domestic seats chasing the paying butts than we need.
Says what? Did the statement say that they expected this to be a contining problem through the next three quarters? Did SWA say we need to see USAIR close their doors in order to raise prices?
That you choose to disbelieve when someone tells you it's raining doesn't mean it's bright and sunny outside. You are free to deny that there's excess domestic capacity, but that don't mean you're right. You may be right, but even WN disagrees.
Who said I denied it? In fact I said there is nearly always, and always was, excess capacity.
Industry overcapacity even impacts JetBlue, as its yields and RASM have fallen over the last couple of years (almost as sharply as the declines in those metrics at USAir over the same period). Were it not for an accounting change in the fourth quarter of last year, B6 would have reported a net loss in Q4 2004. And its first quarter results were hardly anything to be proud of.
Is that Jet Blues only problem? Or are its costs rising due to the fact that their airplanes are not all new anymore and workers are still progressing along in pay?
So tell us, Bob, why are airline tickets so cheap these days?
Didnt SWA say they raised fares but yields are down? Why was that? Fuel. Overall, real fares have been declining for over 50 years. The airlines have normally had slim margins, even during regulation, however improvents in technology continue to make airfare cheaper and cheaper. Why are they pricing so low? Because they are in a contest to drive competitors out of business, and yes, its a dumb business strategy. Instead of trying to put each other out of business they should just try and make money.
I also suggested to the company about using A300 for LAX-HNL flights. That way, they can put more pax on those aircrafts rather than 757. In addition, I suggested to raise fare on those flights since those flights are mostly full all the time. It's the same concept for JFK-SJU, JFK-SDQ AND JFK-PAP. The company hose those people for fares, so I don't see why they can't hose Americans who travel to Hawaii as well....! They told me they will look into it.410OhOne said:
Hopeful
Veteran
- Joined
- Dec 21, 2002
- Messages
- 5,998
- Reaction score
- 347
okoge1027 said:
Working at JFK, let me tell you that flying the A300 on ETOPS trips is a disaster!
Several years back, AA converted the interiors of some A300's for LHR trips.
The aircraft was not designed for long hauls. It does not fly at the altitudes that other airliners do to get the fuel savings. The wing design is the reason. When the A300 flew JFK to LHR, fuel became such an issue that they had to start calculating how much fuel the pipes and lines held.
It is best when used as a large puddle jumper getting 3 - 4 cycles a day.
eolesen
Veteran
- Joined
- Jul 23, 2003
- Messages
- 15,959
- Reaction score
- 9,375
okoge1027 said:
We ran economics for A300 to Hawaii about eight years ago. It was a dog with fleas....
A300 works best where we can take advantage of the 22 LD3 positions -and- carry a full load upstairs. Didn't work out that way for Hawaii, and clearly didn't work Transatlantic. We had a hard time just getting bags on with the pax, let alone freight and mail...
They also make great beer cans, which will more likely be in their future than flying to Hawaii...
Mark Inman
Advanced
- Joined
- Jun 22, 2004
- Messages
- 194
- Reaction score
- 0
The problem is not with to much capacity! The problem is that to many people control the capacity. The greedy low lives at the legacy carriers cant stuff there pockets and bank accounts like they use to with this many people controlling the capacity so the rape the workers hoping to bring us to the point that we put enough pressure on our elected official to return the monopoly to them. We have got to help our selves by uniting in craft unions with common goals or none of the working people are going to like the outcome. NO VOTE :angry: NO PEACE!!!!
