Morningstar thumbs down on LCC

[lovinglcc]

When it comes to pricing, I've often pondered the following:

We know what our CASM is. For this example, let's say it's 12cents.

We know the mileage from city to city. For this example, let's say, 1000 miles.

Let's assume our load factor is consistantly 50%.

So, to cover costs, we double the CASM to 24cents, then multiply by the mileage. That would give us a ticket price of $240.

If we used a model like this consistantly, we would break even all the time, with only a 50% load factor!

 

[LCC_#1]

sounds to me that the writer is also complaining about what many of us have said repeatedly:

define yourself...(i.e., poor business fundamentals). This carrier cannot continue to charge the fares it is charging and offer very little in the way of service amenities in FC.

My fare was nearly $800 so I did not feel LUCKY to get the snack basket, I felt insulted--particularly after their remarks.

First of all , I don't think your average "writer" even knows how an airline is ran...especially one who hasn't done his homework.

Secondly, while alot of revenue, the majority of passengers ARE flying for less money. I don't know where you were going but I do know you are usually west bound, so my pardons if I am wrong.

I remember during Christmas a passengers stating on national news..."I am flying home because it is cheaper than driving" What a statement and NOBODY got it. It BURNS in my memory.

The problem is that flying was to get you to places like the west coast in 5 hours instead of 5 DAYS.. Can you REALLY drive from NY to LA for say $500? NO FREAKIN WAY!!! The fuel ALONE would be well over $800 that YOU paid on your last ticket. Let's not forget the 4 nights of hotel stays at $40 a night ( IF you are lucky) at a whopping $200 MORE dollars. And how about food or the unexpected car trouble?

Might I suggest that from the ceo to the granny, if you REALLY want to know WHY a ticket either IS or SHOULD be high, take your car on a coast to coast trip or a full coastal trip, save your receipts and THEN lecture about airline pricing.

Unfortunatley, YOUR ticket is the FAIR ticket price. The rest of the a/c is making YOU the sacrifial lamb. Their tickets should be just as much. Of course the masses wouldn't PAY $800, but they WOULD $400 or $500. If all the airlines charged that amt, there would BE no choice and the airlines would be in the black overnight and maybe actually be able to offer something BESIDES the snack basket. And please spare me the United thing. The jury is still out on their risk to offer the world while the rest of the plane flies as cheap as US. Will they make money? And on a consistant level? Will that decision contribute to a possible Ch 22?

It's funny how your average American thinks nothing at dropping down hundreds of dollars to take their family to a pro football game every Sunday and spend WAAAAAAAAYYY overpriced CONCESSION PRICES that seem to increase EVERY year but God forbid you charge a fair price on an airline ticket.

Until the airlines stop UNDERPRICING, they will continue to OVERPRICE the biz traveler, alienating them, and struggling to make money. AND the longer we GIVE the customer the option FOR that insanely, money loosing price, the more thay will demand it and the more the airlines will bleed.

As far as the f/a coments, they were wrong and although true to an extent, should be kept to herself. I know I look at all f/c customers the same and as deserving of good service as the next.

The airlines AND the flying public need to get real...PERIOD!!

 

[dc3fanatic]

Ah....he's wrong. I just worked JFK LAS flight and had a discussion with a lady who booked a 9 day advance notice roundtrip fare. She told me she paid $289 for it from JFK ONT on HP via LAS while JetBlue was $549 roundtrip (non-stop). $289 is dirt cheap for a roundtrip "RED EYE" ticket.
Maybe he travels from a city where we don't have competition or maybe he just wants a story. Analysts have been proven wrong in the past.

'Low cost' is traditionally referring to low operating and non-operating cost - NOT Low Revenue.

 

[justaumechanic]

I would be willing to bet the ticket was a one way at $289. Remember none of us talked to the lady..

Now, you should take that revelation on ticket prices to your company accountants and ask them if LCC can make a profit on that $289 r-t transcon fare. My first guess on the anwer would be NO.

As BoeingBoy stated, selling the cheapest ticket does not a low cost carrier make. The ticket is on the other side of the equation.

(Ticket price x no. of tickets sold) should be equal to or greater than the cost to transport those fannies from Point A to Point B. All of us in the "legacy" category are struggling with this particular equation now. (Yes, I know that is an oversimplification, but deal with it. )

 

[FCYTravis]

I would be willing to bet the ticket was a one way at $289. Remember none of us talked to the lady..

No, I would be willing to bet it's a round-trip at $289. There are still lots of cheap fare deals out there for the taking. Especially if you know where and when to look.

I'm flying SFO-PHL-FLL-PHL-SFO tonight and tomorrow for a base fare of $178 - US matched a Southwest DING! fare sale a few weeks back. Just for fun - and another 7k miles toward CP. I'm not taking a seat anyone else would have bought, as all my upgrades cleared at the window and everything's showing pretty wide-open bucket-wise. Guess nobody wants to fly to Fort Lauderdale right now.

 

[US1YFARE]

\I don't know where you were going but I do know you are usually west bound, so my pardons if I am wrong.

It was actually PHL-MCO, so the nearly $800 fare is high. I would agree that $800 would be reasonable on a transcon flight, but PHL-MCO, come on....and then to hear that comment, and yes, I was in FC.

It also bugs me that I have to pay $1300 to DFW from PHL and get nothing in FC and have a crappy selection of mainline flights to even get FC. How about the PHL-BOS route that US competes with Airtran on--that ticket is sometimes now over $600--airtran is always much cheaper with decent flight selection and a biz class option.

 

[jimntx]

I would be willing to bet the ticket was a one way at $289. Remember none of us talked to the lady..

If you go to Orbitz right now, and request a JFK-ONT departing 18APR and returning 25APR, you will get a range of round-trip fares from $197 on UAL to $328 on CO. All of these involve one-stop/change somewhere because JetBlue does not list with Orbitz.

And, we wonder why none of us is making any money.

 

[FWAAA]

If you go to Orbitz right now, and request a JFK-ONT departing 18APR and returning 25APR, you will get a range of round-trip fares from $197 on UAL to $328 on CO. All of these involve one-stop/change somewhere because JetBlue does not list with Orbitz.

And, we wonder why none of us is making any money.

I agree. I've said it before, and I'll say it again: The lifeboat is taking on water, and it's long past time for someone (or two) to be thrown overboard before everyone falls victim to the sharks. An airline or two goes under and the fares would rise. Not forever, but for a while.

When fuel was $0.55 a few years ago, it made sense that everyone could afford to fly. At $2.25/gal, many fewer people should be able to afford a flight. Problem is, there's still far too many seats chasing the butts, and that leads to very low, unsustainable fares.

 

[BoeingBoy]

And if you check WN for those dates, you'll find the lowest r/t fare is $279 (two stops/changes) while B6 is $443 (n/s). Neither include taxes/fees.

Jim

 

[john john]

I for one would have "Gently" mentioned that I found the comment offensive and depending on the response I may well have written to the Sandcastle.

Yep! after 29 years in US customer service I can smell a letter writer sometimes you just have to swallow your pride

 

[john john]

I don't know if I would have even mentioned anything to them.....but I guarantee I would have walked off that aircraft with their names and be emailing the sandcastle the minute I hit an internet connection. That to me is a totally inappropriate and offensive comment. And BTW, I know 2 US F/A's that were fired for making derogatory comments overheard by customers....one of them was a friend of mine.

Just Cause would prevail. Letter writhing is part of the business Good/Bad especially airlines. It is no secret there is a world of compensation and sense of entitlements out there.

 

[US1YFARE]

Just Cause would prevail. Letter writhing is part of the business Good/Bad especially airlines. It is no secret there is a world of compensation and sense of entitlements out there.

Not everyone calls or writes Consumer Affairs/Relations/whateveritisthesedays seeking compensation. And, I think the customer relations people can spot compensation seekers a mile away.

 

[LCC_#1]

If you're a legacy carrier with an innefficient business model compared to SWA then how is it the customers fault? Did PineyBob create the business model?

[

Bob,
I am not going to go back and forth with you on all this. Just put down the airline tickets and drive EVERYWHERE you need to go for a while. You will then see how stupid it is to compare the value of getting to your destination quickly instead of days on end to an OVERPRICED pro football ticket that MAY or MAY NOT give you the value of a winning team.

II don't disagree with what you say about pricing but you DO get a GREAT value when compared to driving...PERIOD!! Again, I challenge you to put your money where your mouth is and DRIVE. Forget your SWA cheerleading BS or your whinny offensiveness because I called out UAL on having the jury out on their Biz plan.

Time to pony up. Get that motor running,head for the highway, get driving, and THEN come here and give me a play by play on every word I have written. Heck, your arse will be so tired from all the wasted hours of driving and equal money wasted for nothing that you will NEVER complain about your airline seat, regardless of who you fly and won't have time to respond.

I have had it with this issue. Are you up for the challenge, Bob? Or are you afraid I would be right?

Next year DRIVE at $2.59 a gallon (or more) for your 139,000 miles and give the difference you will pay for driving to your charity of choice. Some charity will rack up. I will PROMISE you that one.

 

[hp_fa]

I am with LCC #1 on this based on his prior posting. Let's look at another poster's PHL-MCO trip for alternatives.

Car - It is 863 air miles bewteen the cities. Travelnotes.org claims it is 990 miles to drive between those two cities, so that is 1980 miles roundtrip. The current average MPG for the manufacturers must meet is 21.6 mpg, which means the drive will require 91.6 gallons of gas. Let's use $2.50 cents per gallon, which is probably low for gasoling close to I-95. The gas alone will cost $219.00. Then figure in meals and snacks for the 15+ hour trip, as well as a possible night in a motel in each direction (a lot of people can't or won't drive 15 hours).

Amtrak - Between $400 and $500.00 roundtrip that takes just about a full day in each direction. Allow more $$$ for food.

OK, so what is the value of saving all the time and hassle from driving or riding the train? How much is your time worth? Allowing for early check in times, TSA lines, etc, the air trip for that trip is about 5 hours each way. When you arrive at MCO or PHL you would be able to work or otherwise be productive. That won't happen after driving, and probably not after the train ride either.

So, what is the value of the fast and convenient airline ride?

 

[PA18]

Nope, you're just confusing selling cheap tickets with being a LCC. When the CASM is close to 12 cents, we're not a low cost carrier.

When we have that CASM and sell tickets for under 6 cents a mile, while B6 with a CASM of under 7 cents charges almost 11 cents per mile, you can call us many things - dumb is one of the first to come to mind - but low cost carrier isn't one of them.

Hopefully, DP will get a handle on the costs on the East side and we will become a low cost carrier. But he's got a ways to go .....

Jim

In the meantime, six months after the merger was finalized, AWA and USA still operate separate flights within five minutes of each other from PIT to LAS (and within three minutes of each other on the return leg); and separate flights within 15 minutes of each other from PHL to PHX.

And US East still insists on funneling every Florida bound passenger from the Northeast through PHL, while Southwest and JetBlue fly non-stop to the sunshine from BOS, MHT, PVD, BDL, JFK, ISP, etc. Two airplanes, two crews, and a billion pounds of jet fuel burned at low altitude on approach, departure, waiting for the alley to clear, and being number 10 in line for de-icing at PHL -- just to get one family from New England to Disney World -- while the competition cruises over them at FL390 enroute to the same place.

Talk about seat mile costs.

And just how many vice-presidents, senior directors, and other various and sundry highly-paid "suits" do Southwest and JetBlue have running around, compared to the so-called "LCC"?