Morningstar thumbs down on LCC

[LCC_#1]

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.

You and Bob and others are totally missing my point in this thread. I am not comparing airlines and their value. I am trying to point out the fact that flying shoud NOT cost less than flying. YOU PAY MORE TO GET THERE FASTER!!!!! That is a concept overlooked, regardless of WHO you fly.

It is 974 mile from PHL to MCO. Thats well over $2000 if you drove there. What is fair here? A 24 hour drive at $2.59 plus one hotel stay and food for WELL OVER $2000 or a 2 hour flight with a snack basket and free drink AND miles accumulated for $800 and a free membership to the US Club when over 100,000 miles. Umm...how do you guys weasle out of that one. I know, you will compare AT, SW, UA, blah, blah...but the point is driving would cost you more, so regaedless of what others charge, your value IS great when comparing too the money and time WASTED when driving.

I will tell you like I told Bob..Drive all those FF miles and then we'll talk of value.

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.

You are listing one city. You gotta do better then that.

Six months to integrate two computer systems. HUM, perhaps we should solicite your IT experience since you seem to be an expert.

 

[Travels2mch]

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.

I have never asked for, nor have received any compensation for any letter writing......and FYI, I write 4 times as many emails to consumer affairs commending great service and US employees doing a commendable job than I do complaints.

 

[BoeingBoy]

I am with LCC #1 on this based on his prior posting.

I think all PineyBoy's saying is that the customer is not the right party to blame if they buy a "cheap" ticket - they are only able to buy at the price that is offered.

A better question is why are higher cost carriers, like LCC, UAL, etc) offering seats for sale for less than the low cost carriers (WN, B6, etc)? As was mentioned earlier in this thread, JFK-ONT with two weeks advance purchase & Saturday night stay is cheaper on several carriers than either WN or B6. That isn't the customer's fault, nor is it the fault of WN or B6.

Since the 3Q05 Air Fare Report is out, some examples:

City Pair / WN Avg Fare / US Avg Fare
BWI-MSY / $134.58 / $110.44
MHT-BNA / $128.65 / $109.82
Chicago-ISP / $121.94 / $101.60
ALB-LAS / $171.66 / $154.05
BUF-TPA / $99.08 / $97.04
BUF-LAS / $168.11 / $151.84
MSY-OAK / $183.68 / $131.90
BNA-PVD / $137.50 / $119.68
BUF-PHX / $164.88 / $131.79
BDL-BNA / $136.51 / $120.06

Lest anyone think this is an East thing:

City Pair / WN Avg Fare / HP Avg Fare
ABQ-OAK / $174.49 / $146.43
LAS-OAK / $111.38 / $105.42
LAS-MSY / $170.57 / $167.35
ABQ-SAN / $152.22 / $131.35
ELP-LAS / $118.18 / $103.89
AUS-LAS / $153.64 / $147.02
LAS-SLC / $93.73 / $81.45
ABQ-LAS / $124.64 / $89.28
LAS-RNO / $86.77 / $80.35

Jim

 

[jimntx]

It is 974 mile from PHL to MCO. Thats well over $2000 if you drove there. What is fair here? A 24 hour drive at $2.59 plus one hotel stay and food for WELL OVER $2000 or a 2 hour flight with a snack basket and free drink AND miles accumulated for $800 and a free membership to the US Club when over 100,000 miles.

This is a bit dishonest. First off, I don't know where you figure $2000 even including hotels and meals. That figure would apply only if your vehicle got 1 mile per gallon of gas.

For a typical family of four...

My car gets about 20 mpg. 974/20 = 48.7 gals x $2.59/gal = $126.13 x 2 (for the r-t) = $252.26 for the gas.

At Hotwire.com, you can get a nice (not fancy) motel room for 4 in the northern suburbs of Atlanta (nice area) for as little as $30/night--for $48/night you can get one that throws in free breakfast the next morning. Let's put in 2 nights for the roundtrip.

We are now up to about $350. Unless you are stopping at the roadside equivalent to Le Cirque, meals will cost about $120--assuming you stop 3 times for meals ( you said 24 hours) and spend $40 each meal. We still have less than $600 spent on the round trip.

Where is $2000 coming from? The advantage to flying is simply that you are there in 3 hours instead of 24. And, personally, I would rather open a vein than drive 24 hours anywhere for any reason--especially with kids in the car.

Oh, and let's not forget that for our family of four to get there in two hours and get the snack basket and free drink is going to cost $800 x 4 or $3200.00.

 

[john john]

I have never asked for, nor have received any compensation for any letter writing......and FYI, I write 4 times as many emails to consumer affairs commending great service and US employees doing a commendable job than I do complaints.

OK NEXT!

 

[FWAAA]

A better question is why are higher cost carriers, like LCC, UAL, etc) offering seats for sale for less than the low cost carriers (WN, B6, etc)? As was mentioned earlier in this thread, JFK-ONT with two weeks advance purchase & Saturday night stay is cheaper on several carriers than either WN or B6. That isn't the customer's fault, nor is it the fault of WN or B6.

I completely agree. Blame lies with legacy airlines (all of them) that stubbornly refuse to either consolidate or otherwise reduce their high-cost capacity (voluntary parking of airplanes or involuntary shutdown and liquidation). Some blame also lies with WN and B6 for stubbornly adding dozens of new airplanes for the last five years into a domestic market already flooded with plenty of capacity.

I think everyone can agree that passengers should pay fares that cover all the costs and a fair profit. Problem is, there's a glut of seats on those legacy airlines, most of which have recently been bankrupt or are currently bankrupt. By definition, those airlines are very desperate for cash flow, and are all too willing to sell seats for whatever they can get, even if they lose money on every seat.

Costs have nothing to do with what pax are willing to pay. Number of seats for sale and the necessity of the trip factor into the price that pax are willing to pay.

I've said it before: There are currently far too many options for business pax and leisure pax looking to fly many domestic routes. Fewer hubs should be a priority.

For instance, from IND or CVG or CMH or PIT or similar other cities to LAX or SFO, there are many, many options, involving perhaps a dozen different hubs. No wonder no legacy airline has a sufficient concentration of F pax and high-fare coach pax to be profitable. Fewer legacy airlines and fewer hubs would concentrate the smaller numbers of remaining F and high-fare coach pax on fewer flights thru fewer hubs, giving the survivors a chance to be profitable.

 

[whlinder]

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.

How are football tickets overpriced? Quite frequently they are underpriced. Judging by the season ticket waiting lists for some teams, plus the rate at which tickets to certain games go for, they are underpriced on average.

The value of the ticket is not whether or not your team wins, the value is in the entertainment provided. Obviously millions of people feel that the value of the entertainment provided exceeds the cost of the ticket.

 

[jimntx]

I completely agree. Blame lies with legacy airlines (all of them) that stubbornly refuse to either consolidate or otherwise reduce their high-cost capacity (voluntary parking of airplanes or involuntary shutdown and liquidation) (edited for length)No wonder no legacy airline has a sufficient concentration of F pax and high-fare coach pax to be profitable. Fewer legacy airlines and fewer hubs would concentrate the smaller numbers of remaining F and high-fare coach pax on fewer flights thru fewer hubs, giving the survivors a chance to be profitable.

The problem with your theory is that you assume that (let's look at worst case) if AA or UAL or US or DL were to go under, no airline, including SWA or JB, would not add any capacity to fill the gaps left by 100's of a/c being parked.

First off, I can assure you that if any of those parked a/c are leased, the lessor is going to offer extremely attractive deals to the remaining airlines to get those a/c back in the air. Now, granted if those are new a/c (which would rule out AA's ) some airline might park some older a/c and substitute the newer a/c, but given past behavior by the airlines, unlikely.

Second, (and this is the most damaging to your theory), you assume that the remaining airlines will suddenly come to their senses and refuse to add capacity to try and capture the market "available" due to the demise of one of the majors. There would be a lot of hub-centric passengers--DFW, ORD, ATL--dependent upon the dead airline who would still want to fly.

If the airline to go under were AA, SWA would snap up every single 737 we have at the yard sale and Love Field would become a city park with lots of concrete basketball courts and an oversized rec center with jetbridges while SWA moved every Dallas flight to DFW. And, SWA's international division (aka ATA) would buy the widebodies and start flying the abandoned international routes from DFW. Particularly, since DFW's landing fees would be suddenly amenable to negotiation.

 

[mrman]

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

Whatever the price that is offered. Consider WN max fare is $300 and they make money on the flight, I would say $300 is the value

 

[KCFlyer]

You and Bob and others are totally missing my point in this thread. I am not comparing airlines and their value. I am trying to point out the fact that flying shoud NOT cost less than flying. YOU PAY MORE TO GET THERE FASTER!!!!! That is a concept overlooked, regardless of WHO you fly.

...I know, you will compare AT, SW, UA, blah, blah...but the point is driving would cost you more, so regaedless of what others charge, your value IS great when comparing too the money and time WASTED when driving.

You are listing one city. You gotta do better then that.

Six months to integrate two computer systems. HUM, perhaps we should solicite your IT experience since you seem to be an expert.

Okay....I'll list another city...Philadelphia to Portland Maine. It's 411 miles one way...about a 7 hour drive. Now I agree, if I had to get there tonight, it sure would be nice to hop a plane for an hour and 20 minute plane ride, but when I look at the US fare of $1,217 - I think I'd be willing to "waste" a little time.

 

[FWAAA]

The problem with your theory is that you assume that (let's look at worst case) if AA or UAL or US or DL were to go under, no airline, including SWA or JB, would not add any capacity to fill the gaps left by 100's of a/c being parked.

Second, (and this is the most damaging to your theory), you assume that the remaining airlines will suddenly come to their senses and refuse to add capacity to try and capture the market "available" due to the demise of one of the majors. There would be a lot of hub-centric passengers--DFW, ORD, ATL--dependent upon the dead airline who would still want to fly.

I made no such assumptions. Sure, other airlines would rush to fill some of the holes, but they wouldn't fill all of them, nor could they do it overnight.

There's a finite number of pax willing to pay profitable domestic legacy fares (higher than WN or B6 fares), and right now, those pax are being shared by too many legacies for any one legacy to garner enough of them to be profitable. But if DL and NW are consolidated with other airlines (or simply die), significant numbers of high-cost seats would disappear. That might help balance the supply of high-cost seats with the demand for them.

You might note that nobody moved in to replace all the lost mainline capacity at STL; IIRC, WN added one daily flight to LAX. And DL's shutdown of its superflous DFW hub hasn't been replaced. Sure, AA added some DFW flights (as did some other airlines), but that was a real capacity reduction. PIT is smaller now than when US ran a full-size hub there. HP closed its CMH hub a few years back and nobody replaced it.

Same thing needs to happen at SLC, CVG and MEM and, to a lesser extent, at MSP, DTW and ATL. Yep, WN and B6 would continue to grow and replace some of that lost capacity. But they're gonna keep adding airplanes regardless of a legacy shutdown or consolidation.

 

[jimntx]

You might note that nobody moved in to replace all the lost mainline capacity at STL; IIRC, WN added one daily flight to LAX.

Well, that's because there was no business to pick up there. While I was off skiing last week, AA cut 5 or 6 flights each way on daily DFW-STL service. This is not in response to SWA's DAL service. It's finally a recognition that we had too much capacity on that route. Often the final 757 to STL at 10pm from DFW would have maybe 50 passengers on it. By eliminating the 8pm and 9pm flights, the 2200 flight is now close to booked full.

There is much made of the fact that when AA first took over TWA there were 400 departures a day from STL, and now there are only 200 or so. If there were passengers to fill those flights, there would still be 400 AA departures a day from STL.

Besides, the reduction in service to/from STL did not result in a reduction of capacity in the airline business. The AA a/c were re-deployed elsewhere. In addition, neither SWA nor JB cancelled delivery of any new a/c.

If a major were to go under, there might be some reduction in total capacity. But, my gut tells me it would be marginal and temporary.

 

[BoeingBoy]

There's a finite number of pax willing to pay profitable domestic legacy fares (higher than WN or B6 fares), and right now, those pax are being shared by too many legacies for any one legacy to garner enough of them to be profitable.

You've summed up the mis-named "overcapicity" problem in a nutshell.

There is an overcapacity of high-cost seats for the number of high-value (i.e. profitable) customers. There is an undercapacity of low-cost seats for the number of bargain hunting passengers. So high-cost seats end up chasing bargain hunting passengers just to bring in some revenue (albeit less than cost).

Jim

 

[Singleflyer]

Jim,

I agree with you on where the "over capicity" exists. But Only UA, CO, and AA are chasing the crowd that will pay for the high revenue seats. Hopefully US for there sake, will quickly understand that these customers don't mind paying a high fare, if they see value with the product. Wolf did understad that for the east coast flyers.

Last week I flew a full fare UA ticket last week (only one available) and I was impressed with the EX-plus they have on an RJ. Since it was a late flight (7:30 PM) departure on mainline, there was no meal in 1st on the mainline portion. UA received $875.00 for a one way CLT-OMA. Pretty good revenue, happy customer with the product, happy client because I was able to make a late scheduled meeting. In the future I will use that product and did, OMA-ORD.

With the short, thin business routes on the east coast that US flies and they adopt this type of RJ, I am sure their revenue per seat mile would increase while reducing capicity by less than 10% on a 50 seater. And this might also help the W&B issues.

Just my thoughts on areas where US could increase their revenue on their high cost operations, and make the analysts happy.

 

[WorldTraveler]

Lots of sub-threads running but at the heart of the discussion is the belief that the US government (and western Europe) has that air transportation should be a fully competitive business free from as much market control as possible. It is proven that if an airline pulls down capacity in a market, another one will replace it so the idea of merging to remove capacity and of removing capacity to improve the industry is flawed. The government’s theory is that the weakest competitors will fall away in a fully competitive business and that should be true…. However, we have seen that not a whole lot of capacity has really left even the legacy segment of the industry over the past 5 years. Older planes which had little value have been retired but remaining airplanes are flying harder and being shifted to potentially more lucrative routes (ie where there is less low cost competition).

I don’t think there is a transportation system in the history of mankind that has consistently been profitable…. It takes a lot of money to build the infrastructure and acquire the equipment on top of the people it takes to run the system… I doubt that anyone who works in a transportation industry can expect to have a promising future unless you work for a monopoly such as the NYC and have strong unions to protect workers… and then the inevitable is only pushed back but not eliminated…..

Sorry to be the bearer of bad news…. Pharmaceuticals still look reasonably attractive for a very privileged few. 🙂


single,
who says only UA, CO, and AA are chasing high revenue passengers? I don't think any airline has removed their top fares and said they will only carry discount passengers. You do realize that WN gets revenue premiums for comparable distances than do many of the legacies. Premium revenue is not about product but about the customer's perception of value.. and that can be established with a very "basic" product. In fact, UA's ex-plus product is nice but many people would consider it inferior to a mainline one-class product on other airlines.