Nwa Launches $50. Biz Fare Increase

[North by Northwest]

'Finally, DL carries more connecting passengers than any other airline in the world. As such, DL has a very legitimate right to dictate pricing in the thousands of connecting markets that it serves. Might may not make right but we all learned on the playground that the biggest kid usually does get its way." (DL has EVERY right to loose as MUCH money as it wants...Big as in BIGGEST LOSS IN AVIATION HISTORY?)
Now THIS is a brilliant statement along with
"NW is getting desperate now and they have no one to blame but themselves. NW has been extremely slow to change (even slower than DL). Now they are paying a price for their stubborness. What's really scary is that of all legacy carriers NW faces the least amount of LCC competition and they still can't get their act together. God help the folks at NW if WN or B6 ever come knocking at MSP or MEM."

Coming from a carrier that has a quarterly loss - almost $2 billion.
(yeah that right) BILLION in ONE quarter. What difference does it make about the volume you carry if it is low yield. I would suggest DELTA folks are FAR more concerned AND desperate about LIQUIDATION than we are...Bankruptcy is an option for NW (albeit a bad one) but can Delta? Seems like everything is HOCKED over there. No more furniture to burn. Now THAT sounds like desperate. Any airline that loses THAT much money with only ONE Union on the property ...doesn't have long for this world. The true irony is that loser airlines that have STIFFED there employees, Vendors and retirees are still operatiing.

I think the inability to compete with WN an B6 is the sad "song" Delta is singing. For your infomation. NW is less exposed to LCC from our hubs because of how we respond and operate...PERIOD. There is ample opportunity for ANY LCC carrier to set up at MSP (WN took a look and passed)/ DTW(WN has been there for many many years)/ MEM. Some have, some have tried, some will try again...few have succeeded.

More to the point "God help those folks at Delta and a few others" when NW locks in concessions (due the the love affair with Bankruptcy, but that is about to come to a screeching HALT, of some carriers).

When Delta or any other carrier can generate the highest yield per asm than you can suggest to NW about how slow they are to change. Now lets wait and see how big Delta's Simply Massive loss is for the year. Then you can blame it on stubborn Norhtwest for shooting down fare increases when they make sense.

Don't hate us because we are Tough/ Experienced/ Battle hardened survivors. :angry:

 

[FWAAA]

The irony of Airlines that are lingering in or on the brink of BK not raising fares seems even more extraordinary IMO. 😉 😉

[post="277087"][/post]​

What I find even more extraordinary is that airline employees actually think that fares are set by their employers and not by the general marketplace (you know - supply and demand).

 

[North by Northwest]

What I find even more extraordinary is that airline employees actually think that fares are set by their employers and not by the general marketplace (you know - supply and demand).

[post="277116"][/post]​

Some airlines failed that class. Some are having to "repeat" that class. Others are trying to graduate.

 

[Flying Titan]

NxNW -
The passion you display in your hatred for DL is very telling...but, again, "Simplifares" are not the problem. Please provide examples of domestic routes where a thousand dollar coach fare is not enough. What do you believe the fare should be on these routes? Why? Even with today's extraordinarily high fuel costs and NW's still high cost structure, a thousand dollar coach fare on a domestic route is a money maker by any way I can calculate it.

Where's your scorn for the $69 o/w DCA/DTW fare listed on NWA.com? This is what's wrong with the industry. This is a fare where no carrier makes money. If NWA wants to pull in some more cash, why not raise that fare to $99 o/w? Wouldn't passengers gladly pay that little bit extra for all of the value added that you've pointed out they receive on NWA?

The way out of this revenue mess is not to go back to the good ol' days of gouging your best customers, or to go to a new paradigm of, "you'll get greyhound service and like it!" The way out is to come up with a rational fare structure where the lowest coach fares don't cause the airline to hemmorage and the highest coach fares don't drive business travelers to the LCCs.

 

[North by Northwest]

NxNW -
The passion you display in your hatred for DL is very telling...but, again, "Simplifares" are not the problem.  Please provide examples of domestic routes where a thousand dollar coach fare is not enough.  What do you believe the fare should be on these routes?  Why?  Even with today's extraordinarily high fuel costs and NW's still high cost structure, a thousand dollar coach fare on a domestic route is a money maker by any way I can calculate it.

Where's your scorn for the $69 o/w DCA/DTW fare listed on NWA.com?  This is what's wrong with the industry.  This is a fare where no carrier makes money.  If NWA wants to pull in some more cash, why not raise that fare to $99 o/w?  Wouldn't passengers gladly pay that little bit extra for all of the value added that you've pointed out they receive on NWA?

The way out of this revenue mess is not to go back to the good ol' days of gouging your best customers, or to go to a new paradigm of, "you'll get greyhound service and like it!"  The way out is to come up with a rational fare structure where the lowest coach fares don't cause the airline to hemmorage and the highest coach fares don't drive business travelers to the LCCs.

[post="277121"][/post]​

"The passion you display in your hatred for DL is very telling" That is what is called a sub-concious plant. Moreover, your sub concious mind controls the way you act conciously. That is what you would like to make others believe because you disagree we the facts that I have stated. In reality...there is a distinct difference between "made-up" and factual statements. Focus on the difference.

Northwest attempted the fare hike, which some did follow, because in case you have not noticed, none of the legacies are making money(all are in NEED to make money). Did you miss the part about NW having the highest revenue producing yield? Your perspective is one of the typical flying Joe Public whom is out to fly for the cheapest fare possilble (via the subsidy of lower wages and benefits of airline employees). Your displeasure with my statements and your attempt to fan/ flame the discussion into Delta/ NW is obvious and very telling...I attempt to use examples of facts that are well known. Now when you can focus on the operation of the two (vs. trying to tell me how much I hate Delta) come back and add something relavent vs. irrelavent emotional flame bait. Have a pleasent "cost choosen" flight.

 

[Flying Titan]

NxNW,
Your posts regarding DL are there for all to see. I didn't make them up. Perhaps I shouldn't have mentioned DL at all because it seems to have given you a convenient excuse to ignore ALL of the substance of my post, just as you ignored the substance of my earlier post on this thread. I was certainly not the first person to bring DL into this discussion.

SUBSTANCE OF THE ISSUE - The problem is not "Simply Stupid Fares" of $998 R/T for a coach seat on a domestic route, plus gov't fees. It is the simply insane fare of $69 o/w on routes that simply cost more than that to fly. Why is there a need to raise the price of fares that are already at a thousand dollars? What routes would you consider to be good candidates for these new top level fares? Is $1100 enough? $1250? $1500? $2000?

You seem to ignore the incongruity in this problem. You claim that someone who would rightly revolt against paying $1,500 domestic fares is only interested in paying the lowest fare possible. You clearly don't understand frequent business travelers and what motivates them. Please re-read earlier posts (assuming you care to reply) and address the substance.

 

[TechBoy]

Some airlines failed that class. Some are having to "repeat" that class. Others are trying to graduate.

[post="277118"][/post]​

Apparently you missed the class as well. In the past, NW refused to raise fares because it was in their interest not to. Now, DL is refusing to raise its fares because that is in DL's interest. What I don't understand is why all you NW people are whining about it.

I'm sorry that DL and NW (and maybe CO too) are increasingly likely to join UA/US in bankruptcy. But the days of huge fare premiums are over (at least domestically) and airlines either need to get their costs in line with the LCCs or face huge losses in running their domestic networks to feed their (sometimes) profitable international ops. It's called competition and it's a good thing. Back when you had us customers over a barrel, you screwed us with $2300 Y fares and the like. But now that customers have more choice, that world is gone.

 

[North by Northwest]

"Apparently you missed the class as well. In the past, NW refused to raise fares because it was in their interest not to. Now, DL is refusing to raise its fares because that is in DL's interest."

Clearly, you didn't qualify for the class. The "class" is about MAKING money...NOT HOW to LOSE money. It's in DL interest to lose $2 Billion a quarter? The "class", apparently... is beyond your ability to grasp.

You folks can pontificate all you like about how NW was the spoiler in raising fares...one thing is clear...NW knows how to maximize revenue superior to all others. THAT... is a FACT. Now you figure out who has more to lose. If you think this industry will continue well into the future with rock bottom fares you are in for a rude awakening. Bankrupt U/ Ual/ along with "Simpli lose $2 Billion a quarter fares" will not be the standard in a few years. The dust hasn't settled...and there are plenty of storm clouds on the horizon. No cost structure operating at todays fuel prices will win out. Even with Bankruptcy we keep hearing from U/ Ual "if only fuel wasn't so high we would've been profitable....ditto from DL. Well guess what...so would most other major carriers INCLUDING (to your chagrin) Northwest.

"Class 101" If I have a barrel of oil...and I am selling it a 10 cents a gallon cause I have 5 buyers, fine. If I have 6 buyers my price goes up to 11 cents...7 buyers =12 cents. Kinda like the price of oil. In business it's called a commodity. My competitors can only under cut me for so long...until their costs out strips their profit.

Match or exceed our RASM...then you and all the rest can tell us how you know best, and how you will set the fares to your benefit. There is one thing NW management knows how to do...MAKE MONEY. SW's ace was their brilliant forsight to put in place a top notch hedging plan. Outside of that Northwest's operation (RASM) is second to none.

 

[Bigsky]

Why wouldn't it be in DL's best interest to have the ability to let fares fluctuate beyond their ridiculous cap in order to maximize revenue. Yes, a $2300.00 domestic Y fare certainly isn't feasible in today's market but it is supply vs. demand. Say for example, that on a given date all seats from ATL to LAX are nearly sold, hence supply low. Delta could very easily charge a price over the cap of let's say $750.00, fill up all the seats and maximize revenues on the route. The cap of 499.00 doesn't fully allow the supply verses demand formula to work in DL's favor, hence a 5 Billion dollar loss for the year. You will see the Simplifares go away eventually as DL management will finally figure this out.

bigsky

 

[North by Northwest]

Flying T ; Don't place statements from me that I didn't make. "SUBSTANCE OF THE ISSUE - The problem is not "Simply Stupid Fares" of $998 R/T for a coach seat on a domestic route, plus gov't fees. It is the simply insane fare of $69 o/w on routes that simply cost more than that to fly. Why is there a need to raise the price of fares that are already at a thousand dollars? What routes would you consider to be good candidates for these new top level fares? Is $1100 enough? $1250? $1500? $2000?

You seem to ignore the incongruity in this problem. You claim (where is that claim under MY name?) that someone who would rightly revolt against paying $1,500 domestic fares is only interested in paying the lowest fare possible. You clearly don't understand frequent business travelers and what motivates them. Please re-read earlier posts (assuming you care to reply) and address the substance.

This issue is one of paying for a commodity... PRICE is set based on demand/ cost/ PROFIT. You seem to think the airline business should operate on a different standard than all other commodities..i.e oil. American business is not known for public welfare. Business travelers pay a premium because of their desire to fly with many time options (time is money)/ many destinations [not flown by LCC's, domestically/ internaionally] THESE options have VERY HIGH costs for major carriers. The expectation that Major carriers should somehow subsidize this desire by paying walmart wages to their employees is way out of line/ un ethical/ and wrong. Perhaps when we purchase what ever product your firm sells we should demand that they pay you low wages in order to pass the savings on to us ( the consumer).

 

[Flying Titan]

Your perspective is one of the typical flying Joe Public whom is out to fly for the cheapest fare possilble (via the subsidy of lower wages and benefits of airline employees). [/b]

[post="277126"][/post]​

This is your statement upon which I based by reply.

 

[TechBoy]

Why wouldn't it be in DL's best interest to have the ability to let fares fluctuate beyond their ridiculous cap in order to maximize revenue. Yes, a $2300.00 domestic Y fare certainly isn't feasible in today's market but it is supply vs. demand. Say for example, that on a given date all seats from ATL to LAX are nearly sold, hence supply low. Delta could very easily charge a price over the cap of let's say $750.00, fill up all the seats and maximize revenues on the route. The cap of 499.00 doesn't fully allow the supply verses demand formula to work in DL's favor, hence a 5 Billion dollar loss for the year. You will see the Simplifares go away eventually as DL management will finally figure this out.

bigsky

[post="277145"][/post]​

The problem is not the $499 fares. It's the $69 fares. NW sells plenty of those along with some ridiculously high fares. That's NW's choice.

I'm no Delta apologist, but from what I can see, they face much more direct LCC competition than NW, CO or AA. So they are trying to keep as much of the higher fare biz traffic on their system by charging more reasonable fares at the high end. It also stimulates more purchasing by last minute travellers because they are not raped by last minute fares. Theorhetically, this will produce higher average yields. HP and AS experience would indicate that this can work. The jury is still out on Delta. However, your idea that Delta can just raise the fares 50% (from $499 to 750) and still sell as many high fare seats is ludicrous and is not borne out by the experience of any airline, including NW which has been the master at low-ball fares.

 

[TechBoy]

"Apparently you missed the class as well. In the past, NW refused to raise fares because it was in their interest not to. Now, DL is refusing to raise its fares because that is in DL's interest."

Clearly, you didn't qualify for the class. The "class" is about MAKING money...NOT HOW to LOSE money. It's in DL interest to lose $2 Billion a quarter? The "class", apparently... is beyond your ability to grasp.

You folks can pontificate all you like about how NW was the spoiler in raising fares...one thing is clear...NW knows how to maximize revenue superior to all others. THAT... is a FACT. Now you figure out who has more to lose. If you think this industry will continue well into the future with rock bottom fares you are in for a rude awakening. Bankrupt U/ Ual/ along with "Simpli lose $2 Billion a quarter fares" will not be the standard in a few years. The dust hasn't settled...and there are plenty of storm clouds on the horizon. No cost structure operating at todays fuel prices will win out. Even with Bankruptcy we keep hearing from U/ Ual "if only fuel wasn't so high we would've been profitable....ditto from DL. Well guess what...so would most other major carriers INCLUDING (to your chagrin) Northwest.

[post="277143"][/post]​

You seem to think that I have some vendetta against NW or something. I was merely pointing out irony. And have now discovered just how sensitive you are on the subject.

You are just making my point for me here. NW is working to maximize its revenue and DL is doing the same. Sometimes that means that they do different things. And that's often good for consumers.

BTW, I wouldn't pound your chest too hard on NW's strengths. The press is full of stories today about a possible NW BK.

 

[North by Northwest]

This is your statement upon which I based by reply.

[post="277152"][/post]​

Mr. Flying T, I am sorry if I mistook this to be your post. "You seem to ignore the incongruity in this problem. You claim that someone who would rightly revolt against paying $1,500 domestic fares is only interested in paying the lowest fare possible. You clearly don't understand frequent business travelers and what motivates them. Please re-read earlier posts (assuming you care to reply) and address the substance. "
Please help me understand what the motivation is behind the needs of Freq. Biz Travelers. I am always open for enlightenment. (sincerely)

 

[Flying Titan]

This issue is one of paying for a commodity... PRICE is set based on demand/ cost/ PROFIT. You seem to think the airline business should operate on a different standard than all other commodities..i.e oil. American business is not known for public welfare. Business travelers pay a premium because of their desire to fly with many time options (time is money)/ many destinations [not flown by LCC's, domestically/ internaionally] THESE options have VERY HIGH costs for major carriers. The expectation that Major carriers should somehow subsidize this desire by paying walmart wages to their employees is way out of line/ un ethical/ and wrong. Perhaps when we purchase what ever product your firm sells we should demand that they pay you low wages in order to pass the savings on to us ( the consumer).

[post="277150"][/post]​

At no point did I say that low fares should be subsidized with "Wal-Mart wages." You brought that into this discussion. Throughout this thread, you have ignored the substance of rational fares. The problem is the $69 DCA-DTW fare. Yet, you won't discuss it. A DTW-SEA fare of $998 is a money maker, plain and simple. Charge $2000 for that fare and you will succeed in driving more and more passengers into the arms of JetBlue, SWA, and others who have figured out how to make money without gouging their customers. What's more is these carriers would not be nearly as strong as they are today if NWA and the other legacy airlines hadn't left themselves so open to pricing attack in the first place. As soon as legacy carriers realize that they can never go back to that pricing model (if they want to survive), the better off everyone will be. IMHO, raising the bottom fares is almost certainly where the money will be found.

You are correct in asserting that business travelers pay a premium for frequency/schedule, direct flights to secondary cities and other factors. Historically, that premium has been 3x-4x the price of a "leisure" ticket. In the 90s we saw this multiple rise to 5x-8x (and at times even an obscene 10x). Why not just put a sign out inviting companies to just come and take some of your best customers away? That's what's happened. People who never dreamed of flying an LCC are now regulars on these carriers because of the actions of the legacy airlines. BTW, the desire to fly internationally is not one of the factors that justify higher domestic fares. As you know, at many carriers, international flights are now subsidizing domestic operations. NWA is at the top of the list.