The Real Problem

LDKIAM

Member
Oct 29, 2002
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Folks, the real problem is the Airline Business as we know it today is broken. With almost every carrier in financial distress, seeking concessions, cutting flights, routes, employees, planes and whatever else they can think, it has to go deeper then just soft travel demand from September 11th.
You can look at history, employees at Pan Am, Eastern, TWA and numerous others have given concessions to their respective companies and they still went out of business or were sold off. Concessions have never saved an airline yet.
The way they do business is the problem, if you can't sell a ticket for the price it costs you to fly the airplane, the business model is broken.
I am not one for pitching reregulation, but it is either reregulate or survival of the fittest. Because when you have upstarts like JetBlue that do not have the overhead and facilities (example, JetBlue pays a reservationist $8 an hour to take calls at home for reservation, therefore they have no building to maintain)of established major airlines it puts them at a cost advantage, somewhat like Valujet was in regards to a virtual airline, outsourcing work to the lowest bidder, in life I have always been a firm believer of you get what you pay for.
The airlines, unions, employees and the government must sit down and come up with something that will fix the industry, not put a band-aid on a gushing wound.
 
[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/7/2002 10:23:22 AM LDKIAM wrote:
[P]KC, you missed the point, no one pays those walkup fares on a flight anymore.  Apparently you have no idea about the fares and how many seats are sold at the millions of differant fares that are on one flight, that is the main problem.[/P]----------------[/BLOCKQUOTE]
[P]Actually a few do.....[/P]
[P]My boss just took off for SFO yesterday - $2400 walkup.[/P]
 

Flufdriver

Senior
Aug 20, 2002
396
6
www.usaviation.com
LDKIAM, you hit the nail on the head. It's impossible to compete against and make any kind of a profit when you have to go against and upstart that pay their people NOTHING and have operating cost that are so low you can't compete. I do favor some sort of RE-Regulation atleast when it goes to pricing. The fare I think should be structured around a number that allows the long time majors with an already well established cost structure to atleast cut even on the price of a ticket. This fare would also be the same fare published at the Low fare guys. They wouldn't like it because it would level the playing field as far as the fare stucture and it would not allow them to have the upper hand to snag the consumer with that fare. The end result would be the low fare carrier would make more money with the NEW more expensive ticket and let us all duke it out the trying to attract the comsumer by offering goodies. Something that really doesn't cost the company money for the return you would get.

The government doesn't care about all the long time majors withering away trying to compete against low fare guys, there only looking out for the consumer. Great example. Look what Wal-Mart has done to small communtites.
It has put many small family owned businesses out of business while offering small wages to a small few who live near.

Lets HOPE this elected government we have steps to the plate and changes things instead of worrying about the rest of the world!! The again look at the steel industry.

Any thoughts?
 

KCFlyer

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Aug 20, 2002
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[P][SPAN class=BodyFont]KC, you missed the point, no one pays those walkup fares on a flight anymore. Apparently you have no idea about the fares and how many seats are sold at the millions of differant fares that are on one flight, that is the main problem.[/SPAN][/P]
[P][SPAN class=BodyFont]Any idea why they don't pay those walkup fares? Any idea how many more might pay for a walkup ticket if it didn't put a crimp in the already tight travel budget? How do the airlines respond? By nickle and diming advance purchase tickets to death. Changes are a hundred bucks, missing the flight results in all your money out the window. Charging $25 for a paper ticket. What's next...charging ten bucks to allow them to sit in a chair in the gate area? [/SPAN][/P]
[P][SPAN class=BodyFont]My theory all along is simple; Get rid of those millions of different fares and replace them with no more than 5. Get rid of the penalties and change fees. Get rid of the difference between $99 advance fares and $2,400 walk up fares. Sure, raise the advance purchase fares a bit, but lower the unrestricted fares a lot. The proposals for reregulation seem to consist of two things: Raise advance purchase fares, and keep unrestricted fares the same and just force the low fare carriers to abandon the low fare market. It will do more damage to your industry and your job than the current structure. My point is, rather than focusing on the advance purchase (leisure and surprise - business) market, why not focus on doing something to encourage more high yield business passengers? Yes, the yield won't be as high as you'd like today, but if companies outside the airline industry are looking to cut costs, what incentive would reregulation give them to send their remaining employees on business trips? [/SPAN][/P]
[P][SPAN class=BodyFont]How many planes and people did AA, UAL, and Delta have prior to 1978? When did you hire in at U? Would that job have been available to you in a regulated market? As much as you seem to want to blame the low fare carriers for the status of the industry, if it were not for deregulation and the competition provided by those carriers, the airlines would only be a fraction of their currnet size. [/SPAN][/P]
[P][SPAN class=BodyFont]And while I might not grasp the intricacies of revenue mangment, it would appear that many in the revenue managment departments at the big airlines don't grasp it either, as evidenced by the staggering losses the airlines are experiencing with 75% load factors. [/SPAN][/P]
 
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LDKIAM

Member
Oct 29, 2002
99
0
KC, you missed the point, no one pays those walkup fares on a flight anymore. Apparently you have no idea about the fares and how many seats are sold at the millions of differant fares that are on one flight, that is the main problem.
 

Flufdriver

Senior
Aug 20, 2002
396
6
www.usaviation.com
Bill thats great wish we had more of those $2400.00 walk up fees...but that's one in a million. KCFlyer, you also know thats rare. I myself ride in First Class and spend alot of time in the main cabin commuting to work and through casual conversation the subjsect will come up how this individual got this REALLY LOW round trip fare, funny how that fare got that low. Great example is US in PIT. PIT to PHX use to be a somewhat high fare, not sure the actual fare but was told how the fare suddenly plunged now the America West is entering the market. Again, fares driven by the LOW cost. My point is .0000003% on the consumers are going to pay the Walk-UP fare and the rest are shopping for that fare that is set by no frill companies.

All we ask is to level the Playing Field. Yields and profit are all ready showing that at SW
 

KCFlyer

Veteran
Aug 20, 2002
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[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/7/2002 10:36:53 AM LDKIAM wrote:
[P]But did he pay for it or did the business?[BR]The business gets to write it off as an expense for their taxes.[/P]----------------[/BLOCKQUOTE]
[P]What if he owned the business? You know, a small business...one who watches their money month to month rather than waiting until April 15 to justify the high airfare? It's not just IBM and Exxon who are sending people out on trips - and even THEY are watching their travel dollars - there are a lot of mom and pop shops who spend their companies money as if it were their own. [/P]
 

KCFlyer

Veteran
Aug 20, 2002
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[P][SPAN class=BodyFont]LDKIAM, you hit the nail on the head. It's impossible to compete against and make any kind of a profit when you have to go against and upstart that pay their people NOTHING and have operating cost that are so low you can't compete. I do favor some sort of RE-Regulation atleast when it goes to pricing. The fare I think should be structured around a number that allows the long time majors with an already well established cost structure to atleast cut even on the price of a ticket. This fare would also be the same fare published at the Low fare guys. They wouldn't like it because it would level the playing field as far as the fare stucture and it would not allow them to have the upper hand to snag the consumer with that fare. The end result would be the low fare carrier would make more money with the NEW more expensive ticket and let us all duke it out the trying to attract the comsumer by offering goodies. Something that really doesn't cost the company money for the return you would get. [/SPAN][/P]
[P][SPAN class=BodyFont]Wrong, wrong, wrong. If you can't make money on a $1,800 walk up fare for a 500 mile flight, than your problems are very, very severe. And if the government starts regulating airfares, who's side do you think they will head for...the side that concerns less than a million airline workers, or the side that affects the hundreds of millions of passengers? The big airlines could compete with the upstarts (BTW two of which have failed in the past couple of months) by changing their revenue managment model. Do you know why SWA gets passengers? Because the difference between a full fare ticket and a deep discount ticket isn't all that great. Do the other airlines do anything to reduce the fare differences on their tickets? No, they just try to undercut the low fare airlines (I suppose to lead people to believe that they are consumer friendly), and make it up by gouging business people on non competing routes. IMHO, your airlines would do better to reevaluate the revenue model and actually lower their unrestricted fares to attract business passengers. Because if the goverment starts reregulating, they are going to insist that your cost levels meet those of the low fare competition...not just get close...meet them. [/SPAN][/P]
[P][SPAN class=BodyFont]The government doesn't care about all the long time majors withering away trying to compete against low fare guys, there only looking out for the consumer. Great example. Look what Wal-Mart has done to small communtites.[BR]It has put many small family owned businesses out of business while offering small wages to a small few who live near.[/SPAN][/P]
[P][SPAN class=BodyFont]If you want the goverment to reregulate, especially pricing, then you might change your example to where Uncle Sam is the Wal Mart and you the airline employee is the small family owned business. Why? Because when you price your services out of reach of the masses, the airline would have no option but to shrink to a level that meets demand. If you started in the airline industry after 1978, then you most likely owe your job to the WalMarts of the skies...they got the airline industry growing. Are you willing to find employment outside the airline industry? Because with reregulation, there will be less demand for your services, and your airline may just shrink to a pre 1978 size. [BR][BR]Lets HOPE this elected government we have steps to the plate and changes things instead of worrying about the rest of the world!! The again look at the steel industry. [/SPAN][/P]
[P][SPAN class=BodyFont]Yes, the steel industry pretty much priced themselves out of the market. Reregulating airline ticket prices would price many airline employees out of the market. You're right, the pricing model needs to change. But to actually help your industry, the prices need to come down, and not go up. And before you come back with the we're giving away seats today argument, you're only looking at the leisure customer (remember him, the one nobody wanted because they bargain shopped) to save your industry. You need to look at the business passenger, and what can get him or her back on your planes. If you maintain the current pricing model, you'll eliminate the leisure travaller, and you'll still alienate the business passenger with fares that they can't afford to pay for their travel. [/P][/SPAN]
 
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LDKIAM

Member
Oct 29, 2002
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But did he pay for it or did the business?
The business gets to write it off as an expense for their taxes.
 

N628AU

Veteran
Aug 22, 2002
909
106
www.usaviation.com
KCFlyer,

While I rarely agree with a lot of what you say, you have nailed it on the head. Those walkup fares are absurd and no one pays for them. You really only need four or five fares in a given market. No one (including WN and B6) are making money on $200 R/T coast to coast. Get rid of it. You need the $2400 fares to balance it out, and no one is paying for them, get rid of them. GIVE THE BUSINESS TRAVELLERS A REASON TO FLY! Southwest is all over this with marketing campaigns like no fare over $299 unrestricted, and that ad where they have the conference call and the guy in Seattle is not in the office, because he has flown in to surprise them, or the ad talking about how you cannot shake hands/hug/kiss/etc via email or the phone. Granted, I am not advocated topping a fare at $299 for us, because we do have a premium product, and people will pay for it. I realize this subject has been beaten into the ground, but some just still continue to choose not to see it.