USAirways, High Yield Monoply Route Challenged

[Hope777]

"What happens when an airline has a monopoly on a popular business route and charges more than $1,100 round-trip for mid-week flights on the 281-mile route? Southwest adds service on the route, naturally. That's what's happening in Philadelphia, where Southwest will end US Airways' monopoly on service between Philadelphia and Boston on June 27."

Full Article From the USA Today,
http://www.usatoday.com/travel/flights/blog.aspx

 

[BoeingBoy]

WN is charging $59 for their "Get Away" fare and $147 for Business Select. Another US cash cow route bites the dust.

Jim

 

[jimcfs]

Let's not forget that others (namely FL recently) have tried to challenge US on this route only to retreat.

I have a feeling that WN won't retreat.

 

[BoeingBoy]

Let's not forget that others (namely FL recently) have tried to challenge US on this route only to retreat.

The problem FL ran into was not enough connecting opportunities. There just aren't that many people that need/want to fly between Philly and Boston. FL just couldn't draw enough of the connecting traffic given US' hub in PHL vs FL's few flights. That will be less of a problem for WN.

Jim

 

[cynic]

Are these new flights or are they reducing flights from other cities?

 

[nycbusdriver]

Now we know where the BOS crews will displace on May 1. At least they'll have reliable service to get to work.

 

[zethya]

It's difficult to determine if the approx 600 daily BOS-PHL passengers (a relatively small number between 2 principal cities) is primariy due to the exhorbitant fares charged by US over the years. I'd speculate that once WN gets their feet wet on the route, coupled with an essentially new (and still evolving) terminal D/E at PHL, the passenger count may significantly increase as AMTRAK users change gears. It's only 5 hours Center City BOS - Center City PHL on the Acela Express. Currently, even BOS-PIT typically has more daily Air passengers than BOS-PHL.

 

[FWAAA]

A few months ago I predicted this. The O&D numbers will likely balloon in a classic example of the "WN Effect." US won't lose its mileage-junkie pax but it will lose their high revenue.

IIRC, the O&D numbers were much larger a few years ago - perhaps when other airlines were providing competition.

 

[JAMAKE1]

The O&D numbers will likely balloon in a classic example of the "WN Effect." US won't lose its mileage-junkie pax but it will lose their high revenue.

Completely agree. Southwest will stimulate traffic on this route. The problem with Air Tran's service was poorly timed flights...

 

[SparrowHawk]

A few months ago I predicted this. The O&D numbers will likely balloon in a classic example of the "WN Effect." US won't lose its mileage-junkie pax but it will lose their high revenue.

IIRC, the O&D numbers were much larger a few years ago - perhaps when other airlines were providing competition.

I'm thinking you're right. I recall back pre merger there wer A321's on the route at peak times and you needed a shoehorn to get on the flight. They had 26 seats in First and I missed getting upgraded a few times. The business was there, where it went I'll never know.

 

[nycbusdriver]

The business was there, where it went I'll never know.

Certainly the economy has been a significant driver in the downturn, but LCC has not helped anything by the way they treat the FF. As you said, the 321s had 26 Envoy seats and you sometimes couldn't get one. Now how many Envoy seats in that 321? How many coat closets for your suit jacket? And on and on.

There had been a concerted, deliberate effort on the part of Tempe to alienate the high yield passenger, and now they whine that they aren't getting high yields. Duh!

 

[PBI2FLL]

The A321s certainly DO NOT have ENVOY seats!

 

[back2CLT]

My predicition, US cuts fairs, but still maintains them at a profitable level....they will wait to watch SW blink....

How long will SW really run a highly congested route at that deep of a loss? There model to maintain low fares is to fly into airports where they can do quick turns. PHL-BOS doesn't strike me as a route that fits that model. Combine that with prices so low that they are guaranteed to oversell, some bad weather, and no agreements for putting passengers on US in case of weather ( I don't think) and I think that US gets the last laugh here.

 

[BoeingBoy]

My predicition, US cuts fairs, but still maintains them at a profitable level....they will wait to watch SW blink....

They already have for advance bookings. Coach fares are $59/$127 (plus taxes/fees) each way, the same as WN's "Wanna Get Away" and "Anytime" fares. US' unrestricted FC is $766 each way though.

How long will SW really run a highly congested route at that deep of a loss?

Don't look at the fare, look at the yield it represents. At over 20 cents/mile, WN can probably break even at about a 60% load factor if they sell only the "Wanna Get Away" $59 fares (and they won't sell only those lowest fares). US, on the other hand would probably need over a 80-85% load factor to break even at that fare. The question is which is more likely - WN getting a 60% load factor on 5 flights/day or US getting an 80+% load factor on 20 flights/day.

Jim

 

[wings396]

How many of the PHL-BOS flights are being operated with the 170/190's ? I don't have the exact number, but a good portion of them are using smaller A/C indicating that the loads are not all that heavy anyway. While I won't dispute that WN will take away some passengers, I don't see it as the big threat that some others may. As posted above, these city pairs are prone to heavy ATC delays killing the "quick turn" business model of WN. Checked bags on a route like this are not a huge factor, so that shouldn't be an issue when choosing US or WN. WN does have a good sized operation in PHL, but can't come close to the amount of connecting traffic that US has including the Intl.that can feed this route.