Originally Posted by Cohiba
Would you rather have people in seats for $69 or have no one in those seats at all, which equals $0.
I don't think the answer to the is question is automatically 'yes I would like $69'. First, the $69 includes taxes, the real revenue is 64.19. Then FlyI has to pay a booking fee, which is a minimum of $3. So, does an A319 burn $60 worth of fuel on a transcon flight if it is 200lbs heavier? Beats me, perhaps a pilot can answer. If they lose your bag they are in worse trouble. The point is that this fare comes close to the marginal cost of transporting an additional passenger.
On a fare like ALB-SAN for $79, (73.49 revenue) I would not be surprised if it is actually below marginal cost, plus the odds of misconnecting the bag are a lot higher.
Of course, no one knows what the true marginal cost is of selling an additional ticket is (I'm betting FlyI doesn't know) and they can't afford consultants to figure it out.