Actually, I would like to begin by agreeing with another post made in this forum in reference to the failure of the Tempe, Arizona analysts to adequately price Caribbean flights due to a distinct lack of experience. This year, there is a clear disconnect in USAirways pricing, and as the other post mentioned, it will likely lead to further reductions in USAirways' Caribbean destinations, which will be an unfortunate situation.

Anyway, I'm very worried about USAirways ability to compete in 2006, particularly in the Bermuda market, simply because they will be flying upwards of 6 flights on some days, which is already down from last year, as their analysts appear to naively feel that the avoidance of competition in some markets will enable US to succeed by keeping their fares high. But, clearly this is a strategy that is surely going to set the carrier up for a major failure in this region, if not addressed soon.

Look at it from this perspective.... About a month ago, when USAirways heard that JetBlue would be flying into Bermuda via JFK; they instantly cancelled their LaGuardia flights for this summer, so that they wouldn't have to match the fare.. Was this a good move.....? Not at all!!! ... Simply because all of the other airlines chose to match JetBlue's fares, and considering that JetBlue doesn't have a frequent flyer program; the new fares have worked wonders for AA and CO. American has now decided that to fill some of the void left by USAirways, they will now (for the first time) offer twice daily 767 service to Bermuda from JFK. Meanwhile, fares have dropped to most destinations in the U.S. particularly on AA and CO, and due to USAirways, inability to adequately lower fares (obviously due to lack of training by AZ pricing analysts) their cheapest fares on many routes range from $100 to $300 more than the competition. Management has advised me that the problem is being worked on, but two months later, fares on very few routes have been adjusted, and adjustments of $50 are not going to kick it. What takes me by surprise is that USAirways touts itself as the largest low fare carrier in the U.S. But, considering that they are now the most expensive carrier to Bermuda.....am I missing something???

Already, I've been asked to shift much of my business travel to CO and AA because of the difference in pricing, and in fact have been told by my boss, that if I choose to fly USAirways, I'll have to pay the difference myself..... Well, considering that the quality of service on USAirways has gone so far downhill, how in the world can they expect people to pay a premium for service that is barely satisfactory. Honestly, if I had to pay a premium for a U.S. Airline it would be the one that gives me a FREE HOT meal in economy on West Coast bound flights ... yup....Continental. And at the end of the day, if USAirways, doesn't reduce the fare on its flights, will I be the only elite member to forego my status with US, and build miles with another carrier??.... Of course not, individuals will be more than happy to fly with the competition. Pricing and quality service go hand in hand, so having dropped the New York flight, and now refusing to reduce fares in order to compete with five of six competitors in the Bermuda to U.S. market, can success really prevail in 2006...... NO WAY! For one thing, look at US' mid-summer pricing to Los Angeles from Bermuda in economy.....Its $925 (including tax) while AA is $686. Furthermore, as a point of reference, last year, I flew to Los Angeles on US in first class for $980 including tax and $590 in economy.

So, is something wrong with pricing post merger....... ABSOLUTELY!! Come on guys buck up! I'm a big supporter, and only want to see better service and more FULL USAirways flights to the Caribbean region, in order to displace AA's dominance. But at this point..... I can only see more reductions in US' Caribbean service, because so far, it appears that analysts in Tempe, AZ do not have what it takes, to keep my carrier of choice flying within this region. So, USAiways, get on those analysts, or better yet, re-hire your prior Caribbean analysts, because further failure in this market is clearly on the horizon if this issue isn't acted upon shortly.

They're not that dumb. Carib. provides huge margins in the Winter and Europe provides them in the Summer. Without those two markets built up over the last 10 years, US would have never survived their bankruptcies.

Taking off the LGA-BDA flight hardly means they are abandoning the Caribbean. They are just focusing their equipment to the best markets. It is possible that the route wasn't doing as great as they wanted it to (compared to the PHL originating flights).

Actually, I never said that they are abandoning the Caribbean; but rather I stated that with ridiculous pricing; they will hardly be able to survive against other airlines like AA, CO and JetBlue whose pricing is clearly much, much lower than USAirways. And, your correct that the LGA flight may not have been doing as great as Philly, but how in the world can US justify premium fares for lame service? At the end of the day, the consumer is going to fly with other carriers, unless pricing is adjusted; and airlines like AA in particular will continue to dominate the Caribbean market due to the ignorance or US' pricing analysts. Think about it, in the last two months that AA, CO, and JetBlue have matched rates on most routes, US has been extremely slow to the punch. Obviously, pricing issues like this WILL affect load factors on the Bermuda route as well as any other routes that US services, be it within the Caribbean or elsewhere.

In a similiar situation, it seems USAir has all but conceded the PIT/MCO route to Southwest. They have cut flights and the cost is crazy. My friend got a Southwest "ding" for $97 (normal fare $177). I had to reuse a cancelled ticket on USAir and the fare was $294! Where is the new "low cost" carrier?

They truly believe that you are going to pay that for a direct flight, due to the "full service" nature of LCC.

I think that's a 737 these days (don't live in PIT anymore nor fly to MCO via PIT). If it is, the average coach pax is going to be much, much more comfy in the back of the LUV bus....

So you think they should match WN's $97 fare? Even WN doesn't make money at that price. US has made it clear that they won't chase the bottom of the market. Nor should they.

So you think they should match WN's $97 fare? Even WN doesn't make money at that price. US has made it clear that they won't chase the bottom of the market. Nor should they.

LUV's lowest fare in the market is $59 one way. I could not find any seats in that bucket in the next few months (which is pretty consistant with what LUV and everyone else does--limit the number of available seats at that price, and use "ding" to unload the unbooked seats as the flight approaches). That would make for a roundtrip fare of $118 or so. LUV's second cheapest fare bucket (also zeroed out for many dates in mid-may) would cost $160 roundtrip. As of Q3 of '05 (latest numbers I could find), LUV's CASM with fuel is 8.39 cents. It's a 1668 miles roundtrip PIT-MCO-PIT. That means it costs LUV around $140 bucks to fly one person over that trip (might be a bit less, as that trip is slightly more than 2x the average stage length).

By comparison, US appears to be matching the fare (in buckets at least) at the low end. And at the $160 level. US (East) had a CASM without fuel in the 4th quarter of 7.85 cents. With fuel, it's a whopping 11.38 cents. At that clip, the breakeven is around $190. But to be fair, HP (US-west) had a CASM of 11.38 cents (or 6.44 cents without fuel--which was actually less than LUV's without fuel CASM of 6.57 cents). Oh, and neither of these numbers for HP/US take into account the express CASM (much higher).

In short, US could not sell the ticket at a profit that LUV can (which we knew). LUV's regular (not ding) fares have one bucket that does not make money on the route, US has at least two or three. And, given all of this, what's the big differentiation that makes sitting in the back of a beatup US (East) 733 that much more attractive than a brand new LUV 737?

Without a stronger product to upsell with or lowering all costs to the HP levels, the "new" US is going to have a really hard time in these kinds of markets.

System wide CASM is affected by stage length and the RJs. The CASM for US on that particular flight is probably lower than the average CASM. Therefore, your break even point in this particular instance is probably high.

Of course, your overall point is obviously correct. It costs US more to move a passenger than it does WN. So what should they do about it? How does matching WN'S rock bottom fares help them?

The only way to lower the CASM is to focus on more longer, higher margin trips. This is why Carib and Europe are crucial to offsetting the shorter hop markets that they've relied on for so long.

System wide CASM is affected by stage length and the RJs. The CASM for US on that particular flight is probably lower than the average CASM. Therefore, your break even point in this particular instance is probably high.

Sure, but that's also double the average Southwest stage length as well.

Of course, your overall point is obviously correct. It costs US more to move a passenger than it does WN. So what should they do about it? How does matching WN'S rock bottom fares help them?

They either need to give people a concrete reason to buy up to the US breakeven price level or match the fares. I'd submit to you that they are currently doing neither of them really well, and it's troubling.

While we (in this case, a good deal of the general FT population) might see a difference in value (as it pertains to things like upgrades, seat assignments, and miles) but that's not going to be universal. However, the general FT population has seen enough of a decrease in benefits to (in many cases) move their business to other legacies.

The "full service LCC model" only really works if your pricing reflects that value. Right now, LCC's does not.

The only way to lower the CASM is to focus on more longer, higher margin trips. This is why Carib and Europe are crucial to offsetting the shorter hop markets that they've relied on for so long.

Europe will probably remain high margin for some time, but the Carribbean won't. Running to the easy revenue does not scale. At some point, you have to either lower costs or get people to buy up to a higher level of value.