US Airways Dividend Miles (Pre-FlightFund Merger) - How does US Airways survive with Southwest PHL to PIT $27 fares

From USA Today;

Analyzing today's Ding! Fares: In looking at today's latest Ding! Fare offering by Southwest Airlines, I couldn't help but notice the $27 one-way fares between Philadelphia and Pittsburgh. Besides the obviously low fare, the thing that's perhaps most noteworthy about that $27 is what it means for US Airways. Philadelphia is a current hub for US Airways, and Pittsburgh is now one of its "focus cities," after being downgraded from hub status last year. So, why is this fare important for US Airways? US Airways had a monopoly on that route, and routinely charged $300 round trip or more for people not wanting to drive the 310 miles between Pennylvania's two largest cities. Walkup fares were considerably higher. Obviously, Southwest's $27 fares — Ding! specials or not — have put an end to that cash cow for US Airways. Posted 11:40 a.m.

US still has plenty of other BlowFares markets, such as many flights out of CLT...for now. And they're not selling every seat on the PIT-PHL flights at $29; the refundable tickets sold to some business travelers and others are more in the range of $150 plus tax roundtrip.

But they shouldn't bank on CLT being free of competition for long. Independence Air and AirTran are already there, and we've all heard the rumors of Southwest coming to the Queen City as well (if there's any gate space for them to do so).

Obviously, US is no longer free to charge BlowFares to many markets.

US needs to lower fares or offer better service or both.

Yes, US needs to lower their fare. but why should SW sell the ticket at 27 OW? can they make money? I think airline compaies should stop this kind of competition to make themself survive.

Obviously, US is no longer free to charge BlowFares to many markets.

US needs to lower fares or offer better service or both.

Yes, US needs to lower their fare. but why should SW sell the ticket at 27 OW? can they make money? I think airline compaies should stop this kind of competition to make themself survive.

WN will sell very few seats for $27, and the rest will be sold for $49 to $79 ($79 is full fare). Capacity controls are not a foreign idea at WN. :D

I assume WN knows what it is doing. ;)

They still have plenty of PIT cash cows left, mostly the nonstop New England routes. Paid $648 with a 14 day advance purchase for a weekend roundtrip from MHT-PIT over Mother's day weekend.

Even on a non-holiday they usually fetch almost $300 for the nonstops.

MHT, BOS, and PVD are all equally bad.

Yes, US needs to lower their fare. but why should SW sell the ticket at 27 OW? can they make money? I think airline compaies should stop this kind of competition to make themself survive.

Why should WN stand aside and let US have part of the market share gratis? WN would like it very much if US left the PHL-PIT market, if not the planet, entirely. Predatory pricing is nothing new. If US can match the low fares for some of the seats sold and/or give customers another reason to fly US over WN, then they will stay in the market and perhaps ultimately in business. Otherwise, they'll have to be content with their remaining BlowFare markets until someone else comes along and puts an end to extortion pricing in those markets.

Competition. It's (one of the remaining things) that makes America great.

$29 one way. 310 miles. According to my calculator that's 9.35 cents per mile.

That's not exactly "giving away" the seat -- if the plane is full it's a nice profit for SWA and just slightly bleeds US. (The "death by a thousand small cuts" strategy...)

US "survives" against this fare the same way they've "survived" against other fares: they cross-subsidize that route by finding someone else to screw. But their blowfares markets attract competition, so they find others to screw even worse, because now they're trying to cross-subsidize two markets. This game can't last. We know that to be true because it didn't.

Why should WN stand aside and let US have part of the market share gratis? WN would like it very much if US left the PHL-PIT market, if not the planet, entirely. Predatory pricing is nothing new. If US can match the low fares for some of the seats sold and/or give customers another reason to fly US over WN, then they will stay in the market and perhaps ultimately in business. Otherwise, they'll have to be content with their remaining BlowFare markets until someone else comes along and puts an end to extortion pricing in those markets.

Competition. It's (one of the remaining things) that makes America great.

True predatory pricing is illegal. Companies are not allowed to lower prices below cost in an attempt to drive a competitor out of business. Please note, I'm not accusing WN of engaging in illegal behavior, just clarifying the terms.

True predatory pricing is illegal. Companies are not allowed to lower prices below cost in an attempt to drive a competitor out of business. Please note, I'm not accusing WN of engaging in illegal behavior, just clarifying the terms.

Even in the airline industry?

I know many states have laws preventing gas stations (and perhaps other businesses) from selling below cost to protect the "mom and pop" stores from unfair competition, but I didn't think the rules applied to airlines.

After all, AirTran tried to compete on the PIT-PHL route back in 2001, but US Airways matched the fares and everyone flew US for the miles and familiarity, driving AirTran out of the market. Once AirTran left, the BlowFares returned.

As indicated, Southwest CAN and does make money on the low fares, and the whole plane doesn't sell for $29.. in fact, probably less seats sell for $29 on Southwest than they do on USAirways. The rest sell for $39, or $49 (I paid $49 to go to Chicago Midway -- and that was a fully refundable one way fare, just shy of the $79 full unrestricted fare).

As others have often indicated Southwest is not always the cheapest. But with the lack of a change fee, a straight forward web site, and no 'BlowFares' for last minute travel, a lot of people will gravitate to book all their travel there.

Things have changed a bit now that Southwest has removed their double bonus which makes it twice as difficult to get a free ticket on Southwest (from 4 to 8). Still a much higher rate than any US airline for domestic tickets, but, not a slam dunk.

The problem here isn't "predatory" $29 fares. $29 isn't predatory, it's actually quite reasonable. $15 would just be a "50% off sale".

The real question is how do airlines get away with blatant gouging in the absence of competition? If a gas station did anything remotely like what US has been doing on the PHL/PIT route prior to WN (or what they do today on PIT/MHT etc) they'd be in legal trouble up to their eyebrows. But airlines not only get away with that crap but they operate as a defacto cartel whenever they can.

So when does WN start up PIT-ALB, BDL, PVD, and MHT? :D Something tells me some of that service will be coming.

If I had flown this entire trip on US the cost was $640 for the specific dates and times I needed to fly. Split the flights between the 2 airlines, WN charged $118.40 and US charged $137.40. WN flights, both FULL. US flights, NOT FULL. Infact, only 48 total PAX on the US MHT to PHL on a 737.

Will I fly WN again? I will be forced to by my company since it's based outside of Boston and the fares PIT to BOS are well over $900 no matter when you book your ticket. US will loose more customers out of PIT if they don't recognize this and soon. WN has only been here a week and their loads are very good I'm told.

It's still not as good as US F class, but far superior to US Y on my regular route. I flew a few flts recently on SW. Had a row to myself on PIT-LAS on a spotless 737-800 with a cheerful attentive crew. Got tons of work done and slept horizontally :cool:

I flew LAX-AUS twice and LAX-LAS and again had either a row to myself or noone in the middle seat. In that situation with the US F product so diminished, WN is almost as good as first IMHO with the genereous Y legroom and nobody elbowing you in the next seat. These flts had a 60-80% load factors approx. compared with the ALWAYS packed full PIT-LAX flights on US. I was always down on WN, but having flown a few routes I am considering them as a real backup alternative to US.

As I see it they are a real threat to US in PIT if they start to expand (which they will), --although I'll still mostly fly US.

$29 one way. 310 miles. According to my calculator that's 9.35 cents per mile.

That's not exactly "giving away" the seat -- if the plane is full it's a nice profit for SWA and just slightly bleeds US. (The "death by a thousand small cuts" strategy...)


Which is EXACTLY the way BBB explained it to me when the Cockroaches had their initial meeting with CCY