MilesBuzz! - Double Miles promo will only help Airlines in short-term.

There is no doubt that the current double mileage promotion is getting people back into airline seats but this will not the airlines this Winter. The current prices for international travel are very good for October travel but are no bargin for November through March travel. Why would anyone pay $550 (from the west coast) for a trip to Europe this Winter when last year you could get fares as low as $299?

Many people are flying now to get the double miles but what will the airlines do for bookings after the double mileage promotion ends on the 15th of November?

Even with the 20% to 30% cut in capacity, the airlines still have many empty seats to fill come January.

The airlines face a real dilemma. They have created their own worst nightmare. By so conditioning us to low fares, they must figure out how to make a profit on those low fares. Most cannot.

So how do they get us to fly again? Offer low fares, at least for the short term in the 4th quarter. But as you note, that does little for those loads in the 1st quarter, since people will await the next round of really low fares.

Is the dilemma getting clearer? When it costs $600 to fly a seat across the Atlantic and back from LAX, you aren't going to make money selling it at $300. But your customers are so conditioned to that $300 fare, they won't buy for much more, let alone for the $600 you need to break even, let alone make a profit. So the question becomes, do you lose $600 and let the seat fly empy, or take $300 and lose $300?

Doesn't take long to figure out why the red ink will go on forever. Why something's gotta give. That something will be one or two carriers, merging into the other four or five. That will reduce the number of seats available, and thus force up the price up to a level closer to the $600 needed. Most will say this is price gouging, and taking advantage of less competition. But the real question is how long can airlines keep going this way?

We can already see the results of reduced capacity on existing carriers. Remove one flight from a route with 6 dailies, and you have cut capacity by almost 15%, and remaining flights will be more crowded. Only problem is that the fares are still being kept low to provide an incentive to fly.

Yes, I know one response to my economic conundrum is for airlines to cut their cost of operations, but the established carriers can only go so far. They can never attain the levels of SouthWest for too many reasons to go into here.

Double miles may be a minor incentive, keeping you loyal to a specific carrier. But I also suspect they will be increasingly important to offset the slow rise in prices we will have to see if the airline industry is to return to a state of business viability.

****.. now i'll get 22,000 miles for fll/ord/pdx/sea/sfo/ord/fll :-)

too bad those won't count toward staus!

Northwest's European and Asian sale fares extend into March, which is a great way to jumpstart the status chase in the New Year. While it's true that costs are certainly rising, it's also important to note that no airline is likely to be selling a whole planeload of $300 seats. That said, higher prices for tix would seem inevitable over the longer term, I would have to agree. In the meantime, we can make hay while the sun shines. http://www.flyertalk.com/forum/smile.gif

I dunno. IMHO the airline business is not much different than the industrial solvent business, the beer business, the shirt business, the computer business etc. They must (well should) adhere to most of the things taught in Economics 101 etc.

The airlines have for some goofy reason invented strange weird rules which for most businesses would probably be illegal (ie if you were born in April in an even numbered year, weigh more than 164 lb but less than 182 lb, are left-handed, buy your ticket between 14 and 18 days in advance, stay over a Saturday night with a full moon, and have type O-Neg blood etc you can fly on odd numbered Tuesdays for 23.375% off full fare etc.

Again I believe hotels have no legit reason for having 88 DIFFERENT room categories and DIFFERENT pricing points (check the Hilton Waikoloa) for the same night. The airlines often have 3-4 pages of rules for a single listed fare of $120. It takes a lawyer to understand them and sometimes two lawyers. They totally forgot the very nice K.I.S.S principle.....Keep It Simple, Stupid.

MisterNice

Again, this is where the Southwest's of the world succeed - how complicated are the fare rules there? Buy, fly and go!

Shareholder, I disagree that international flights cannot exist in a Southwest type business model. It would be difficult to do, but not impossible.

Look at Icelandair - taking advantage of their geographic location relative to North America and mainland Europe, they fly out in the evening, hub out of Iceland, and get you into Europe by morning, then reverse the process.

They are not competing with BA for "top end" customers, but there are (until now, at least) making money at what they are doing.

Key is to be extremely disciplined about the route network and scheduling.
Also, pricing is different - you can not turn the plan as often on longhauls, so the passenger per mile served per segment equation is different - but still "do-able".

Delta is advertising on their website that the double miles will count toward 2002 elite status.