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Old Aug 30, 05, 10:50 am   #1
 
Join Date: Mar 1999
Location: SFO
Programs: United 1K, AA Gold, SPG Gold, HHonors Gold, Hyatt Platinum, Marriott Gold
Posts: 2,229
Independence Air - going out of business sale?

How can they make money on $69 transcon fares?

AUGUST 30, 2005-- Independence Air has just launched a 3-day sale with some of the best coast-to-coast fares we've seen.

Fares from Las Vegas, Los Angeles and San Diego to Washington D.C. startat just $69 each way. You can also fly to more than 35 other Eastern U.S. cities from $79 each way.

Book by midnight ET on September 1, 2005. You can travel
7 days-a-week from September 6 through November 15.

Sample fares (each way):
Los Angeles-Washington D.C. ... $69
San Diego-Washington D.C. ... $69
Las Vegas-Washington D.C. ... $79
Los Angeles-New York ... $79
Los Angeles-Orlando ... $79
Los Angeles-Pittsburgh ... $79
San Diego-Boston ... $79
San Diego-Tampa ... $79
Las Vegas-Atlanta ... $89
jaguar is offline  
Old Aug 30, 05, 12:27 pm   #2
 
Join Date: Mar 2003
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They can't. They've been on a going out of business sale since they started (see previous threads about a 109% breakeven load factor required, etc etc).

We can only guess that their strategy was to either hope United didn't make it, or cut back at Dulles, or to hope that the loss leader fares got people to flyI once, then come back and buy higher fares once they grew to like the service. While it seems some have grown to like the service, the fact that all the loss leader fares are still available means everybody's still paying fares that don't pay the bills.

Of course, many have been saying FlyI is not long for this world for a while now, and they've made it to their one year anniversary. That's a pretty solid result
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Old Aug 30, 05, 12:49 pm   #3
 
Join Date: May 2001
Location: IAD
Programs: Gymboree Global Services
Posts: 5,515
Those fares are ridiculous with $70/barrel oil. I plugged in the 20% corp discount, LAX and SAN came out to $130 RT with taxes. Nice.
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Old Aug 30, 05, 1:30 pm   #4
 
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How do you get that corporate discount?
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Old Aug 30, 05, 7:19 pm   #5
 
Join Date: May 2002
Location: South Park
Posts: 355
This is not a can you make money or revenue issue. With traffic crashing for many carriers, not just DH, when September hits (and this year is no different) it becomes a matter of filling up planes. Would you rather have people in seats for $69 or have no one in those seats at all, which equals $0.

Of course flight reductions can offset the impact and DH has already made some, but you can't pull out every West Coast flight.


Cheers.
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Old Aug 30, 05, 8:09 pm   #6
 
Join Date: May 2001
Location: IAD
Programs: Gymboree Global Services
Posts: 5,515
Quote:
Originally Posted by MFLetou
How do you get that corporate discount?
Not sure if you can still sign up for it, but info is in this thread:

Save 20% through 3/31/05
whlinder is offline  
Old Aug 30, 05, 9:55 pm   #7
 
Join Date: Sep 2002
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This is a last-ditch effort to raise some much need cash. Will it be enough to stave off Chapter 7? We'll have to see.
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Old Aug 30, 05, 10:03 pm   #8
 
Join Date: Mar 2005
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Their break even load factor is still 112%. They're delaying the inevitable.
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Old Aug 31, 05, 12:40 am   #9
 
Join Date: Feb 2002
Posts: 1,169
I cannot help but think 'Payroll Sale'
I just hope they run through 9/18 since I (stupidly) booked friends on DH flights.
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Old Aug 31, 05, 6:29 am   #10
 
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Quote:
Originally Posted by audio-nut
I cannot help but think 'Payroll Sale'
I just hope they run through 9/18 since I (stupidly) booked friends on DH flights.
i was on them last sunday night - $34 with coupons and discounts - EWR to IAD
have the same flight on tuesday am , then the next monday am
i just hope they make it that long!!
jessej is offline  
Old Aug 31, 05, 4:10 pm   #11
 
Join Date: Jun 2005
Posts: 81
It's depressing to see how many coupons are being given away....they depress already low fares and just make things worse for the company. The fall is a traditionally slow time of year though, so any revenue is good to fill up those aircraft.
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Old Aug 31, 05, 11:07 pm   #12
 
Join Date: Jul 2005
Posts: 3,031
Quote:
Originally Posted by foxnine
It's depressing to see how many coupons are being given away....they depress already low fares and just make things worse for the company. The fall is a traditionally slow time of year though, so any revenue is good to fill up those aircraft.

the 20$ coupons that say they are for r/t only work for one way. when you use that with the 20% off from glide or corporate your looking at $36 o/w.
ClimbGuy is offline  
Old Aug 31, 05, 11:08 pm   #13
 
Join Date: Jul 2005
Posts: 3,031
Quote:
Originally Posted by whlinder
Not sure if you can still sign up for it, but info is in this thread:

Save 20% through 3/31/05
i wish i knew about the 20% sooner the www.flyi.com/save20 doesn't work anymore i get a error 403 meaning i can't view it cause it is 'blocked' can anyone else get to it?
ClimbGuy is offline  
Old Sep 1, 05, 7:06 am   #14
 
Join Date: May 2001
Location: IAD
Programs: Gymboree Global Services
Posts: 5,515
Quote:
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.
whlinder is offline  
Old Sep 2, 05, 9:31 am   #15
 
Join Date: Aug 2004
Programs: iClub
Posts: 50
It does not matter how cheap a sale is offering tickets. It is all about revenue management. Using your logic, an airline should never give away a seat for advertising, humanitarian aid, etc. If you have 20,000 seats/per day and you know for a fact that 4,000 will be empty (LF <80%), why not put those empty seats to good use...ADVERTISE. Use those seats to reinforce your brand...a hip, low fare airline, with fantastic customer service. If you want to fly somewhere for $39 what airline would you think of?

Cheers.

BBB
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