Originally Posted by
viaIAH
Not calling out this post in particular but I see this said often...non-GS elites are not profitable. Seems to me the airlines should stop selling seats that aren't profitable. If it costs them $1000 to break even on a trip from A-->B then the minimum price for that seat should be $1001 not $299. I'm not forcing the airline to sell it to me cheaper. If I have to pay $1001 I'll pay it or stay home. If they can't fill the seats at $1001 then fly smaller planes or make fewer trips.
I know that was an oversimplification but its pretty basic that you can't make a profit by selling a product for less than it costs to bring it to the market.
You're missing the other side of airline economics - cost. That airline seat is a perishable asset - once the door closes and no one is in it, it becomes a cost to the airline with no revenue to offset that cost.
Also, there is no way to say an airline seat costs $x from A to B - an aircraft has operating costs which translate into a CASM number and you need a RASM number that exceeds the CASM by a healthy number of cents per mile for positive, profitable yield - and it's that yield number the airline is chasing.
Quite often an airline needs to maintain a money-losing route or flight to retain market share - it's a tough business decision that needs to be made and there are mountains of data to help drive that decision.
One tool anyone can use is to gain insight into flight revenue is flightaware.com - it lists the range of prices paid for a ticket on a particular flight. The person in 12A might have paid $69 for their segment while the person in 11A paid $400 - there is no way to break the number down to say a seat must be sold for $X to make the flight profitable.
Way back in the 80s and part of the 90s, airlines operated fewer flights on larger aircraft - perhaps A to B was 3 flights a day on a DC10 while today it's 7 flights a day on a 737. I agree there are just too many airplanes flying around and too much inventory, but unless the government restores the CAB and starts re-regulating pricing the best we can hope for is more aggressive management of airport and airspace slots to reduce overall traffic - but even that is heading in the opposite direction with the introduction of the FAA's NextGen project (moving them from vacuum tubes to something a little more 21st century-ish) - meaning more aircraft can occupy the same space, and airports can manage more arrival and departure movements per hour.
The market demanded more flight frequency and the airlines complied - I just don't see them going back unless customer economics change drastically (meaning another recession that slashes discretionary air travel significantly)