Originally Posted by
fly747first
Right, so you expect VX to raise fares when you acknowledge the airline is primarily targeting young people, most of which want to spend as little as possible on airline tickets?
That, in a nutshell, is the problem with VX. Their 'cool' factor mostly draws the Occupy Wall Street crowd, not the investment banker.
Shut the entire operation down; all it does is destabilize an industry that is on the mend.
Originally Posted by
fly747first
I think VX could make more money by utilizing more buckets and what I mean is, if F is not selling, open the lowest F bucket and make it $150-$200 more than the upgrade fee and see how the inventory moves, but the current F fares are just too high.
I don't think that VX will ever make money on an annualized basis. It's a deeply flawed business model.
Originally Posted by
fly747first
If VX would have started as a one class airline, I'm not sure that it would have been more successful because B6 would have been on its tail constantly, especially when you take into account that B6 has been very aggressive lately even towards NK up to a point of undercutting NK's fares.
A small chance of success is better than no chance of success. VX sells very few F seats prior to the upgrade window.
Originally Posted by
fly747first
Can you enlighten us specifically about these studies and who conducted them?
I read a LOT of economics papers from grad students; most aren't published. This is what I've come up with doing a quick google search:
http://www.iata.org/SiteCollectionDo...nd_summary.pdf
http://www.trforum.org/forum/downloa...city_paper.pdf
http://trid.trb.org/view.aspx?id=1129624
There are many different variables in the elasticity of air travel - destination, distance, business vs leisure, one's disposable income, supply, etc.
With the reduction in available seats over the last few years, all air travel has become more inelastic.
Originally Posted by
fly747first
But we don't know that the load factors would have indeed remained stable, do we?
VX mostly flies long haul routes to business destinations. Very inelastic.
Originally Posted by
fly747first
Hmmmm, VX has never functioned as an ultra low-cost airline; NK is really the only ultra low-cost carrier we have in the U.S.
There's also G4.
But let's compare apples to apples. Third quarter 2012 CASM.
VX = 10.44 cents. NK = 10.15 cents (when special one time credits are removed)
A320 apples to apples comparison
VX = 8 F, 141 Y. NK = 4 Big Front seats, 174 Y
A319 apples to apples comparison
VX = 8 F, 111 Y. NK = 10 Big Front seats, 135 Y
If VX went with higher density seating similar to NK, their CASM would easily be lower than NK. It would be a much more logical choice, considering their target customer (young hipster with very little disposable income).
VX doesn't need to emulate all of NK's charges or even use their pricing model. They simply need to either add seats if they want to continue with their current pricing strategy or raise prices if they want to continue with their current seat density. This isn't rocket surgery, nor is it brain science.
