Originally Posted by
willflyforfood
can anyone argue against the point made that the budget brands in a hotel chain are categorically designed to offer travelers a "budget" price hotel stay? A one-off comparison of a single evening notwithstanding, a night's stay at a Ritz-Carlton will always cost more than a night's stay at that chain's "budget" or "downscale" roof.
More to the point, Ben(s), is that the comments you are hearing is that you've created a budget model for you without the convenient by-product of creating a budget model for PAX. I applaud your attempts to try and bring AC out of the red, but don't try and convince pax that it's a good deal to book ROUGE for the same price as what the former mainline version of that flight once cost.
Well, to your point about hotel comparisons, it's important to note that a Ritz-Carlton will never compete with a budget hotel; they are two separate entities, and are priced to what the market will bear. We take the same approach with rouge - it was never meant to be a low fare carrier (key difference between low fare and low cost, BTW), but rather, as Ben mentioned, one that would allow use to compete in markets where the mainline product was not financially sustainable. Don't recall seeing an airport Ritz, for example.
It also competes with a different segment of the market: those that would consider TS or WG. The introduction of rouge didn't mean that we would necessarily slash prices, but rather it allows us to compete effectively in this segment. If prices are high, it means one of two things: 1) the flights are full, or 2) the competition is priced similarly (sometimes this is combined with #1). It is important to note that we will not voluntarily discount the product because it is materially different from mainline, as that would negate our cost advantage, so we continue to use revenue management techniques to maximise our yield where possible. If the fares are high it's because the planes are full and people are paying them. From a business perspective, we are like everybody else in this regard.