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Old Aug 13, 2014 | 8:29 am
  #529  
jasondc
 
Join Date: Apr 2004
Location: Washington, DC
Posts: 1,309
well

You play exactly to my point - if it were profitable on its own, LH/SK/AF would never have reduced service. The fact is that the average fares from Europe are very low - (i can get the average fare, and the average one way fare actually paid is way lower than what you suggest). Those airlines would be on those markets regardless no matter what if it were profitable. Fact is, they arent, and are looking for other ways to serve the markets. High yield/ high fare paying passengers nearly always take a nonstop flight. EK/EY/QR might have a very nice business class / first class cabin, but nothing beats the convenience of a nonstop flight, especially for those with the money to pay for biz/first. What you mention represents a dearth of paid biz travellers but a large number of leisure passengers who wont pay for a nonstop biz class at a higher fare but will pay a cheaper fare for a connection business class. That is not the hallmark of a profitable/ high yield market. It's the hallmark of a low yield market where people will pay a little but not enough to support a nonstop flight.
For the US, take a look at average fares from the USA to BKK. It is VERY easy to find fares under $1000 USD return. That is nowhere near enough to be profitable, given the very large distance and the need to split that fare up/ allocate it over up to 5 or 6 sectors (if one does XXX-ORD-NRT-BKK). That is bargain basement. And BKK has very little paid premium from the USA.
So overall, your observations actually support the notion that the fares are not high enough to support premium heavy carriers such as UA/LH/SK/AF in what is arguably a low fare/ low yield/ price sensitive market. The demand is certainly there, no doubt, but not the demand at the higher price point.

Originally Posted by EXLEFTSEAT
You have to be careful to throw stuff around. AF reduced their service because they could not compete with the Gulf carriers Premium service and ultimately are code sharing with EY, LH also has trouble defending their turf and is working a low cost long distance LCC focusing heavily on Asia Pacific, SK was unwilling to compete with TG and the Gulf carriers and preferred to deploy their A340s for the new route CPH-SFO. And lastly again I point out that there are no bargain basement prices to BKK. Read my post above!
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