Originally Posted by
GrayAnderson
The problem is that one cannot indefinitely sustain a pricing edge without also having a sustained cost edge. United is not really in a position to "pull an Uber" and sell the next hundred million tickets all at a loss.
This is why the "just cut price and it will all be fine" folks don't understand the situation. United has basically the highest costs of any airline. Lots of brand new planes, new higher wage rates, and high landing fees at certain hubs.
United just announced its 1Q results, it made only, $196M after special items (see
http://www.flyertalk.com/forum/28193033-post9.html and entire thread). That was down more than 2/3 from its 1Q 2016 performance, due to costs being 6% higher. ( see
http://www.flyertalk.com/forum/28194084-post11.html). With $7.174B in Passenger revenue, if United cut prices by 2.8% it would have lost money.
United will price cut, because if there is less demand, lower fare buckets will stay open longer, making United cheaper. United may also lower fare buckets, but I expect discounting to be the result of less demand, not changing fare structures.
IMHO United would be better to spend extra $$$ on a customer service improvement plan, with firm guarantees for passengers, something United can tout. This appears to be what United is doing with its April 30 "roll-out".