Originally Posted by TomBascom
The road to hell is paved by examining routes for profitability on a case by case basis. The network is what is important -- and the network will not be healthy without a mix. Maximization of total profit is not accomplished by maximizing each revenue opportunity individually. Nor is it accomplished by filling each and every seat on every flight. "Slack" is necessary for optimal performance of the system as a whole.
There are whole branches of mathematics that deal with this stuff. It concerns me to hear the people in charge of these decisions at US Airways talk as if they're acting on vigilante impulses to remove supposedly unprofitable elements from the mix. I surely hope they have better models and justifications than some simple minded claptrap about "leisure routes".
Tom--I do agree that the goal is maximization of profits--and that FC on leisure routes is worthwhile if that amenity increases the probability a high yield business traveler will stay loyal to the U network and book their high yield travel on U. The problem though is that the added value of that high yield traveler is falling--mostly because high yield fares are becoming a thing of the past. As the fare differential between business and leisure travel falls, the airlines can no longer afford to spend as much on amenities to reward them for their loyalty. What the network carriers need are amenity systems that clearly differentiate themselves from LCCs, but are not so costly. What form this will take is unclear at this moment--perhaps only first class services on high yield routes, or perhaps FC on all flights, but a less costly version--perhaps Airtran style--a bigger seat, free drinks (but in plasticwear
, perhaps a decent cold lunch, but not much more.