Originally Posted by Marisaac
...
Also with the spike in gas prices, more leisure travellers are using the airlines for summer travel. If X # of seats are sold in a particular fare class that fare class is closed and the next higher fare class becomes avaliable.
Not necessarily. For those leisure travelers planning long distance trips, perhaps some of them will 'perceive' a benefit of flying vs. driving, but the cost of plane tickets+rental car+rental car gas would far outweigh the cost burden of $3+/gal gas vs. $2+/gal gas. The again, Americans have never been known to think their financial decisions through thoroughly.
Remember...people have to fill their tank to drive to work, shop, etc. If the cost burden of gasoline, natural gas and heating oil take up too much of the family (or corporate) budget, the first purchases to get delayed are things like travel and durable goods. People won't fly - instead they just wont go at all.
Originally Posted by ijgordon
Oh come on, now you are just making things up. How about this - gasoline spending accounts for only 2.8% of total income for U.S. consumers. Even if you factor in other energy-related expenses (e.g., heating), you're still probably below 5%. Fuel costs are more than 20% of CO's revenue. Clearly, it's a lot more important for them. And we are NOT in a particularly tight spending environment, look at the macro data - retail sales, PCE, etc.
Making things up? Why are so many consumers up in arms over fuel costs? If you read my post carefully, you will notice I used the word "perceived". Consumers do not watch statistics, nor care about % of total income - all they care about is pulling up to the pump and seeing a gallon cost over $3 a gallon with news pundits calling for $4 or $5 a gallon by summer, if not more. That scares them. They see their fuel costs going up. They will spend less.
I imagine fewer than 5% of the American public keeps a monthly spending budget with enough detail where they could actually analyze their cash flow and determine the exact amount of additional money spent on gas as well as other small items they could cut back to compensate.
I never stated that fuel costs impact one party worse than another - another poster made that comparison. I certainly know that dollar for dollar, high fuel prices hurt CO worse than any consumer. This is not about who is being damaged more, this discussion is about the impact of higher travel costs on customers already stretched thin by the reality or perception of fuel costs eating up more of the monthly budget.
As far as the spending environment, those are lagging indicators, are they not? Rapidly increasing interest rates which affect credit card charges and many mortgage payments, along with higher prices for fuel and other goods/services impacted by fuel costs will cut spending significantly in the near future. If the fall '06 economic numbers don't support that, then feel free to resurrect this thread at that time and I will gladly retract my hypothesis.
Again, the point of this thread is discussing the logic of CO raising ticket prices (or restricting discount inventory) while their customer base is concerned with their own increased cost burden. Will it result in decreased ticket sales or will it not? I say it will.