I am economics major, so I hope this doesn't sound harshly capitalistic.

Getting people flying is only part of the equation. The airlines need cash flow, so selling a lot of discount tickets at huge losses is not a viable strategy in the short or long term although it's better than airplanes sitting on the ground for 3 days.

Flying right now is a largely emotional issue. Some people will not get on an airplane no matter what the cost. So in pricing, I could forget about them and realize that the airline won't sell as many seats regardless of price.

In time people will become more comfortable with flying and then prices could rise and/or capacity increase to offset increased demand.

Then I'd try to figure out what the people who currently will fly are willing to pay and set fares there. But I would do exactly as some of the airlines have done and reduce the schedules to avoid flying mostly empty airplanes if at all possible.

At the same time, I'd lean on corporations who are hesistant to have employees travel and possibly renegotiate agreements to give them better pricing, at least temporarily. Now is not the time to lose a big corporate account to a competitor.

And lobby the FAA to reduce some of the so-called security measures that don't make flying any safer but just add to passenger frustration (e.g., no curbside check-in).

The bottom line is that operating flights where the revenue is less than the cost of fuel, catering, and crew is not good business. If the variable costs to operate the flight are higher than the revenue plus the cost to reaccomodate passengers on another flight, then fly the plane.

(Edited to add last paragraph for clarification.)


[This message has been edited by FOH (edited 09-23-2001).]