<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mjschill:
An alternative position....
Say you pay $200 for a BUF-MCO ticket. I could argue the airline isn't making any contribution on this at all. However let's say they actually made 10% on a fare this low...$20. In return they're awarding you nearly 3,000 miles, or 1/8 of a free ticket. The variable cost of that...meaning the fuel cost to move your ... from point A-B when you do redeem a ticket, is worth at least that same $20..their contribution....making their $200 completly un-profitable
Frankly, if this 40% were to stop flyig US Air, I would suggest it represents maybe 10-15% of their revenue and maybe 20% of their expense, based on the Dividen mile redemption.
.</font>
Another point that your missing and US exects obviously miss. OK, lets suppose its a breakeven situation with the FFs low fare flights. The point is that we DO fly full fares, just not ALL full fares. Wouldn't take 10 break even flights for 1 whopping $2,000 profit flight? So really if you average out when we fly discounts and fulls they ARE making money, lots of money on us. We are consitent and predictable. You can look at us flight by flight, ala the term FREQUENT flyer.
Frankly, and you and anyone else has to admit. This airline gurus haven't really done a very good job with any of the airlines right? They are all swimming in pools of billions of dollars of debt. Most are right on the cusp of filing bankruptcy anyway. That doesn't sound like the recipe of a success story to me.
If anything, I'd say these execs are worried about one thing. Maintaining THEIR personal multi-million dollar salaries and bonuses at the cost of everything and anything.
I know that is difficult to believe in this new world of lilly white ethics in corporate America...but thats just my opinion.