Originally Posted by
ChrisA330
I'm certainly no expert, but from what I've read...when airlines consistently are operating with high loads, they run the risk of spillage to another airline as customers are more likely to find sold out flights or flights where the only fare available is the highest fare...so they can look uncompetitive in the market.
This has been noted by both UA and Continental in making their recent cutbacks in capacity. However, what was mentioned was that high loads equate to perceptions of poor customer service. They also recognize that capacity reductions can lead to a reduction of demand and spawn further capacity reductions given that:
- capacity is reduced to raise revenues per seat and increase the average fare
- capacity reductions increase load factor and fleet efficiency
- increases in fares reduce demand
- full planes lead to perceived or actual customer service decrease
- poor customer service leads to reduced demand
- reduced demand creates pressure on fares
- start cycle over