Is it Just AA? [that keep fares high even as fuel costs decline]
Jan 19, 2015, 8:39 pm
#46
FlyerTalk Evangelist
Join Date: Aug 2008
Location: Usually in SAN or Central Europe.
Programs: AA:EXP/1MM. Accor/Radisson:Silver; HH:Gold; ICH:Plt Amb.
Posts: 22,307
What you're ignoring is the fact that one carrier is offering the same route for $200 less. Nobody's putting a gun to your head and forcing you to buy AA. And if you (and enough other people) are willing to pay $200 extra to fly on AA, then AA has set their price correctly.
Jan 20, 2015, 4:54 am
#47
Join Date: Oct 2012
Location: NYC
Programs: AADULtArer
Posts: 5,675
however, most people, when it comes to airlines, say, let the market take care of that. let them charge whatever the market will bear. why not do the same after a hurricane? shoot! if y'all can't afford $10,000 for a $1000 generator, too bad. I'll just sell it to the guy who can either afford it or is desperate enough to dig deeper than he should.
Jan 20, 2015, 7:10 am
#48
Join Date: Nov 2009
Location: Austin
Programs: AA EXP +2MM- LT PLT! HH Diamond
Posts: 6,086
Airlines buy their fuel way in advance of use trying to hedge the bet on price increases. Unfortunately fuel costs don't drop for them as fast as they do on the market. But yes, one would expect the price of a ticket to reflect the cost of actually flying, but if the sales are strong, there's no reason to drop fares.
Years ago (and I'm sure still) the local water company needed to raise their base rate to cover the reduced usage due to a water shortage. Funny thing they didn't drop their base rate once water became more available. Called free enterprise? Once one competitor starts stealing your customers by dropping prices, the others usually follow suit.
Years ago (and I'm sure still) the local water company needed to raise their base rate to cover the reduced usage due to a water shortage. Funny thing they didn't drop their base rate once water became more available. Called free enterprise? Once one competitor starts stealing your customers by dropping prices, the others usually follow suit.
Purely and simply, airlines price their tickets more based on value than cost. In other words, they find the price point at which enough people are willing to pay that they maximize their revenue for a given flight. If they reduced the price they may fill the last couple of seats on the plane but make less overall and, likewise, if they increase the price they may lose because they end up with more empty seats.
Varying prices based on the cost of a barrel of oil is what's called cost-based pricing - you charge a certain markup over the cost of providing the service.
In reality, the price of most things in life, ironically with the exception of oil-based products, are priced more value-based than cost-based. Of course, you hope the maximum value-based price (the maximum the item is worth to someone) remains more than the lowest cost-based price (the minimum you can afford to sell it at) otherwise you will eventually be forced to sell at a loss. I'm sure there's been numerous times of high oil prices when airlines have been in just this situation.
Varying prices based on the cost of a barrel of oil is what's called cost-based pricing - you charge a certain markup over the cost of providing the service.
In reality, the price of most things in life, ironically with the exception of oil-based products, are priced more value-based than cost-based. Of course, you hope the maximum value-based price (the maximum the item is worth to someone) remains more than the lowest cost-based price (the minimum you can afford to sell it at) otherwise you will eventually be forced to sell at a loss. I'm sure there's been numerous times of high oil prices when airlines have been in just this situation.
Jan 20, 2015, 10:10 am
#49
Join Date: Aug 2011
Location: ELP
Programs: AAdvantage, Amex MR
Posts: 2,314
I need to go on a little rant (I start a lot of my flyertalk posts with those words it seems like LOL 
)
I have started looking at flights to Nashville over the summer. Rumors of a US soccer game there plus my girlfriend really wants to go there, will be our first trip together. Right now flights on AA are 600 per person.
I know it is over 4th of July weekend but still. The lowest I can absolutely find is a mixed metal itin on Delta and AA on an OTA for 538.
Outrageous to pay that for a domestic flight, and basically a mid con at that. I know it is over a holiday weekend but still.
Since it is still almost 6 months out I am holding out hope the fare will drop to more acceptable levels. However I am not holding my breath. The airline oligopoly is holding back supply to keep demand high to justify these outrageous fares. Keep the fares high and price out the discretionary leasure traveler, then when loads drop instead of lowering the price to sell the remaining seats the airlines can use that as an excuse to downgauge in order to eliminate some supply to keep the demand high. I have already seen it. ELP-DFW used to always be MD-80/A319, now there is only a few mainline a day and the rest are CRJ. I think I even saw a CRJ or two on the DFW-BNA leg. Flight between two major cities on a CRJ. 
Instead of lowering prices to sell excess supply, airlines would rather just cut out the excess supply and keep charging the high fares. Raise fares some more, price out some more people, then use that as an excuse to downgauge and cut even more.
)I have started looking at flights to Nashville over the summer. Rumors of a US soccer game there plus my girlfriend really wants to go there, will be our first trip together. Right now flights on AA are 600 per person.
I know it is over 4th of July weekend but still. The lowest I can absolutely find is a mixed metal itin on Delta and AA on an OTA for 538.Outrageous to pay that for a domestic flight, and basically a mid con at that. I know it is over a holiday weekend but still.
Since it is still almost 6 months out I am holding out hope the fare will drop to more acceptable levels. However I am not holding my breath. The airline oligopoly is holding back supply to keep demand high to justify these outrageous fares. Keep the fares high and price out the discretionary leasure traveler, then when loads drop instead of lowering the price to sell the remaining seats the airlines can use that as an excuse to downgauge in order to eliminate some supply to keep the demand high. I have already seen it. ELP-DFW used to always be MD-80/A319, now there is only a few mainline a day and the rest are CRJ. I think I even saw a CRJ or two on the DFW-BNA leg. Flight between two major cities on a CRJ.
Instead of lowering prices to sell excess supply, airlines would rather just cut out the excess supply and keep charging the high fares. Raise fares some more, price out some more people, then use that as an excuse to downgauge and cut even more.
Jan 20, 2015, 10:16 am
#50
FlyerTalk Evangelist
Join Date: Nov 2007
Location: Denver • DEN-APA
Programs: AF Platinum, EK Gold, AA EXP, UA 1K, Hyatt Globalist
Posts: 21,596
No one if forcing you to buy a ticket. Why should they charge less if they think they can sell seats. If AA can't sell seats, prices will drop. It's a holiday weekend as you have acknowledged. You can always stay home, take your GF our for a nice dinner or two or three, cuddle at home and watch the game on TV and still save money.
Jan 20, 2015, 12:32 pm
#52
Join Date: Dec 2009
Location: PHL / NYC / PSA-BLQ
Programs: AA PPRO, Marriott/Hilton Gold, AMX-Plat, Global Entry
Posts: 3,109
I need to go on a little rant (I start a lot of my flyertalk posts with those words it seems like LOL )
I have started looking at flights to Nashville over the summer. Rumors of a US soccer game there plus my girlfriend really wants to go there, will be our first trip together. Right now flights on AA are 600 per person. I know it is over 4th of July weekend but still. The lowest I can absolutely find is a mixed metal itin on Delta and AA on an OTA for 538.
Outrageous to pay that for a domestic flight, and basically a mid con at that. I know it is over a holiday weekend but still.
Since it is still almost 6 months out I am holding out hope the fare will drop to more acceptable levels. However I am not holding my breath. The airline oligopoly is holding back supply to keep demand high to justify these outrageous fares. Keep the fares high and price out the discretionary leasure traveler, then when loads drop instead of lowering the price to sell the remaining seats the airlines can use that as an excuse to downgauge in order to eliminate some supply to keep the demand high. I have already seen it. ELP-DFW used to always be MD-80/A319, now there is only a few mainline a day and the rest are CRJ. I think I even saw a CRJ or two on the DFW-BNA leg. Flight between two major cities on a CRJ.
Instead of lowering prices to sell excess supply, airlines would rather just cut out the excess supply and keep charging the high fares. Raise fares some more, price out some more people, then use that as an excuse to downgauge and cut even more.
)I have started looking at flights to Nashville over the summer. Rumors of a US soccer game there plus my girlfriend really wants to go there, will be our first trip together. Right now flights on AA are 600 per person.
I know it is over 4th of July weekend but still. The lowest I can absolutely find is a mixed metal itin on Delta and AA on an OTA for 538.Outrageous to pay that for a domestic flight, and basically a mid con at that. I know it is over a holiday weekend but still.
Since it is still almost 6 months out I am holding out hope the fare will drop to more acceptable levels. However I am not holding my breath. The airline oligopoly is holding back supply to keep demand high to justify these outrageous fares. Keep the fares high and price out the discretionary leasure traveler, then when loads drop instead of lowering the price to sell the remaining seats the airlines can use that as an excuse to downgauge in order to eliminate some supply to keep the demand high. I have already seen it. ELP-DFW used to always be MD-80/A319, now there is only a few mainline a day and the rest are CRJ. I think I even saw a CRJ or two on the DFW-BNA leg. Flight between two major cities on a CRJ.
Instead of lowering prices to sell excess supply, airlines would rather just cut out the excess supply and keep charging the high fares. Raise fares some more, price out some more people, then use that as an excuse to downgauge and cut even more.
Many have analyzed when to buy (and it is route and time of year/event dependent) but the sweet spot on pricing is 1-3 months out.
Here's one analysis - http://www.cheapair.com/blog/travel-...ta-has-to-say/
Be patient, pay attention and think creatively and you have a good chance of getting a good fare. Use something like itamatrix to search as well.
Jan 21, 2015, 8:34 pm
#53
Suspended
Original Poster
Join Date: Mar 2014
Location: KMIA
Programs: AA
Posts: 77
whatever. air travel has become a quasi-necessity. the greed of wall street is what drives fares, not supply and demand. those who think otherwise need to lay off the kool-aid.
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
http://www.salon.com/2014/06/01/air_..._deregulation/
but what would a former legacy carrier ceo know anyway...
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
http://www.salon.com/2014/06/01/air_..._deregulation/
but what would a former legacy carrier ceo know anyway...
Jan 22, 2015, 10:14 am
#54
Suspended
Join Date: Sep 2006
Programs: AAdvantage PP
Posts: 13,913
whatever. air travel has become a quasi-necessity. the greed of wall street is what drives fares, not supply and demand. those who think otherwise need to lay off the kool-aid.
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
http://www.salon.com/2014/06/01/air_..._deregulation/
but what would a former legacy carrier ceo know anyway...
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
http://www.salon.com/2014/06/01/air_..._deregulation/
but what would a former legacy carrier ceo know anyway...
Feb 8, 2015, 2:11 pm
#55
Suspended
Join Date: Feb 2007
Posts: 1,273
Wow flying to Europe is expensive despite lower oil prices
Hi All,
Surprised to see that flying to a popular destination like CDG from say SFO in May is still $1700 in Y. Surprisingly J is just $4800, which is not even a 3 times multiple.
Surprised to see that flying to a popular destination like CDG from say SFO in May is still $1700 in Y. Surprisingly J is just $4800, which is not even a 3 times multiple.
Feb 8, 2015, 2:59 pm
#57
Suspended
Join Date: Feb 2007
Posts: 1,273
Yeah, its kind of bizzare why AA would do that. I'm flying DFW to FRA in April and J was only 40% more than discount Y. I thought it was an anomaly but perhaps not.
Feb 8, 2015, 8:43 pm
#58
Join Date: Apr 2004
Programs: AA Plat/2MM, DL Silver, UA Silver (via Marr), Marr LTT, HH Gold (via cc), Hyatt Disc
Posts: 1,039
[QUOTE=teevee;24211403]whatever. air travel has become a quasi-necessity. the greed of wall street is what drives fares, not supply and demand. those who think otherwise need to lay off the kool-aid.
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
I think most here have acknowledged that maximizing profits is a publicly held business's primary objective. You choose to call that "wall street greed". I think you are the one who needs to lay off the kool-aid. Why should AA or any other single business be the first (and maybe only) one to decide "we're not going to maximize shareholder value"? What you are asking for is a total revision of the American financial system. How about your company starts by cutting prices in half? Please post back when you have done that and then maybe we can discuss whether other companies should follow.
maximize profits--not for bettering the airline, for enriching the tycoons of wall street.
I think most here have acknowledged that maximizing profits is a publicly held business's primary objective. You choose to call that "wall street greed". I think you are the one who needs to lay off the kool-aid. Why should AA or any other single business be the first (and maybe only) one to decide "we're not going to maximize shareholder value"? What you are asking for is a total revision of the American financial system. How about your company starts by cutting prices in half? Please post back when you have done that and then maybe we can discuss whether other companies should follow.
Feb 8, 2015, 11:34 pm
#60
Original Member
Join Date: May 1998
Location: NYC
Programs: AA 2MM, Bonvoy LTT, Hilton Diamond
Posts: 14,636
That's not bizarre. Bizarre is when JFK-HKG AA code/CX metal is $16,000 in First one way while YYZ-NYC-HKG AA code/CX metal is only $4,200 booked in full F.