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Speculation: What will happen to AA fares once itís safe to travel ?

View Poll Results: What will AA do about fares going forward, once itís safe to travel?
Fares will be pretty much as before Coronavirus
36
19.35%
Fares will be significantly higher
59
31.72%
Fares will be significantly lower
33
17.74%
AA will follow the lead of Delta and United
51
27.42%
Other opinion, posted below
7
3.76%
Voters: 186. You may not vote on this poll

Speculation: What will happen to AA fares once itís safe to travel ?

Old Apr 14, 20, 12:34 pm
  #1  
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Join Date: Dec 2009
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Speculation: What will happen to AA fares once itís safe to travel ?

There is always a dark side to these pandemics. I want to create a poll. Assumption: It is safe to travel. AA will start charging:
A. Fares like they used to
B. Fares above what they used to. (Gotta make money as fast as possible)
C. Fares less than they used to.
D. Follow the other legacy airlines.

I'd love to know what you all think.
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Old Apr 14, 20, 12:38 pm
  #2  
 
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Originally Posted by tomj888 View Post
There is always a dark side to these pandemics. I want to create a poll. Assumption: It is safe to travel. AA will start charging:
A. Fares like they used to
B. Fares above what they used to. (Gotta make money as fast as possible)
C. Fares less than they used to.
D. Follow the other legacy airlines.

I'd love to know what you all think.
I think most people on FT are profoundly unqualified to answer this and the response of the average FTer, or even the aggregated responses of all of 'em, will have ZERO impact on what AA actually does.

Furthermore, your caveat to "B" not only reveals bias in the question but also a lack of understanding about airline industry economics. Or perhaps economics in general.

If by "make money as fast as possible" you really mean "pricing for cash flow", that means LOWER prices, not higher ones.

Edited to add: also on "D" note that it's not just legacy airlines that AA matches. Sometimes.
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Last edited by Herb687; Apr 14, 20 at 12:42 pm Reason: not just legacy airlines
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Old Apr 14, 20, 12:50 pm
  #3  
 
Join Date: Dec 2002
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I think fares will mostly be the same, with a few lower fares on select city pairs based on competition. But I think they will really push mileage bonuses for most flights and "super" bonuses for specific markets to maximize short term cash and yet give the flying public the impression they are getting a deal.
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Old Apr 14, 20, 12:54 pm
  #4  
 
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The correct answer is D** sometimes; A, B, or C at other times.

** As noted above, the poster who created this pointless poll really erred when making D "legacy" airlines only. There are plenty of markets where AA's pricing is driven by matches or match plus a premium of non-legacy airlines.
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Old Apr 14, 20, 12:58 pm
  #5  
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Originally Posted by Herb687 View Post
I think most people on FT are profoundly unqualified to answer this and the response of the average FTer, or even the aggregated responses of all of 'em, will have ZERO impact on what AA actually does.

Furthermore, your caveat to "B" not only reveals bias in the question but also a lack of understanding about airline industry economics. Or perhaps economics in general.

If by "make money as fast as possible" you really mean "pricing for cash flow", that means LOWER prices, not higher ones.

Edited to add: also on "D" note that it's not just legacy airlines that AA matches. Sometimes.
You make valid points. I do not work in the airline industry. I am a frequent flier and I know what costs make sense to me. I am also a businessman with employees I had to fire or furlough. The Federal government is not giving me BILLIONS of dollars to support my business as it is to airlines. How do you apply that rationale to your thinking?
Lastly, I'm bored. I''ve been home too long so I thought this poll would be entertaining. Afterall FT is filled with people sharing their stories. Sound like you work for JD Power. Why not do your own poll?
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Old Apr 14, 20, 1:03 pm
  #6  
 
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After 9/11 they dropped for a while. A lot depends on what is meant by “when it’s safe to travel?” A vaccine? If that’s the criteria, prices will probably return to normal.
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Old Apr 14, 20, 1:04 pm
  #7  
 
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Originally Posted by tomj888 View Post
The Federal government is not giving me BILLIONS of dollars to support my business as it is to airlines. How do you apply that rationale to your thinking?
I think the bailout will be largely irrelevant to airline pricing and yield management.
Lastly, I'm bored. I''ve been home too long so I thought this poll would be entertaining. Afterall FT is filled with people sharing their stories.
FT stories can be interesting. And entertaining. I guess I just don't see the entertainment value of taking a topic and soliciting a lot of uninformed opinions.
Why not do your own poll?
Because unless I'm polling airline executives and pricing and yield management types it will have zero predictive value.
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Old Apr 14, 20, 1:33 pm
  #8  
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Well I put other because at this point it's a guessing game at best. It's like trying to decide if its going to rain only, rain with thunder, rain with thunder and lightening, partly cloudy, mostly cloudy or sunny in Boston on August 23, 2020. So many moving parts. To what level does business travel return? Summer leisure travel? Ability to cut capacity? Lingering social distancing requirements? The general state of the economy?

My guess would be that AA will significantly cut capacity, raise fares and try to go back to jamming a butt in every seat. If the ULCC traveler price sensitive traveler just doesn't show back up and AA can cut capacity enough they might get away with it.
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Old Apr 14, 20, 1:38 pm
  #9  
 
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Pricing will likely be about the same. Low prices won't cause fearful travelers to book; only confidence in travel safety will. So there's really no point in having a fire sale.
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Old Apr 14, 20, 1:47 pm
  #10  
 
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Originally Posted by MiamiAirport Formerly NY George View Post
Well I put other because at this point it's a guessing game at best. It's like trying to decide if its going to rain only, rain with thunder, rain with thunder and lightening, partly cloudy, mostly cloudy or sunny in Boston on August 23, 2020. So many moving parts. To what level does business travel return? Summer leisure travel? Ability to cut capacity? Lingering social distancing requirements? The general state of the economy?

My guess would be that AA will significantly cut capacity, raise fares and try to go back to jamming a butt in every seat. If the ULCC traveler price sensitive traveler just doesn't show back up and AA can cut capacity enough they might get away with it.
I agree. Those who need to travel will within reason pay competitive fares. That gates the upper level in most markets since fares will need to be in line with UA and DL, but that's how it works today. All carriers are reducing fleet sizes and we will start to see load factor that meet any legally mandated maximums for current aircraft configurations. We may see regulatory bans on middle seats and other distancing come into play in determining what constitutes 100% load factor.
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Old Apr 14, 20, 3:08 pm
  #11  
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I can see two contrary factors. First, pent up demand as we're all stuck at home planning our next holiday. Second, airlines will want to entice business travelers back in to the sky after we've all gotten used to Zoom. For NY George, airlines may try to constrain supply, but airlines that own their planes can only cut so much. AA has to pay for that dreamliner whether it's in the air or on the ground.

Originally Posted by Herb687 View Post
I guess I just don't see the entertainment value of taking a topic and soliciting a lot of uninformed opinions.
FT doesn't exist to provide legal or financial advice and half the posts on this forum are from people with only anecdotal evidence to support their view. No one is forcing you to engage.
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Old Apr 14, 20, 4:56 pm
  #12  
 
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Not sure how significant my industry is to the overall demand picture but I can say that since the "Stay at home" orders were in place, we (at work) have been able to continue business as usual for the most part and do a LOT OF things remotely, video conferencing, working from home, etc.
Not that we could not have done it before, but this pandemic has forced us to do things differently and made us realize that its actually possible and ok to do so.
(I work in engineering/consulting).
And no, pricing is not going to convince us otherwise, because flying will become an unnecesary expense, and most at work are not status chasers or plane lovers, so the less travel, the better for most of my colleagues, even the younger ones.

Long story short, I think that many industries will dramatically decrease their traveling needs.
I also think that the supply chains will somewhat change.

There is also going to be fear among many travelers (business and leisure). Personally, I am going to skip the company Xmas party (on the other coast) and will avoid flying at all at least for a year, regardless of how the pandemic develops.

So, I think there will be less demand for travel for quite a while (a year, a decade?) and in the near term (one - two) years I am not sure what effect it will have on prices.

AA will adjust its prices according to demand, I guess (micro economics 101?)
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Old Apr 14, 20, 5:05 pm
  #13  
 
Join Date: Mar 2020
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What do you think about booking Chicago to Maui in December? Buy now, or wait?

Also what do you consider good rates?

Thanks!
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Old Apr 14, 20, 6:56 pm
  #14  
 
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I picked other opinion posted below--it'll depend on the market. I think business route will be lower, leisure routes might be higher.
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Old Apr 14, 20, 7:38 pm
  #15  
 
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Well I picked "D" but mostly based on the overall health of the legacy.

They obviously can't turn on the faucet just because they're ready. That then leaves planes sitting unused which they will have to unload pretty fast. They will either be short of crews (who are now bagging groceries in stores) or unable to afford their overhead without a quick turn-around.

A good re-adjustment by their customers will have taken place, preferring to learn new ways either working from home or on home soil vacations or family visits.

Thus they will have to operate at a lost with different Ads to try to get their customer base back,
Each Airline will watch what the others make work
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