i dont think oil has to much to do with it. They have very smart people hedging oil many months in advance.

I don't follow you. Consumers are what drives revenue to CO - if a consumer (or hundreds of thousands of them) decide to cancel travel because they cannot afford to pay higher fares along with their current increased burden of fuel cost (real or perceived), that will result in lower ticket sales.

If business customers decide to curtail travel because their other operating costs have increased due to high fuel prices, that also results in lost sales to the airlines (and hotels, rental car agencies, etc.)

Continental, like all companies who sell discretionary products/services places it revenue stream at risk when they raise prices in a tight spending environment. There is a very fine line between doing what's necessary to counter increased operating expenses and pricing your product away from your customers.

Those aircraft are still going to fly - if load numbers go down because fares are too high, overall revenue is going to be impacted much worse than if fares remained competitive to encourage sales.

EWR-BOS is shuttle with a very high percentage business travelers. CO know they can charge the fare. Full Y is over $600 and I'd say over half the passengers flying EWR-BOS choose to have a Y fare ticket for the flexability or their trip is of short notice they have no other option.

I honestly don't get why a rational business traveler (one without a limitless travel budget, at least) would pay $600 to fly CO from EWR-BOS when you can fly out of JFK on jetBlue for a fraction of the price. Even on one day's advance purchase, JFK-BOS is $180, and 21 days ahead it's only $100.

A lot of historical data is used in determining how and when to increase prices. You may see a price increase but if consumers do not book tickets and the seats do not get filled then CO will lower the prices again the following day to stimulate demand or for their fares to be competitive.

Also with the spike in gas prices, more leisure travellers are using the airlines for summer travel. If X # of seats are sold in a particular fare class that fare class is closed and the next higher fare class becomes avaliable.

Oh come on, now you are just making things up. How about this - gasoline spending accounts for only 2.8% of total income for U.S. consumers. Even if you factor in other energy-related expenses (e.g., heating), you're still probably below 5%. Fuel costs are more than 20% of CO's revenue. Clearly, it's a lot more important for them. And we are NOT in a particularly tight spending environment, look at the macro data - retail sales, PCE, etc.

Once again, we've allowed our friend, chasbondy to sidetrack the thread with his propaganda.

The fact of the matter is there was a price increase, and oil had nothing to do with it. Oil could be at $20 a barrel, and if CO could get away with raising fares by $30, they would.

Bottom line is it's a market-driven business decision, with associated risk as always. They think the demand is up, they can raise fares.

IMHO and IME, some reasons are: B6 area at JFK is a dump; JFK is a less convenient airport for someone traveling to north Jersey, and even Manhattan (sometimes); CO has more convenient flight times for the pax; and the pax is a President's Club member and wants to be able to work in the club while waiting for flights at each airport. Club access can be espcially important when flights are delayed, as they often are on this route. Also, YUPs if elite (if available) and at least the theoretical possibility of EUA.

Not necessarily. For those leisure travelers planning long distance trips, perhaps some of them will 'perceive' a benefit of flying vs. driving, but the cost of plane tickets+rental car+rental car gas would far outweigh the cost burden of $3+/gal gas vs. $2+/gal gas. The again, Americans have never been known to think their financial decisions through thoroughly.

Remember...people have to fill their tank to drive to work, shop, etc. If the cost burden of gasoline, natural gas and heating oil take up too much of the family (or corporate) budget, the first purchases to get delayed are things like travel and durable goods. People won't fly - instead they just wont go at all.

Making things up? Why are so many consumers up in arms over fuel costs? If you read my post carefully, you will notice I used the word "perceived". Consumers do not watch statistics, nor care about % of total income - all they care about is pulling up to the pump and seeing a gallon cost over $3 a gallon with news pundits calling for $4 or $5 a gallon by summer, if not more. That scares them. They see their fuel costs going up. They will spend less.

I imagine fewer than 5% of the American public keeps a monthly spending budget with enough detail where they could actually analyze their cash flow and determine the exact amount of additional money spent on gas as well as other small items they could cut back to compensate.

I never stated that fuel costs impact one party worse than another - another poster made that comparison. I certainly know that dollar for dollar, high fuel prices hurt CO worse than any consumer. This is not about who is being damaged more, this discussion is about the impact of higher travel costs on customers already stretched thin by the reality or perception of fuel costs eating up more of the monthly budget.

As far as the spending environment, those are lagging indicators, are they not? Rapidly increasing interest rates which affect credit card charges and many mortgage payments, along with higher prices for fuel and other goods/services impacted by fuel costs will cut spending significantly in the near future. If the fall '06 economic numbers don't support that, then feel free to resurrect this thread at that time and I will gladly retract my hypothesis.

Again, the point of this thread is discussing the logic of CO raising ticket prices (or restricting discount inventory) while their customer base is concerned with their own increased cost burden. Will it result in decreased ticket sales or will it not? I say it will.

CO has been quietly up'ing fares $5-10 every week over the past few weeks - likely to cover fuel increases. The fare bucket availability per fare code is dynamic and changes based on demand, CO holding back, testing the market, competition, etc.

In between arguing about fuel cost impacts and eating my delicious Costco hotdog, FareCompare just reported fares from my home airport to the DC Metro area and EWR just dropped $20-$30 since this morning...or lower buckets got some inventory.

However, I can still fly to either Southern California or the Bay Area for less than it costs to fly to DC, and for the same amount it would cost to fly to EWR.

I rest my case. It's not oil, it's business!

That's not to say oil doesn't still have an effect on the bottom line. BTW. Does anyone have a sense of what percentage of CO's costs are for fuel? I have no idea, but if it was 25% and oil cost continental 20% more, then it should only reflect a 5% increase in costs. They're raising ticket prices a lot more than that.

Bottom line in all this is, CO and all airlines will increase fares to maximize revenue

Airlines will raise fares as high as they perceive consumers are willing to pay for those seats. It depends on a lot of factors from competition to demand, to disposable income to a special event in a particular city etc etc. Revenue is driven systemwide as opposed to what it costs per mile. Oil is up yes but there are a lot of other factors that come into play when pricing a product.

Summer travel and the bankruptcy of DL and NW (reduction in total seats in the market) have all contributed to the increase in prices. It is a simple demand and supply relationship.

bocastephen, which widget are you using? I have Yahoo Widgets setup but have no travel related widgets, as such...

This is the link to download the Yahoo Widget - click me

There is also one for Google Desktop - click me

When clicking a fare, it takes you to the farecompare site to check availability and dates, and then passes you to the airline's site to complete the sale - as of now, it doesn't appear that farecompare gets revenue from using these tools, so I hope posting the agent downloads here is not a violation of the TOS re: commercial services

You can set the widget for coach, business or first, but it actually only pulls and displays coach fares and only from one airport of origin