Stock down 20% from high
Jun 9, 2015, 8:45 am
#3
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Maybe the airlines should offer better (lower) airfare. Then, people will buy and increase PRASM.
You can cut capacity all you want but if even the most basic fare is too high, planes will remain empty.
You can cut capacity all you want but if even the most basic fare is too high, planes will remain empty.
Jun 9, 2015, 8:51 am
#6
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You seem to be unfamiliar with components of PRASM and with DL's load trends. Loads are most certainly not the problem.
Jun 9, 2015, 8:52 am
#8
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Actually, DL isn't blaming oil prices. They (as well as AA, UA, and WN) acknowledge that the problem is that capacity is a bit too high.
Jun 9, 2015, 8:53 am
#9
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However, what I feel that airlines are ignoring is cost. Sure, fuel prices are relatively low. But what about other fixed costs?
Jun 9, 2015, 9:03 am
#10
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Sorry but I have flown DL/AA/US/WN/CX/UA all in the last 2 months and I have not seen any flight with more than a couple of seats open.
Jun 9, 2015, 9:04 am
#11
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Well that is simply not true. DL and the other airlines focus intently on costs, both fixed and variable.
Jun 9, 2015, 9:13 am
#13
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You might try brushing up on basic microeconomics, specifically the section about supply and demand, and how that impacts prices. Once you brush up on that, you might want to revisit the mathematical derivation of PRASM, which is (Pax Revenue)/(Available Seat Miles) and consider what would cause either the numerator or denominator change favorably. Hint: lowering fares is unlikely to do so.
Well that is simply not true. DL and the other airlines focus intently on costs, both fixed and variable.
Well that is simply not true. DL and the other airlines focus intently on costs, both fixed and variable.
Jun 9, 2015, 9:19 am
#14
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I flew DTW-BGR last Friday and was surprised it was on a 717 with about 50 empty seats. BGR-LGA on Monday morning was about 60% full on an ERJ. It depends on what flight you are on.
Jun 9, 2015, 9:21 am
#15
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Why bother with anecdotes? DL has performed a natural experiment.
- They held steady at around 85% domestic loads
- The increased ASMs 4%
- PRASM dropped 5.5%
Clearly the marginal capacity can only be filled by decreasing prices beyond a break-even point.