I am shocked by the absense of a strategy on the part of airline execs to get the public flying again. I would like your opinions..specifically, what are your top 3 ideas for getting the seats full again?

as i have stated in other thread before:

for the next 60 days (or any time period)

1. no advance purchase requirement for U or L fares, buy now, fly now

2a. special low fares to NYC from any US/Canadian cities, send in Broadway show tkts, get 100 bonus miles each

or 2b. all flights to NYC get DOUBLE miles

3. quoting blairvanhorn :'thinking cap just slipped off'

I am economics major, so I hope this doesn't sound harshly capitalistic.

Getting people flying is only part of the equation. The airlines need cash flow, so selling a lot of discount tickets at huge losses is not a viable strategy in the short or long term although it's better than airplanes sitting on the ground for 3 days.

Flying right now is a largely emotional issue. Some people will not get on an airplane no matter what the cost. So in pricing, I could forget about them and realize that the airline won't sell as many seats regardless of price.

In time people will become more comfortable with flying and then prices could rise and/or capacity increase to offset increased demand.

Then I'd try to figure out what the people who currently will fly are willing to pay and set fares there. But I would do exactly as some of the airlines have done and reduce the schedules to avoid flying mostly empty airplanes if at all possible.

At the same time, I'd lean on corporations who are hesistant to have employees travel and possibly renegotiate agreements to give them better pricing, at least temporarily. Now is not the time to lose a big corporate account to a competitor.

And lobby the FAA to reduce some of the so-called security measures that don't make flying any safer but just add to passenger frustration (e.g., no curbside check-in).

The bottom line is that operating flights where the revenue is less than the cost of fuel, catering, and crew is not good business. If the variable costs to operate the flight are higher than the revenue plus the cost to reaccomodate passengers on another flight, then fly the plane.

(Edited to add last paragraph for clarification.)


[This message has been edited by FOH (edited 09-23-2001).]

FOH,

I'd have to disagree with your bottom line.
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The bottom line is that operating flights where the revenue is less than the cost of fuel, catering, and crew is not good business. If the variable costs to operate the flight are higher than the revenue plus the cost to reaccomodate passengers on another flight, then fly the plane.

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Until interline travel becomes commonplace, and the market model wil support segment vs destination pricing, Companies will be required to maintain some unprofitable legs. Admittedly, these will be minimalized, but if a carrier doesn't go to a desired location....I do not consider them. The analysis of Variable costs vs revenues works....but you need to include business lost due to service limitations.


I agree wholeheartedly that the current security measures do little to actually increase security...but do the masses know that? Sometimes actual action is not as important as the perception. Real change to the security system will take time and dollars. This was a way to get the airline industry back on track (somewhat) ...now.

I have strong feelings about my travel and the convenience it offers. Take the convenience away, or increase pricing... and I will find other ways to get business done.

I agree with you FOH about capacity reduction, but really, what is the marginal cost (cash flow) to produce the marginal revenue (cash flow) from an unsold seat? Provided that the usual "availability" constraints are attached to a promotional sale, I think airline cash flow would be greatly enhanced by aggressive (targeted) discounting.

The #1 thing I would have done as CEO, would have been to cut all wages across the board 20%, and announce a no-layoff policy for 90 days. Zero bonuses until they turn a profit, and the Executive staff takes an extra 20% cut, and publishes the numbers.

The #2 thing I would have done is call all the other CEO's and make them do the same.

#3 would be to call a press conference with all of them, (all 10 top CEOs) stating what was done and why - protect jobs and keep America working, then ask the public to do their part and keep America FLYING.

This 1-2 punch the airlines have pulled is beyond unconscionable. First, wrap themselves in the flag and beg for a bailout, then Second, even after Congress rolls over and forks over $15 Billion, go ahead and destroy the lives of over 120,000 people (where will they go for work?)

Time for reregulation, plain and simple.

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"You can never have too much Reverb."

Start negotiating today with Marriott, Hilton, Avis, Honolulu tourism board, Busch, Hertz, the Mouse, Las Vegas Visitors & Convention, or anyone else desperate to revive travel. Work out some *seriously* attractive promotions - not just window-dressing.

Pick the right grim-but-warm exec spokesman -- an Iacocca sort who can peddle the message on TV ala "We need to get America flying again ... and Air X is going to earn your business. Every mile, every day."

For the next 60 days, buy some serious prime time & have the pitchman sell those promotions. For travel booked and flown during that period:
-- Settle for breaking even on the high-margin business routes, but bump up the load factor.
Offer TRIPLE miles for all full-fare seats in First or Business, plus a *meaningful" break on a rental car (or hotel in available markets).
Fill the back through: giving discount 5-day-advance coach fares, offering DOUBLE miles to all of your own FFs ... and to any other airline's FFs. Advertise that you'll have snacks on every flight over an hour, hot meals on every flight over two. "At Air X, we know that earning your business means going the extra mile, not cutting corners."

-- Lose a bunch on the tourist market, but send load factors through the roof & get the market share now.
Pick a couple dozen vacation routes and advertise *real* hotel-car-airfare packages for Disney, Busch, Hawaii, Miami Beach - whoever will help pay the freight. Make it good enough that nobody can match it.
Offer TRIPLE miles to your own FFs, and DOUBLE miles to first-timers who join. Have gate agents at the vacation destination airport meet the plane to hand out some sort of logo-embossed trinkets as pax leave the concourse.
Even if it means leasing a few widebodies out of the desert, put enough cheaps seats on the low-profit but tourist-friendly routes so that LOTS of people have flown Air X by Thanksgiving season.

For any pax who book and fly during the 60-day period, offer a 20 percent across-the-board discount on their next r/t, valid anytime between Thanksgiving through Valentine's Day.

Adapt a page from Iacocca's book; announce a 30 percent exec pay cut for 2001 and 2002, and a freeze on management and exec options or bonuses. Ask the unions for 10-20 percent pay cuts (pilots highest, mechanics next, FAs and low-level ground staff give back the least) ... and either provide 'em with a generous stock-purchase discount, or a generous severence package in event of layoffs.

As for the first point, yes it is more complicated than a flight by flight accounting.

About your second point, I agree. That is why the airlines and FAA need to fix the airport security situation. Right now air travel is much less convenient for short hops. This doesn't affected UA quite as much as other airlines (e.g., US, WN) who fly more short-haul routes but it has an effect nonetheless. Why should I fly from LGA to IAD when Amtrak takes about the same amount of time and is probably cheaper?

I understand that real security measures will also take more time than what were used to before September 11 but I would find it easier to deal with the wait if I had some confidence that the security precautions actually might prevent a serious incident rather than being there to make me feel better.

I think we agree on this. Figuring out how much people are willing to pay would definitely include deeply discounted fares. I've seen a lot of them out there, which has certainly resulted in at least one additional passenger.

Last week I booked a round trip from Seattle to Evansville, Indiana, a small regional airport, for one of my parents. The fare including all taxes was $235. It required a 3 day advance purchase and had no minimum stay requirements.

I'm planning on going on a trip soon and want to take advantage of the low fares.