AP: MSP Fares Higher than Others

 
Old Jan 10, 05, 12:27 pm
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AP: MSP Fares Higher than Others

MINNEAPOLIS (AP) _ Minnesota travelers can get to more than 160
cities _ from Brainerd to Beijing _ from the Northwest Airlines hub
here. But two new studies show they pay extra for the privilege.
While low-fare competition has driven down airfares across most
of the United States, people flying out of Minneapolis-St. Paul
International Airport pay some of the highest fares in the nation.
In the second quarter of 2004 alone, the cost of traveling to
and from the airport was $118 million higher than the average fares
for comparable travel at other U.S. airports, according to research
by Severin Borenstein, an airline industry expert and economist at
the Haas School of Business at the University of California,
Berkeley.
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Old Jan 10, 05, 12:38 pm
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The story was actually the AP version of this story from the Minneapolis Star Tribune.

http://www.startribune.com/stories/462/5174964.html

There was also a big package in the Star Tribune on Sunday about the future of the airport and the proposed expansion.
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Old Jan 10, 05, 1:02 pm
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Uh-oh, time for our daily ‘MSP is underserved and overpriced! (We need jetBlue service to Amsterdam)’ thread.

* MSP enjoys a tremendous level of air service. This attracts business (start-up & relocation + attraction of conventions / routine business) and brings millions of connecting passengers (not only does the airport collect fees per passenger, the passengers spend money in various retail venues). The airport also collects fees per flights.

* MSP employees a large, disproportionate (in retaliative to other hub carriers & the employees/types of employees employed in various hub cities) number of NW employees.

When you have an operation that pumps tens of millions of dollars and tens of thousands of jobs into your economy, you should expect to pay a premium for it.

(And BTW, the Star-Tribue is about as fair and unbias to NW as Bill O'Reilly is to the Democratic Party.)
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Old Jan 10, 05, 1:53 pm
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Statistics, BLAH, BLAH, BLAH!!

Just saw the article on USAtoday.com http://www.usatoday.com/travel/news/...tm?POE=TRVISVA

NW disputes the findings and says it is because of a higher percentage of last minute business travelers (probably because they have a lot of service and can actually get to other destinations to conduct business). They have their own statistics that state MSP is 6% below the national average.

Two other surveys say that the average price for tickets bought is greatly above the national average.

I guess it all depends on what set of numbers are important to you.
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Old Jan 10, 05, 7:44 pm
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Originally Posted by wldtrvlr
Just saw the article on USAtoday.com http://www.usatoday.com/travel/news/...tm?POE=TRVISVA

NW disputes the findings and says it is because of a higher percentage of last minute business travelers (probably because they have a lot of service and can actually get to other destinations to conduct business). They have their own statistics that state MSP is 6% below the national average.

Two other surveys say that the average price for tickets bought is greatly above the national average.

I guess it all depends on what set of numbers are important to you.
Let's see.... one study was done by a college professor, one study was paid for by the Strib, and one by NW. Do you actually think a newspaper would massage numbers in a study done by another corporation to get this story? That is ridiculous. The paper would be shamed out of business.
Actually, since they've run stories like this before, I know they'd have run a big package on how there ISN'T a "Hub Premium" we pay here. So Bagels, while I actually agree with a lot you say, your last BTW is a little silly......Yeah, I'd say the most reliable report is the one that NWA PAID for (LOL)
And as for the last-minute business tickets: Is this the only market in the US with business travelers? Since when do 3M, General Mills, and Best Buy need thousands of tickets to NYC at the last minute, at such a higher need than any other market in the entire country? Please.
And this study is based ONLY on tickets either starting or ending in MSP, so our fares have nothing to do with connections here. So yes, air travelers do really pay hundreds of millions of dollars more for tickets here over the years. It's that simple.
That said, I know that I appreciate having so many nonstops out of MSP, especially to AMS and NRT. So while I appreciate WHY it's more expensive to fly out of here, I wish NWA wouldn't lie so vigorously, and then pretend it wasn't so. Come on, does it really cost half as much to fly a DC9 from ORD to NYC? You can never get anything cheaper than $300 to NYC, while from MKE/MSN/ORD (even the west coast!) it's often less than $200.
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Old Jan 10, 05, 10:47 pm
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Originally Posted by Bagels
Uh-oh, time for our daily ‘MSP is underserved and overpriced! (We need jetBlue service to Amsterdam)’ thread.

* MSP enjoys a tremendous level of air service. This attracts business (start-up & relocation + attraction of conventions / routine business) and brings millions of connecting passengers (not only does the airport collect fees per passenger, the passengers spend money in various retail venues). The airport also collects fees per flights.

* MSP employees a large, disproportionate (in retaliative to other hub carriers & the employees/types of employees employed in various hub cities) number of NW employees.

When you have an operation that pumps tens of millions of dollars and tens of thousands of jobs into your economy, you should expect to pay a premium for it.

(And BTW, the Star-Tribue is about as fair and unbias to NW as Bill O'Reilly is to the Democratic Party.)

Yes all of this is true, but the fares did not become unreasonable until the state invested in NW back in 1994 (I think it was 1994 mabye it was 1993). Once that happened in my opinion NW realized that the MAC and the State of MN had a vested interested in having no competition at MSP to ensure repayment. The Star-Tribune should have looked at fares from the time of the deal with the state for the next 2 years. They would have seen the huge increase in fares. As a small business this hurt us.

The MAC has no interest in competition as the loans have not been repaid. Anything they say in regard to competition is lip service as far as I am concerned. Yes we have great air sevice for a city our size. Really great service, but we who live in the hub pay for it.
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Old Jan 10, 05, 11:10 pm
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the studies are nothing new. similar studies have been conducted by different organizations over the years with the same conclusion--fares ARE higher out of msp! but so what? it doesn't approach the "hub gouging" some here claim. people do have access to other major carriers out of msp. there is competition and nw is winning at msp.

btw.. the claim that mac is not interested in competition at msp is one guy's opinion and a myth. mac is a public agency and their interest is to serve the flying public. i know the mac operation rather intimately (no, i do not work there), they are always initiating talks with the southwests of the world, in trying to draw them here because the public tells them that they're interested.
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Old Jan 11, 05, 6:18 am
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Originally Posted by worldexpress
the studies are nothing new. similar studies have been conducted by different organizations over the years with the same conclusion--fares ARE higher out of msp! but so what? it doesn't approach the "hub gouging" some here claim. people do have access to other major carriers out of msp. there is competition and nw is winning at msp.

btw.. the claim that mac is not interested in competition at msp is one guy's opinion and a myth. mac is a public agency and their interest is to serve the flying public. i know the mac operation rather intimately (no, i do not work there), they are always initiating talks with the southwests of the world, in trying to draw them here because the public tells them that they're interested.
Just to clarify my point. The MAC invested public money in a private company and it is in the public's interest to get that money back. Having NW healthy is by far the best way to do that. Serious competition will reduce the health NW which is now not in the public's interest. Having a few flight from Southwest is not really going to hurt NW by creating significant competition.

Not to get into a flame war over this, but it is my opinion and if you look at what happened to fares since the investment and competition out of MSP those are the conclusions I draw. I do not deny that the MAC has stated publicly that they want another carrier for competition, but they way I see it we have no competition and NW plans to pay the MAC back which is in the public interest. Again I am drawing the only conclusions that make sense to me based on facts I see, not stating a fact.
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Old Jan 11, 05, 7:09 am
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I know that it's generally cheaper for me to fly NW out of a regional airport in Wisconsin (served by UA, Midwest, NW) and connect through MSP than to fly NW originating out of MSP. That's been the case for quite a while and has become more pronounced the last few years.
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Old Jan 11, 05, 12:53 pm
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hnewman--
The state of MN, not the MAC, provided the loan to NW. IIRC, the amount borrowed has since been repaid twice + then some, although NW continues to owe well more than it borrowed. It’s alleged that NW has asked, and been rejected, for credits against its out-of-pocket expenses for MSP improvement/expansion projects.

NW still had access to the financial markets when it accepted the loan; it was intended to enable NW to continue deliveries of its Airbus and Boeing jets. In exchange for the loan, NW was to build its Airbus maintenance facilities within MN + keep its commitment within the state.

Until MN offered/agreed to a loan, ATL/GA was the front-runner for the Airbus maintenance facilities (they had offered NW an incentives package that included sweet-heart lease rates on what remained of EA’s assets, including its Airbus maintenance facility).

Today, NW’s commitment to MN is visible: maintenance (virtually all in-house maintenance is performed within MN), call centers and managerial rankings continued to be consolidated at MSP. Several studies have shown [email protected] (vs. [email protected], [email protected]) to receive a hugely disproportional hub economic impact compared to other airlines and their operations at their hubs.

While there’s no doubt there’s a hub premium at MSP, it’s mostly justified given NW’s enormous commitment/operation. And the premium isn’t as large as most people think as most studies are skewed: more people are willing to pay 4x AirTran’s $286 walk-up fare to BOS (most likely for a short, direct flight as opposed to two long flights via ATL). The overall average fare will be higher, but there is a choice involved.

Also, the MAC has tried actively to lure WN... they’ve tried creative deals (such as the pay-per-flight from the HHH) to lure WN, but they can’t exactly cut the airline a sweet-heart deal. If they did, NW would likely retaliate (e.g. announce the A330 heavy maintenance will be performed at DTW, afterall) - and rightfully so.
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Old Jan 11, 05, 1:33 pm
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It's true that MSP O/D is expensive. But NW is good for MSP area economy, and good for travellers who like direct flights. That's good. There is some competition (Sun country, FL, other legacies to their own hubs, etc) so if cheap travellers would like to waste 3 or more hours connecting somewhere else then that's their prerogative.
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Old Jan 13, 05, 7:53 am
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Originally Posted by Bagels
hnewman--
The state of MN, not the MAC, provided the loan to NW. IIRC, the amount borrowed has since been repaid twice + then some, although NW continues to owe well more than it borrowed. It’s alleged that NW has asked, and been rejected, for credits against its out-of-pocket expenses for MSP improvement/expansion projects.
Bagels one of your facts is incorrect. Northwest did borrow from the MAC

1992 APRIL: NWA receives the loan from the Metropolitan Airports Commission and gives half of the $270 million to Bankers Trust, its primary lender.

http://www.leg.state.mn.us/lrl/issues/nwa.asp
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Old Jan 13, 05, 2:13 pm
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Wait, somebody's done a study saying a hub city fares are higher than non-hub city airfares? What's next, a study that proves that ice is colder than steam?
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