How much should NW charge for tix?
Apr 22, 2005, 11:00 am
#16
Join Date: Feb 2005
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If prices are slowly raised, we will most likely pay more. 7 to 14% is most likely not a deal breaker. What amazes me is the severe swing of the pendulum attempted in the past. $209 one week $1200 7 days later with 7 day advance purchase in both cases. I had no choice but to fly UA 
. Clearly fares must rise. Just don't try to recoup all the losses in one fell swoop.
. Clearly fares must rise. Just don't try to recoup all the losses in one fell swoop.
Apr 22, 2005, 1:10 pm
#17
Join Date: Nov 2004
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Originally Posted by psychtobe
if you divide $2.8B in revenue by 135,000 quarterly departures, you get an average ticket price of $20,740. cargo figures prominently into this equation, but i don't know how, nor how much.
but using your figures.... if you figure $34 per segment, and you figure 4 segments per flight (assuming travel from a non-hub city), that's $136 more per RT... and my point is, even if ALL airlines raised average fares $136 per RT, so that competition were not a factor, I don't think people would pay it.
At some price for gasoline (obviously higher than $2.50 per gallon), people will change their driving behavior. And at $400 plus for an average deep-discount Y, I think people would fly less. So unless we accept the premise that flying is unaffordable to most people, I would submit that it is the airlines' cost structure (labor and fuel) which is too high, at least as much as revenue being too low.
what this really boils down to is guilt... i don't think I should be made to feel that I am contributing to NW's demise by buying $250 transcons...
but using your figures.... if you figure $34 per segment, and you figure 4 segments per flight (assuming travel from a non-hub city), that's $136 more per RT... and my point is, even if ALL airlines raised average fares $136 per RT, so that competition were not a factor, I don't think people would pay it.
At some price for gasoline (obviously higher than $2.50 per gallon), people will change their driving behavior. And at $400 plus for an average deep-discount Y, I think people would fly less. So unless we accept the premise that flying is unaffordable to most people, I would submit that it is the airlines' cost structure (labor and fuel) which is too high, at least as much as revenue being too low.
what this really boils down to is guilt... i don't think I should be made to feel that I am contributing to NW's demise by buying $250 transcons...
Apr 22, 2005, 1:51 pm
#18
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Originally Posted by troyintn
People will not pay those prices... A family of four will not pay 1600 bucks.
The reversal will have to be accomplished over time, and indeed we'll never go back to the hideous days of sc**w-the-businessman $2300 Economy transcons, but it has to be done. You can't run an industry forever using price points that are below cost basis. In fact in the realm of tangible goods, selling an imported product below its cost basis (e.g. Asian TV sets) is called "dumping" and it's illegal.
If we ever see any form of reregulation in the airline industry to stop all the players from committing suicide, I bet it'll assume a form similar to anti-dumping legislation -- prevent the carrier from selling seats at a price point below cost basis.
Apr 22, 2005, 1:57 pm
#19
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Join Date: Dec 2002
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i'm a pretty regular leisure traveler, and my elective flying would decrease if Y cost $400, $600, or more, on a regular basis. Yes, people will still fly home for the holidays - but just watch that Spring Break and summer travel dry up...
Apr 23, 2005, 12:15 pm
#20
Join Date: Nov 2004
Location: Nashville
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Originally Posted by BearX220
They USED to -- in fact they USED to pay a lot more, and as other posters here have pointed out, thought they were getting a sweet deal. The industry has now taught budget travelers to expect fares that are well below the cost of service provision, much as GM has now taught people not to buy GM cars unless there's a value-smashing $5000 rebate attached.
The reversal will have to be accomplished over time, and indeed we'll never go back to the hideous days of sc**w-the-businessman $2300 Economy transcons, but it has to be done. You can't run an industry forever using price points that are below cost basis. In fact in the realm of tangible goods, selling an imported product below its cost basis (e.g. Asian TV sets) is called "dumping" and it's illegal.
If we ever see any form of reregulation in the airline industry to stop all the players from committing suicide, I bet it'll assume a form similar to anti-dumping legislation -- prevent the carrier from selling seats at a price point below cost basis.
The reversal will have to be accomplished over time, and indeed we'll never go back to the hideous days of sc**w-the-businessman $2300 Economy transcons, but it has to be done. You can't run an industry forever using price points that are below cost basis. In fact in the realm of tangible goods, selling an imported product below its cost basis (e.g. Asian TV sets) is called "dumping" and it's illegal.
If we ever see any form of reregulation in the airline industry to stop all the players from committing suicide, I bet it'll assume a form similar to anti-dumping legislation -- prevent the carrier from selling seats at a price point below cost basis.
Apr 23, 2005, 2:52 pm
#21
Join Date: Jun 2004
Posts: 44
The problem is not the low fares. The problem is the labor contracts and the high fuel prices. Southwest has proven they can make money with $200 transcons; they have lower-cost labor, aggressive fuel-hedging, and the smarts to stick with one aircraft type instead of countless types like NW has.
It doesnt take a brain surgeon to see the direction the US airline industry is heading towards........the Ted, Song, Southwest, and JetBlue business models are the wave of the future.
It doesnt take a brain surgeon to see the direction the US airline industry is heading towards........the Ted, Song, Southwest, and JetBlue business models are the wave of the future.