Race to the bottom
 

More entrants to driving prices down from Canada. Norwegian Air plans to fly between Canada and Europe this summer - Business - CBC News

Trouble is, they drive down service at the same time and if not enough people will pay for a better level of service, the better level of service starts to be removed from the market. Thus the rise of Rouge flights and the reduction of mainline Air Canada flights.

This race to the bottom is everywhere. https://www.google.ca/search?q=airli...hrome&ie=UTF-8

At what point are the customers likely to realize that lower prices have a cost that they are ignoring. I remember when the term 'Low Cost Carrier' began to be used. Of course everyone knew back then that they were inferior in service but provided a way for those with less money to afford air travel. Not a bad thing in and of itself obviously. However, now the LCCs are becoming 'mainline' in terms of number of passengers flown and they have now started referring to 'Ultra Low Cost Carriers' coming into the market.

This continuing reduction in comfort, service, health and safety applies everywhere (so don't move this to the Air Canada forum please). How low are you willing to go?

If/when this happens, the reductions on price/service will stop. the fact that a flurry of low cost, low service providers are entering the market means the market is supporting them (or, at least, the providers think they will.)

Their success/failure will determine whether the market continues to evolve in that direction. Commoditization isn't a new thing - air travel is just the latest in a long line.

How low I'm willing to go isn't really relevant. Markets respond to aggregate demand.

I would challenge your bundling of health and safety in with comfort and service. What data do you have to show safety is being reduced? Certainly not air traffic accidents'fatalities.

The market demands more low cost options, and mainline airlines are responding to this by cutting down costs in every way.

I'd say for the majority of the flying public, most people just want to get from A to B the cheapest way possible. There's a HUGE demand for this - especially over the Atlantic. If your preferred carrier (Air Canada) continues to devalue its product and/or subs in trash Air Canada Rouge planes to compete with the LCC's, switch to a better, all-inclusive airline such as Lufthansa, Swiss, Aer Lingus, etc.

Regarding health and safety, there are already rumblings about health and safety issues as seat size and space continues to get smaller CPRich.
https://www.theguardian.com/business...a-safety-issue

That a plane doesn't crash doesn't mean that flight conditions didn't kill anyone or cause any physical, mental or emotional problems. Air traffic/accident, fatatlies numbers show only one aspect of the health and safety of the passenger experience. I mean, do you really want to say, 'well any flight that didn't kill you was a good flight.'

Bolding mine

There are a lot of rumblings in the world about a lot of things. doesn't mean they're true. If you could provide some evidence I'm sure the regulatory bodies would love to see it.

Your campaign to bring back 70's style economy seating isn't going to work with todays market.

If my "rumbling" about things makes it true, then there are a lot of new facts in the world. And the earth is flat. And Obama is a Kenyan. And Mr. Rogers was a sniper.

And yes, flight safety is in fact measured in terms of accidents and deaths. If you consider "emotional damage" as a factor in the safety of our airline system, then further discussion is rather pointless. Feel free to protest low-cost providers because people feel bad.

Better yet - don't fly them. And let others make their own choices. And see how the market sorts out. After all, high cost/quality has won out over low price in mass markets goods in other places like, ummm.....

If only there were a super high speed train across the oceans.

https://www.usatoday.com/story/trave...trak/18471389/

It used to be people took the bus because they couldn't afford to fly. Now flying is no better than taking the bus. :rolleyes:

Norwegian has been flying to the US for a few years now. I took them from LAX to CPH a few years back and yes, it certainly illustrates just how low a lcc can get. They subcontract everything to cheap companies, including gate agents and cabin crew. The food is terrible enough to be poison. The service spotty. The crews are annoyed. All you get is from point A to point B, and I guess that's what you have to be prepared to put up with. Buy cheap, GET cheap.

As someone who can afford more, I have no problem parting with more money not to get what legacies offer, but to AVOID lcc service. My hope is that legacies will get more competitive to survive against the lcc's and drop their own prices, but the reality is that in order to do that, THEY have been dropping services and benefits in order to afford it. And this is the race to the bottom.

I've flown with Norwegian, LEVEL, AC Rouge, Ryanair, Vueling, Transavia as well as more than a dozen full service airlines over the past year. My expectations for ULCCs and LCCs were more than met, while full service airlines often failed to deliver.

The only "service" to me that matters is seat size. I wish the government would mandate a minimum of 18 inches in width and 32 inches of pitch on all planes. Fares will rise slightly, but air rage incidents will drop to nothing, saving millions.

I too would be happy if some kind of regulations were put in place, but I'm not holding my breath. The only possibility seems to be the health and safety concerns that smaller seat sizes have started to raise.

It used to be if you had 'little money' you took the bus. If you had 'some money' you took the train. If you 'had money' you took the plane. Now as per the link I gave above, in terms of seat width and pitch, it is the train that comes out on top and the plane has shrunk to the size of a bus seat and pitch. :eek:

So if you 'have money' and more importantly 'have the time', you would do better to take a train where available. Which just goes to show that time is worth more than money! Maybe we should start considering those who 'don't have enough time' as the 'new poor.' :D

I am much the same in being willing to spend more but I do not want the mainline carriers to drop their prices. The formula is simple and never changes. Price minus cost equals profit. When you change one, you change them all. If you reduce price but not cost, then you reduce profit. There is no sense in doing that obviously. So if you reduce price you must reduce costs to maintain profit and that inevitably means you reduce service in "order to afford it" as you say.

The only other way to maintain profit without reducing costs is to increase sales but as the majority of travellers today focus only on price, the mainline carriers are not likely to be able to increase sales of seats as long as people keep booking the cheap seats on low cost carriers. A true 'Catch 22'.

I'd like to see mainline carriers increase the number of premium seats(what used to be a standard economy) per plane and I'll pay for one. But that's not likely to happen, it's the opposite that is more likely.

I am saddened that the general public have internalized low expectations for flying. Nowadays the average person simply expects that flying means putting up with cramped seats, crowded airports, intrusive and slow security checks, surly airline employees, and gouging surcharges for everything. Talk about expecting these to be different-- which they all were not that many years ago-- and they laugh as if you'd asked for the world on a string.

Norwegian is arguably helping to drive up service and other standards in the US legacy airlines on long-haul. If what I've heard about Air Canada recently is even partially correct, then Norwegian could well be the injection in the arm that AC needs.

The plane seats in the back of the flying bus of various legacy majors is now worse than the seat comfort of the public buses used by local/regional transport companies owned by governments. When governmental public transit buses may be way more comfortable than the seats on some planes used by say American Airlines or British Airways, the race to the bottom has shown that calling out airlines as flying buses is an insult to some buses.

This is happening, in a manner of speaking. Premium Economy is becoming increasingly prevalent. BA is retrofitting some planes with larger Premium Economy cabins. The big US airlines are introducing it. Even Norwegian offers it. But it still is a product in flux, with different airlines taking different views of just how premium it should be. At its simplest, it's a seat like those from 30 or 40 years ago, and a worse meal. At its best, it's a slight upgrade on North American "first" class offerings. But, as its name suggests, it's more allied to Economy than to Business Class, as are its prices.

The fact that it's growing so much demonstrates that there is demand for such a product, albeit limited demand. The point is that airlines make their money from the front cabins and, apart from periods of peak tourist demand, struggle to fill the back. They must compete on price back there, and so, as already discussed in the thread, they must not offer any more airplane real estate than their competitors. So we have narrower seats closer together. Only UA, with its Economy Plus, has bucked that trend, but it seems to be being dragged inexorably back to the pack - and it does seem that relatively few people will pay the $150 or so for an extra legroom seat. And those who will would probably choose Premium Economy for perhaps $200 more instead.

I think there is a lot of demand for these types of seats, but the price being charged is so ridiculously high that few are willing to pay.

For example, increasing the number of seats on the 777 from 9- to 10-across increased gross revenue on these seats by 11 percent. Flying people does cost money though, so I would guess the net revenue increase was about five percent or less. Same goes for revenue earned from reducing pitch. So the airlines could break even by offering seats in the 9-across format with a 10 percent increase in pitch for about a 10 percent premium, and people would buy these seats like crazy.

It is possible, through regulation, to require the airlines to offer bigger seats on a revenue-neutral basis, and I think such regulations should be put into effect.

"I think there is a lot of demand for these types of seats, but the price being charged is so ridiculously high that few are willing to pay."

Umm, that is contradictory. If there is 'demand for these types of seats', it includes the price. Wanting a bigger seat but not being willing to pay more for it is an entirely different 'demand'.

Your assumption that if you increased size by 10%, people would pay 10% more is just an assumption. The facts seem to indicate that given the choice of that or a 10% smaller seat for 10% less cost, the people would choose to pay less for less.

Clearly, we have not yet reached the limit at which people will say NO to a cheaper seat. Price is their first, last and only criteria. That's what makes it a 'race to the bottom'.

Exactly.

airlines offer what the market will bear. market participants such as yourself only bear economy fares, as is established in this thread. where is the bottom? its a minimum level of safety and security maintained by authorities, and so far this minimum is better than it's ever been.

Ultimately, I want more competitors in the market. The U.S. government has cozied up to the legacies for a long time, allowing them to merge several times over and form a nice tight group that controls a majority of the capacity. Not quite a full-blown cartel, but it often acts like one.

So I welcome the ULCCs - even though I don't really want to fly them myself. I'd love to see more full-service carriers and greater access to U.S. markets from foreign airlines, but anything is better than nothing. From what I understand about the Canadian market, it could stand some more competition as well.

I refuse to fly on LCC, unfortunately the legacy airlines are dropping their standards to those of LCC but continuing to charge higher prices.

The thing I don't understand is the legacy carrier's "basic economy" product.

Here's a semi-common thing I see on MCI-DTW:

Spirit: $32 one-way.
Delta, regular ticket: $207 one-way.
Delta, basic economy: $182 one-way.

I understand the allure of the $32 ticket.
I understand the desire for an upgradeable, mileage-earning ticket with full EQM, baggage, etc.

I cannot understand for the life of me why anyone would buy the $182 ticket. I don't even know why they bother offering it. Maybe if it were $40, I'd buy it because I like Delta's color scheme eight dollars more than I like Spirit's. But 6x as much as Spirit? Why? Makes no sense.

Perhaps people who refuse to fly ULCCs on principle (or due to ego) will buy Delta basic economy.

Count me as one of the few willing to pay. Money is not a huge issue for me, most of my flying is paid by my employer, and the extra I put up personally to buy up to a premium seat is really a tiny price to pay for a bit more comfort, control..and distance away from the Kettles. I like that it's an option. Those that are willing to pay, like me, will pay, and those that are not will not. I can afford a better product so why not buy it? Why should I, in the name of some egalitarian principle or in solidarity with those less fortunate, be denied that? The airlines shouldn't be regulated against developing a revenue stream this way...it's OPTIONAL after all. If you don't want to pay, you don't have to.

And if someone doesn't want to pay, that someone should be fine with not getting what they wouldn't pay for. Why on earth should airlines be regulated into making it available to those not willing to pay for it?

You seem to be confused about what I will 'bear'. What I would actually like to see is the airlines go back to what an economy seat experience used to be like 30 years ago and simply charge me the equivalent price in real money today. In other words provide what today they call Premium Economy, for all economy seats and at the Premium Economy price. Remove the current Economy seats and service entirely. Is that clearer deniah?

So please don't try to suggest that I am one of the 'market participants' who will only 'bear (today's)economy fares'. It's those market participants that I'm annoyed with. They are forcing the airlines to provide a product that I personally don't want. That would be fine if the airlines still offered the alternative of a product I do want, but the whole point of starting the thread was the fact that such alternatives are becoming fewer and fewer. Major airlines like Air Canada are dropping routes on their mainline planes and instead flying them with their inferior LCC lines like Rouge. What does that tell you about where they are heading? A higher level of product and service or a lower level?

For short-haul in most places (North America, Europe, Asia) you can comfortably fly Business Class/ "First" Class and for long-haul you can fly Premium Economy for the same price as Economy 30 years ago (https://www.theatlantic.com/business...oticed/273506/). The cost for what you get has been plummeting, and as a significant consumers are mainly price conscious, even cheaper options have been developed. Don't want to fly in a cheap Basic Economy or ULCC flight, then pay for an alternative.

Airlines are going to provide what more people want, not what you want. If the airlines are providing a product you don't want, don't buy it. If they aren't offering the product you want, find another airline. If no airline is offering what you want, then there is probably not enough demand for it

and people who a skeptical of the crew training and the maintenance practices of ULCCs. Also the pitch in legacy Y- might be a few inches more than some ULCC.

My friendly neighborhood ULCC is Allegiant. They were having enough incidents in 2016-17 that often seemed to trace back to iffy maintenance that I'm still in a 'wait and see' mode even as they finish phasing out the MD-80s in favor of newer Airbuses.

I'm glad they're flying here and increasing competition, but prefer the safety standards and reliability of the legacies. Another reason to pick the basic economy option over the ULCC is IRROPS- yes, you're just above the buddy pass folks when it comes to IRROPS rebooking, but the odds are decent you'll get onward within 24 hours compared to days later/trip in vain if the ULCC decided to outright cancel a flight that only operated 2-3 times a week.

Again, I'm willing to pay more EuropeanPete but you are making the assumption that what I want is available. Air Canada mainline no longer fly the route I want to fly ie. Toronto to Edinburgh. Instead they fly it with their LCC Air Canada Rouge. Their Rouge planes are inferior to their mainline planes in terms of age, amenities, etc. So IF there are Premium seats available, they are still inferior to Premium seats on Air Canada mainline flights.

Second, is the IF seats are available. There is a limited number or Premium seats and as I generally do not book months in advance, they may well be sold out by the time I am ready to book. Booking an economy seat even with extra legroom can be a problem if you only book a couple of weeks ahead of flight date.

So it is not as simple as saying,'pay more and get what you want'. There are usually 200+ seats in the unacceptable economy seating but only 20+ (some planes even less) Premium seats. I am well aware of the costs in terms of 'real dollars' today vs. 30 years ago and as I have said, I am willing to pay. There are just not enough seats available or better airplanes even flying the route. Being willing to pay can't change that.

Should one be surprised that there arent more options for a longhaul direct from Toronto to a city housing 500k people, with no strong cultural or commercial connection, and only the 6th busiest airport in the UK?

If you're willing to pay, there is always the private route.

First, you are ignoring the fact that there were direct flights on mainline AC before. Those flights have now been handed over to Rouge. You are incorrect to say there are not 'strong cultural' connections. That is why the direct routes are being flown at all. It has nothing to do with the size of the city being flown to. The Toronto to Scotland routes are probably one of the highest traffic 'cultural connection' routes to be found anywhere. Here are the 5 largest number of Canadians by ethnic origin. English6,320,085Scottish4,799,010French4,670,595Irish4,627,000German3,322,4052016 Census

As it happens, Scotland is the only one of those 5 where there is no mainline AC direct flights any more.

A further note on suggestions to upgrade to Premium Economy on Rouge as some have suggested. Have you read the reviews on Rouge? It is next to impossible to find one positive review of Rouge regardless of what class you look at flying.

As for flying the private route. That isn't an answer, it's just a silly non-answer.

Those are great arguments for buying the $207 (regular) fare. Compared to that, the $182 is a lousy value. If it were Spirit at $32, DL Basic at $100, and DL Regular at $200, I'd quite possibly consider the DL Basic fare. But it's never that...I always see it *barely* below the regular coach fare.

And I totally agree on the maintenance concerns in some cases. Allegiant's Mad Dogs can all buy their own booze at this point, and looking at which airlines have owned/leased each one is like a walk down 1990s memory lane. (Hello, Vanguard, Midway, and Reno Air!!) Makes me wonder which of the frames Aeromexico is flying today that Allegiant will be flying 15 years from now. :eek:

I've been on ULCCs quite a bit, mainly NK and F9 but also Air Asia and Sky Airline when I'm in those parts of the world.

Anecdotally I'd have to say the cramped seating is far and away the #1 passenger gripe. You're making nearly the whole plane suffer to add 2 more rows, and anyone above a certain height (would guesstimate 5'10" or so, maybe less) is likely to have knees pinned to the seat in front with limited mobility and having to shift between maybe 2-3 positions at most, with knees unable to un-bend and not being able to get legs or feet fully under the seat in front (and this assumes no bag taking up that space).

It's an area that screams for government intervention because only the government can level the playing field. If the playing field is level and no one can try to profit by making things even more cramped, then they'll just compete on something else.

They'll need a good scientific basis like heightened DVT risk or something along those lines, but as you get longer routes with the 27-28" seat pitches, I think we'll see more problems. It should be common sense, but airlines are willing to ditch that if it interferes with profits.

I don't understand what all the moaning is about. If you want a return to 70s style economy service, just buy what today is called premium economy. It costs more than regular economy, but I expect it's probably at or below the real cost of what 70s economy used to be.

I think the pricing structure in the example is done on purpose. DL wants you to think that the $207 is the "best value" and people that look for value will take the $207 fare, but obviously there are sufficient people buying the basic fare at $182 (judging by my previous experience there are plenty of such people who sees that they are "saving" $25).