transportbiz

Yeah, just seeing what they sell, pricing wasn't a consideration. Changing the request to first class, UA, VX and B6 show up as options on first leg out of DEN depending on routing. VX would not be most peoples first choice as the layover in SFO is 5 hours.

aCavalierInCoach

Most enforcement actions are civil rather than criminal but the DOJ's role is largely the same.

Excellent points.

findark

This is not quite true - a fare Lxxxxx/UPDI which books into P will require both P and L space to be bookable, whereas the D fare from VX is available whenever there is D space in the front cabin, regardless of how full it is in Y. The lack of correlation between the fares means that VX fares can end up where F is close to, or even less than, Y. It's most common about 7 days out on routes/flights that are leisure-heavy (this is usually my excuse for springing for otherwise expensive VX F).

What I really don't know is what percentage of UA's front cabin is getting filled with the lowest /UPDI fares - that is, whether they sell out of L or P first. If the low economy buckets are filled with Y pax, then UA is going to end up with higher average revenue for the F cabin. It's a similar difference for VX MCS - it's not a differentially priced fare, so it will look more affordable when the low economy buckets are sold and UA F has gone up too.

LarkSFO

Thank you for the searching tips..

I originally actually cut and pasted some of the text in your OP, and found the court case itself. While it does say that Spirit got the lower court summary judgement (in favor of Northwest) thrown out, it does not say (or I could not understand) what the final result of the case was...

When I review the academic paper at the link you posted, I find this portion of it to be most relevant to this UA vs. VX discussion:

“Despite the seemingly predatory response of dominant hub carriers such as Northwest and American Airlines their conduct in the airline industry their actions have gone without censure under the antitrust laws.

These major airlines are pricing above costs on routes as a whole, but they are sacrificing profits and pricing low enough to drive out entrants. As Professor Edlin remarks: “If the law fails to recognize these low prices as predatory because they are above cost, consumers are the unambiguous losers.”

Although consumers benefit in the short run as a major airline and low-fare entrant engage in a price war, the consumer ultimately suffers once the entrant is forced from the market and the major
airline resumes monopoly pricing.”

Which essentially seems to say: in the authors opinion, predatory pricing in the airline industry exists and should be punished, but the current law and metrics to prove an airline is pricing flights below there actual cost are inadequate to bring (and win) a legal case...

For VX, or the DOJ should they choose to engage, it seems the 'prove UA is flying below their cost' element of the law would be difficult or impossible to achieve. SFO is a hub, DEN is a hub, there is O/D traffic but also significant connecting traffic.

UA (it seems) would make the case that while the SFO-DEN leg is priced low, when you add the price of the entire connecting itinerary, they are not pricing below their cost.

It seems to me that this is a very low bar for the airlines to exceed.

Which leads to the last point of your cited paper: Laws should be changed to make it easier to punish airlines for what appears may be predatory pricing behavior.

Until and unless these laws are changed, it does not seem like VX or the DOJ will take this to court...

Then again, I did not think the DOJ would get involved in the gate swap agreement between UA and DL (EWR/JFK), and they did.

So, you never know!

aCavalierInCoach

I'm not sure I have the same conviction as you do in the DOJ/VX's unwillingness to cry foul, but I don't think your conclusion is an unreasonable one either.

Bear96

Wait, what?

The usual criticism around these parts is that UA whimps out and "abandons" markets when competition shows up.

Which is it?

aCavalierInCoach

A couple of folks have opined with this "Darn FT, you can't have it both ways!" and I don't think it's fair. We're not talking about United downgauging or abandoning a hub-xxx route when competition shows up, we're talking about two United hubs and a punitive (rather than competitive) response (no way United sustains this frequency if it gets VX out).

Kacee

To me the real issue is that UA is creating over-capacity on this single route while they have a mainline shortage throughout the rest of the domestic network.

DOJ is already investigating capacity cuts by the four majors and whether that's a collusive, anti-competitive practice. When you combine the one (cutting domestic capacity to force prices up) with the other (dedicating empty seats to a single route where VX is trying to compete) it's really not a pretty picture and I would certainly hope DOJ takes a look at the overall approach here, and whether it's harmful to competition and consumers.

aCavalierInCoach

To a point made (somewhat tangentially) by Lark, my fear here is that the DOJ may not have many tools at its disposal. Being a monopoly / oligopoly isn't itself illegal. The current legal framework around predatory pricing is not obviously helpful, and it is incredibly hard to prove collusion. What is obviously collusive behavior to us as consumers -- draw downs of capacity and increasing fares on routes with limited competition -- may not be illegal absent firm evidence of explicit coordination.

Kacee

I don't disagree with that. And I will add that anti-trust is a highly specialized area in which I don't profess to be expert. I just think DOJ should take a look at it. Because it smells bad. And they're already looking at the majors' capacity reductions. And have initially rejected the DL/UA gate trade at JFK/EWR.

fly18725

How is this a punitive, rather than competitive, response?

A new entrant and the additional capacity from UA will stimulate demand. UA operated more than this number of flights, with greater capacity, in the recent past. Is there something else that points to a punitive response?

aCavalierInCoach

It's punitive for the reason I placed in the parenthetical -- that it is (in my expectation) a temporary measure meant to make the route unprofitable for a competitor rather than to make their own product superior on a non-transitory basis.

I could be proven wrong if United sustained this level of service after a VX exit or otherwise -- only time will tell, but I am extremely skeptical.

krazykanuck

People here love to hate on UA, but when push comes to shove, all else equal, I'd still rather have a confirmed seat in UA E- than free for all on WN. Can't speak for F9 - never flown them.

Kacee

Free for all? Not since they implemented the A/B/C system. It's more civilized than UA's system IMO. If your boarding number is B30 or better, you'll get a window or aisle. For $12.50 early bird fee, you'll get an A boarding number.