Kirby says passengers choose price over seat pitch
May 30, 2017, 6:00 am
#61
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Kirby:
"If you take a row of seats off an airplane — you take 4 percent of the seats off the airplane — it costs the same amount to fly the airplane as it did before,” Kirby said. “You’re burning the same amount of fuel. You pay the pilots the same. Maintenance is the same. So you have to charge 4 percent more to make that break even. Customers have to be willing to pay more if they want more seat pitch. And the evidence is that they aren’t willing to.”
Hmmmmm.......if you take a row of seats off an airplane, you are subtracting the weight of the seats PLUS the weight of the passengers who would have sat in those seats PLUS the weight of the baggage PLUS less fuel to fly the lighter plane. How can the fuel burn be the same?
"If you take a row of seats off an airplane — you take 4 percent of the seats off the airplane — it costs the same amount to fly the airplane as it did before,” Kirby said. “You’re burning the same amount of fuel. You pay the pilots the same. Maintenance is the same. So you have to charge 4 percent more to make that break even. Customers have to be willing to pay more if they want more seat pitch. And the evidence is that they aren’t willing to.”
Hmmmmm.......if you take a row of seats off an airplane, you are subtracting the weight of the seats PLUS the weight of the passengers who would have sat in those seats PLUS the weight of the baggage PLUS less fuel to fly the lighter plane. How can the fuel burn be the same?
He's right.
Travellers have long voted with their wallets, and many, though not all, want lower pricing. It's why MRTC at AA didn't work, and it's why Spirit, Allegiant, Frontier, easyjet, Ryanair, Air Asia, etc. can thrive. It's also why E+, Comfort+, etc. can work (even why E+ worked at the same time AAs experiment didn't - it was some of the plane, not all of it) - those who choose to spend more for more legroom can, if can be offered as a perk to FFs, as well, but those who want low-cost tickets can get those, too. Also why the low-end basic fares in Y now work - if you want the lowest price, you can now get it. You just won't get everything else that comes with other Y fares.
If I had to guess, when AAs less legroom rows in the back of economy have a critical mass, they will be blocked for their basic economy equivalent fares, and competitors like UA will do the same thing - reconfigure similarly and hold these less-legroom seats for those on BE fares - doesn't mean BE will be guaranteed it, but a good chance they will get it. It makes sense - you don't want to have people paying regular fares - especially last minute buyers that are doing YBME kind of fares, getting the back set of less legroom seats, and if someone is paying less, they don't really have a reason to complain about getting the least desirable seats in the aircraft. Just what I think.
Travellers have long voted with their wallets, and many, though not all, want lower pricing. It's why MRTC at AA didn't work, and it's why Spirit, Allegiant, Frontier, easyjet, Ryanair, Air Asia, etc. can thrive. It's also why E+, Comfort+, etc. can work (even why E+ worked at the same time AAs experiment didn't - it was some of the plane, not all of it) - those who choose to spend more for more legroom can, if can be offered as a perk to FFs, as well, but those who want low-cost tickets can get those, too. Also why the low-end basic fares in Y now work - if you want the lowest price, you can now get it. You just won't get everything else that comes with other Y fares.
If I had to guess, when AAs less legroom rows in the back of economy have a critical mass, they will be blocked for their basic economy equivalent fares, and competitors like UA will do the same thing - reconfigure similarly and hold these less-legroom seats for those on BE fares - doesn't mean BE will be guaranteed it, but a good chance they will get it. It makes sense - you don't want to have people paying regular fares - especially last minute buyers that are doing YBME kind of fares, getting the back set of less legroom seats, and if someone is paying less, they don't really have a reason to complain about getting the least desirable seats in the aircraft. Just what I think.
May 30, 2017, 6:02 am
#62
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Width in particular is just a pack of lies in many cases. For airlines to compete more on product quality, there really need to be some standards for product disclosures, hopefully with regulatory force behind them. A measurement of "personal space" (distance from middle of arm rest to middle of arm rest + middle of seat back to middle of seat back) is badly needed.
Measurement of seat width is, in fact, prescribed by the Feds for a CFR mandating online disclosure of minimum seat width by aircraft by cabin - for infant seat installations. The info is there for people willing to do a modicum of work. There are always going to be people who are happiest when complaining. If the difference between 17.2" and 18.0" sets them off they're going to find plenty of difficulty in life.
May 30, 2017, 6:07 am
#63
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If you have stronger credentials as an expert in safety than the DOT, FAA, and EASA, I urge you to state them. Impress us! Aircraft are certified at max passenger counts far above what UA operates.
May 30, 2017, 6:08 am
#64
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This is simply incorrect. Passengers choose on every single flight. They buy E- and get a prompt to pay $20 more for E+ and they decline. (At least a large segment declines). They have the data to prove his statement and he is spot on.
May 30, 2017, 6:08 am
#65
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That's why I explicitly said it's not valid to simply say I'm choosing price over seat pitch. I'll try a different model: let's say you're captive and only provided the options of extreme torture, slow death, or quick death. And you go with quick death. Choosing death doesn't mean you want to die. It means you don't want tortured. It's all a false dilemma setup. There's a middle ground that could be offered, but isn't. Your captors can market it anyway they like: "Great news! Due to customer demand, we've stopped torturing! So your choice is now slow death or quick death."
May 30, 2017, 6:08 am
#66
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So not a very big difference. (Someone should probably check my numbers.)
Correct on all 3 counts. Air Asia and HK Express charge vastly less than United, but still offer a better experience. The premium carriers charge similar rates to United but offer an experience that is a world apart. It's all about competition. U.S. legacies are fat and lazy with lazy overpaid union employees. Open the skies over America and that will change -- to the enormous benefit of consumers.
22 cents per seat mile for labor in the U.S. 8 cents for an Asian LCC.
Last edited by WineCountryUA; May 30, 2017 at 10:39 pm Reason: merging consecutive posts by same member -- please use multi-quote
May 30, 2017, 6:34 am
#68
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E+ being the last to fill is a reflection of the number of elites who've abandoned UACO. This was the profitable, loyal MP membership of both self funded travellers as well as mid level company paid travellers that JeffCo and his SVPs decided to treat as dirt and drive away.
So the cheaper, lower cost fare buckets are selling out early so that the back of the plane gets filled but with not terribly profitable seats. Those who have status and/or can plan their travel in advance are buying into lower cost F and J buckets.
UACO has been trying to monetize everything including bundling E+, selling E+ subscriptions, etc. Now they are applying the same logic to BE but as an un-bundle - or pricing up all of the other fare buckets so that they can look cheap on Google Flights.
As others have said, there's a difference between customers and passengers. Especially those who have figured out that United Continental doesn't deliver the experience and performance that they advertise, they've changed their loyalties and taken a different airline. Others, as shows on this forum, are daily weighing the TODs/HODs options since CPUs, RPUs and GPUs are decreasing in value and benefit.
If Mr. Kirby thinks that the only way to go is to force his elites to purchase more and more, then they will - up to a point. And then they'll do something else - which JeffCo found out anyway.
David
So the cheaper, lower cost fare buckets are selling out early so that the back of the plane gets filled but with not terribly profitable seats. Those who have status and/or can plan their travel in advance are buying into lower cost F and J buckets.
UACO has been trying to monetize everything including bundling E+, selling E+ subscriptions, etc. Now they are applying the same logic to BE but as an un-bundle - or pricing up all of the other fare buckets so that they can look cheap on Google Flights.
As others have said, there's a difference between customers and passengers. Especially those who have figured out that United Continental doesn't deliver the experience and performance that they advertise, they've changed their loyalties and taken a different airline. Others, as shows on this forum, are daily weighing the TODs/HODs options since CPUs, RPUs and GPUs are decreasing in value and benefit.
If Mr. Kirby thinks that the only way to go is to force his elites to purchase more and more, then they will - up to a point. And then they'll do something else - which JeffCo found out anyway.
David
May 30, 2017, 6:36 am
#69
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The hard fact is, whether the floor price of a seat is $119 or $149, most people will pay the floor price. This whole race to Sardine City is because of Spirit's profit margins, not anything the customer "asked for."
Exactly -- another attribute of a customer-insensitive oligopoly that exploits lack of choice for the benefit of executives and shareholders.
May 30, 2017, 6:48 am
#70
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1. E+ sells very well and there is data to prove this. The analysis was done carefully after the merger as CO was going to get rid of it, but did not due to the strong sales numbers
2. the customer who buys Spirit is not the customer who buys United, Delta or AA. Two completely different markets, two different business models, two completely different cost structures. Comparing the two is nonsensical
3. every US carrier offers the same product, and if every carrier removed one row of seats and standardized at 33" of pitch as the baseline and every airline sold fares that reflected this, then every customer would pay higher baseline fares. We are talking about 20-40$ more on average, and this is not going to cause any significant portion of the market to suddenly run to Spirit, Allegiant, etc.
May 30, 2017, 7:07 am
#71
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Most people who fly FR pay incremental fees that very often adds up to a 'normal' airlines price or more. I haven't flow FR in 20 years (when they were modeled on WN) but for the last 15 years or so there have been frequent nightmare stories about FR pax experiences (they have frequently been rated the worst brand of all major companies in the UK). so FR thrives on the simple minded (for want of a better expression). The danger is there are a lot of simple folks in the US, so will the FR model be successful here? I hope not. I don't know anything about Spirit.
May 30, 2017, 7:10 am
#72
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This is not correct analysis.
1. E+ sells very well and there is data to prove this. The analysis was done carefully after the merger as CO was going to get rid of it, but did not due to the strong sales numbers
2. the customer who buys Spirit is not the customer who buys United, Delta or AA. Two completely different markets, two different business models, two completely different cost structures. Comparing the two is nonsensical
3. every US carrier offers the same product, and if every carrier removed one row of seats and standardized at 33" of pitch as the baseline and every airline sold fares that reflected this, then every customer would pay higher baseline fares. We are talking about 20-40$ more on average, and this is not going to cause any significant portion of the market to suddenly run to Spirit, Allegiant, etc.
1. E+ sells very well and there is data to prove this. The analysis was done carefully after the merger as CO was going to get rid of it, but did not due to the strong sales numbers
2. the customer who buys Spirit is not the customer who buys United, Delta or AA. Two completely different markets, two different business models, two completely different cost structures. Comparing the two is nonsensical
3. every US carrier offers the same product, and if every carrier removed one row of seats and standardized at 33" of pitch as the baseline and every airline sold fares that reflected this, then every customer would pay higher baseline fares. We are talking about 20-40$ more on average, and this is not going to cause any significant portion of the market to suddenly run to Spirit, Allegiant, etc.
Basic E Fares were created to combat this. If this was true why does the 'cheap fare with no frills' which mimics what an ULCC/LCC offers?
May 30, 2017, 7:19 am
#73
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1. as mentioned upthread, the price someone pays on most LCCs is not their final cost. Spirit does not make its money from fares, it makes its money from upsells and mandatory fees. A Spirit fare is really just a United/Delta/AA fare broken into different parts - a 'deposit' you pay to buy space, and a collection of fees you pay at the airport before you and your bags get to board the flight. Only the lightest and most savvy travelers are able to fly Spirit for the advertised price. Other LCCs like WN don't compete on price as they are often more expensive than UA/DL/AA and much, much more expensive than Spirit - they compete on reputation, i.e. brand, and by limiting where the consumer can compare their fares with other airlines so many people just assume WN is cheaper - and others prefer WN for its product.
2. BE fares compete on price, but not on cost - the cost to carry that passenger is still the same, and what they are depriving the customer of on a BE fare (seat assignment, etc) has no cost component which offsets the lower fare. It's a marketing ploy and nothing more. In fact, the more BE fares they sell, the worse the margin will be on that flight as the cost structure is completely different.
May 30, 2017, 7:23 am
#74
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Not sure that is valid. The whole point of the Basic E Fare is to lower the price on 3rd party booking sites(Where most are that are shopping solely on price). The idea of the Basic E is 100% price driven and all the airlines that offer them remove some of the basic features of their standard main cabin fare.
And as noted before the profit is in the front. Not the rear. The hope is the Basic E checks a bag and maybe buys something on board to help with the fare.
And as noted before the profit is in the front. Not the rear. The hope is the Basic E checks a bag and maybe buys something on board to help with the fare.
May 30, 2017, 7:31 am
#75
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I've tried Spirit. My cynical suspicions confirmed. Base fare + $40 fee for a carry-on + seat selection charge = as much or more than a ticket on a normal airline. Between that and the chaos factor, I would not do it again except as a last resort. Spirit has deposited irrops credits in my account that I do not intend to use.
It's important to note that Spirit's main success factor is the unbundling of services -- they advertise a low fare that you in practice probably cannot or would not pay, given that you at least take a carry-on bag. Fail to pre-pay your carry-on fee and march up to the gate with a bag, and they will charge you another $100, which may exceed your base fare. This is like scoring a middling deal on a middling hotel on Priceline, then rolling up and being charged $100 for valet parking; it makes the value of the original deal moot.
The weird thing to me about BE and other legacy plays for the Spirit base is the me-tooism. Rather than emphasizing all you get on a legacy airline (Southwest never lets you forget you get free checked bags, no change fees, non-expiring RR points, etc.), United emphasizes all you don't get on its lowest fares.
It's important to note that Spirit's main success factor is the unbundling of services -- they advertise a low fare that you in practice probably cannot or would not pay, given that you at least take a carry-on bag. Fail to pre-pay your carry-on fee and march up to the gate with a bag, and they will charge you another $100, which may exceed your base fare. This is like scoring a middling deal on a middling hotel on Priceline, then rolling up and being charged $100 for valet parking; it makes the value of the original deal moot.
The weird thing to me about BE and other legacy plays for the Spirit base is the me-tooism. Rather than emphasizing all you get on a legacy airline (Southwest never lets you forget you get free checked bags, no change fees, non-expiring RR points, etc.), United emphasizes all you don't get on its lowest fares.