Kirby thinks airfares should be double
#16
Join Date: Sep 2003
Location: W29
Programs: It's Complicated...
Posts: 6,796
Let me get this straight. The fact that airlines are a smaller percentage of GDP is a reason for raising the price of your product? I am not an economist but I don't see a the link.
My recommendation to UA, if you want to charge more, deliver a product worthy of a higher price.
My recommendation to UA, if you want to charge more, deliver a product worthy of a higher price.
#17
Join Date: Feb 2001
Location: NYC
Programs: UA MileagePlus 2MM
Posts: 1,567
I think it is hard to generalize on airfares because all aviation markets are dynamic and change. While flights in the US and to Asia might be a bargain in coach, flights to Europe from the US seem more expensive in recent years. If you are trying to buy a W/V/Q fare to use a GPU, it seems in my experience economy tickets are hitting close to $2k RT, whereas 5 years ago it was half that. It's hard to find a Polaris ticket from the US to Europe for less than $8k if you are sticking to UA, unless you have access to corporate discounts. So I can't imagine $16k as mid range Polaris fare. I think the concept is interesting, nonetheless, but I think it doesn't apply across the UA board...
#18
Join Date: Mar 2005
Location: out my front door 60 min prior to IAH flight until they increased the check in time to 45 min
Programs: CO Platinum or UA 1K for so long, now almost 2MM
Posts: 322
A 32" 480p plasma TV cost more in the 1990s than. 75" 4K LED TV today. So what's the point? The truth is he is trying to squeeze blood out of a turnip. No need to analyze it any further.
#19
Join Date: Jun 2005
Location: Bloomfield, NJ
Programs: UA Gold, Million Miler, Marriott platinum, lifetime platinum
Posts: 973
If airfare was doubled, load factor would fall dramatically. Planes, I think, are full because it's very inexpensive. Most of my travel is elective, and I simply wouldn't travel as much if prices doubled. I think many are in that boat. '
I kept old handwritten tickets from the late 70s, when I was a kid and we flew Eastern Airlines from buffalo to Orlando for $250. That was a FORTUNE back then. We dressed and had hot meals in Y, and planes were empty. Very different world today.
I kept old handwritten tickets from the late 70s, when I was a kid and we flew Eastern Airlines from buffalo to Orlando for $250. That was a FORTUNE back then. We dressed and had hot meals in Y, and planes were empty. Very different world today.
#20
Join Date: Mar 2007
Programs: United Mileage Plus Premier
Posts: 775
Personally I think he has a great idea. Back in the 90's I used to fly from EWR to BOS or BWI or DCA to cover events as part of my work. In those days you could get cheap fares by planning ahead and flying was pretty easy to deal with. Since late 2001 flying has become much more difficult to deal with and the fares on those routes when up quite a bit so I started driving or taking AMTRAK. No two hour waits on two ends of a day trip, free internet on AMTRAK, room and time to get some editing done on the train so when I arrived back at home I could actually go to sleep at a reasonable hour.....So tell me again how raising fares made the airlines more money from me?
I am retired now and most of my flying is between EWR and LAS, 4-5 trips a year at an average cost of under $400 per RT. If Mr. Kirby has his way and that cost rises to $800 or so per RT is it just another incentive for me to just move to LAS full time and enjoy more time with my grandchildren.
Mr. Kirby, under your leadership we have seen wonderful things like fees fro baggage, fees for priority check in, fees for food in economy, seat pitch shrinking more and more, fees for an extra 3 inches of seat pitch, fees for changes, fees for international upgrades, devaluations of the value of our miles, longer wait times at counters, fewer and fewer real people, more and more machines....Should I go on? I fly because it is a quick, sometimes, and efficient way for me to get where I need and want to go. When it is no longer quick and cheap I will find another way.
I am retired now and most of my flying is between EWR and LAS, 4-5 trips a year at an average cost of under $400 per RT. If Mr. Kirby has his way and that cost rises to $800 or so per RT is it just another incentive for me to just move to LAS full time and enjoy more time with my grandchildren.
Mr. Kirby, under your leadership we have seen wonderful things like fees fro baggage, fees for priority check in, fees for food in economy, seat pitch shrinking more and more, fees for an extra 3 inches of seat pitch, fees for changes, fees for international upgrades, devaluations of the value of our miles, longer wait times at counters, fewer and fewer real people, more and more machines....Should I go on? I fly because it is a quick, sometimes, and efficient way for me to get where I need and want to go. When it is no longer quick and cheap I will find another way.
#23
Join Date: Dec 2002
Location: Washington, D.C.
Programs: UA Premier 1K: PlAAtinum; DL SM, MM; Marriott Gold; CO Plat Emeritus; NW Plat Emeritus
Posts: 4,776
All depend what starting date you use. 100 years ago it was zero percent of GDP. Does he think every industry should always have a stable share forever?
His brain is addled by greed.
His brain is addled by greed.
#24
Suspended
Original Poster
Join Date: Oct 2004
Location: Bay Area
Programs: DL SM, UA MP.
Posts: 12,729
Not that I want to give him the benefit of the doubt but he was at a Wall Street conference.
So he's trying to paint a bullish case for his company and industry.
I'm sure he realizes if they double the prices, demand would plummet.
So he's trying to paint a bullish case for his company and industry.
I'm sure he realizes if they double the prices, demand would plummet.
#25
FlyerTalk Evangelist
Join Date: Oct 2006
Location: SFO/SJC
Programs: UA Silver, Marriott Gold, Hilton Gold
Posts: 14,854
Considering the amount of consolidation and bankruptcy in the industry over the last 30 years, I'm actually surprised fares haven't doubled.
In 1988 your legacy carriers were DL, NW, UA, AA, TW, PA, EA, and CO (ish -- they were a mess in '88, less than two years removed from bankruptcy #1 and well on their way to their second bankruptcy in five years). Plus Southwest was out there making the southwest effect a thing.
Down to three legacy carriers and fares are still pretty reasonable. I guess despite it all, there still is competition in the aviation marketplace.
In 1988 your legacy carriers were DL, NW, UA, AA, TW, PA, EA, and CO (ish -- they were a mess in '88, less than two years removed from bankruptcy #1 and well on their way to their second bankruptcy in five years). Plus Southwest was out there making the southwest effect a thing.
Down to three legacy carriers and fares are still pretty reasonable. I guess despite it all, there still is competition in the aviation marketplace.
While I would rarely fly one of those carriers - I dont want the everything costs extra model, which I believe, in the end, often costs more - I have no doubt that the fact those carriers are competing also lowers fares on UA and other legacies. Take CVG for example, which until a few years ago, had a dominant carrier (DL) and no LCCs Flying, and was pretty much always in the top 5 most expensive airports to fly to. The DL dominance started to go away, and fares remained pretty high. Then there was a domino effect when ULCCs started coming - now Frontier and Allegiant fly multiple daily flights to multiple destinations, and WN finally arrived back last June. As the growth continues - airfares have continued to drop - with CVg now being able to promote itself as the lowest price airport to fly out of in the region, and still is growing consoderably. And as prices dropped, the airport started to grow significantly - Cincinnati-based pax that used to drive to DAY, CMH, etc. because it was cheaper there now are flying out of CVG again because he pendulum has swung.
#26
Join Date: Sep 2008
Posts: 812
There's a line called the Sherman Act somewhere between whining that your company isn't making quite as many billions as you'd like and colluding with competitors to double prices. Mr. Kirby should be careful and stay on this side of that line.
#28
Join Date: Sep 2006
Location: HNL
Programs: UA GS4MM, MR LT Plat, Hilton Gold
Posts: 6,447
What Kirby should have said -
Airfare is the same or less than the 1990's -
Oil in 1995 was $16.75 barrel in 1995 - now it is $73
Labor is higher
Technology is higher
Airplanes are double in price
Liquor is higher
Landing fees are higher
etc...
Therefore, if everyone expects the same as the mid 1990's one would need to double the cost of airfare (since that won't happen)
#29
FlyerTalk Evangelist
Join Date: Oct 2001
Location: Austin, TX
Posts: 21,176
Those comments, if accurate, are extremely close to price signaling, which is a form of collusion and thus prohibited under the Sherman Anti-Trust Act.
Companies can't agree amongst themselves to set prices. A statement like "airfare should be twice what it is today," can easily be interpreted as a promise to double United prices if the competition were to double theirs.
It's not an open-and-shut case, but sincx is correct; Kirby would be better off keeping his opinions about pricing to himself.
Companies can't agree amongst themselves to set prices. A statement like "airfare should be twice what it is today," can easily be interpreted as a promise to double United prices if the competition were to double theirs.
It's not an open-and-shut case, but sincx is correct; Kirby would be better off keeping his opinions about pricing to himself.
#30
Join Date: Sep 2006
Location: HNL
Programs: UA GS4MM, MR LT Plat, Hilton Gold
Posts: 6,447
Those comments, if accurate, are extremely close to price signaling, which is a form of collusion and thus prohibited under the Sherman Anti-Trust Act.
Companies can't agree amongst themselves to set prices. A statement like "airfare should be twice what it is today," can easily be interpreted as a promise to double United prices if the competition were to double theirs.
It's not an open-and-shut case, but sincx is correct; Kirby would be better off keeping his opinions about pricing to himself.
Companies can't agree amongst themselves to set prices. A statement like "airfare should be twice what it is today," can easily be interpreted as a promise to double United prices if the competition were to double theirs.
It's not an open-and-shut case, but sincx is correct; Kirby would be better off keeping his opinions about pricing to himself.
Regardless, is there any example in the US of a reporter interview turning into a Sherman anti-trust issue? If Kirby held a private conference call with DAL and AA, and prices all went up the same I see that as an issue. An interview, I can't think of any examples.