Kirby thinks airfares should be double

Old Sep 14, 2018, 6:20 pm
  #16  
 
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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.
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Old Sep 14, 2018, 6:21 pm
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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...
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Old Sep 14, 2018, 6:38 pm
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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.
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Old Sep 14, 2018, 7:08 pm
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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.
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Old Sep 14, 2018, 7:30 pm
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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.
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Old Sep 14, 2018, 7:49 pm
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I don't think Kirby understands basic economics...
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Old Sep 14, 2018, 7:52 pm
  #22  
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Or perhaps he has a massive sense of entitlement.
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Old Sep 14, 2018, 8:03 pm
  #23  
 
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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.
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Old Sep 14, 2018, 8:09 pm
  #24  
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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.
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Old Sep 14, 2018, 8:20 pm
  #25  
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Originally Posted by oopsz
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.
while you have less legacies now due to consolidarion and airlines going out of business, youre ignoring the pressure that (U)LCCs have. Im 1988, there were virtually no low cost carriers, and WN, which did exist, was a fraction of the size, so while they had some markets they served, it wasnt nearly as many as they have today. Now, all of those legacies from 88 which no longer exist have been replaced with LCCs, Frontier, Allegiant, Sun County, etc. make no mistake that without them, fares would surely be higher today.

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.
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Old Sep 14, 2018, 9:38 pm
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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.
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Old Sep 14, 2018, 10:06 pm
  #27  
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I have an opinion too - I think Kirby's salary should be cut by 50%.
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Old Sep 14, 2018, 10:09 pm
  #28  
 
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Originally Posted by sincx
and colluding with competitors to double prices. Mr. Kirby should be careful and stay on this side of that line.
Where has that happened?

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)
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Old Sep 14, 2018, 10:24 pm
  #29  
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Originally Posted by HNLbasedFlyer
Where has that happened?
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.
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Old Sep 14, 2018, 10:32 pm
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Originally Posted by jsloan
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.
It is a moot point since airfare is not doubling.

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.
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