PWMTrav

I'd consider the BOS-SAN route with AS and UA (1 stop) competing for $200 to at least be a skirmish. That's the last great TCON fare I've seen, though. And the key there was the fact that a regional airline was competing with a legacy. I can't tell you the last time I saw two legacies go at it.

Superguy

I don't think fuel costs are as much as people think they are.

An A320 burns about 665 gallons per hour. If you have a full load on a US A320, you're looking 150 people. You're looking at about 4.5 gallons per hour. On a typical transcon, you're in the neighborhood of burning 22-25 gallons used. You're looking at about $175-$200 at current jet-a prices per pax (used IATA price figures). Fuel was also a bit cheaper back then too, so it would have been less of a factor.

True you have to factor in labor, gate rent, etc. but even with costs and taxes factored in, it's not like they were bleeding cash at the $250/299 price point. As ITRADE said, you don't need to sell a huge amount of the cheap fares either. And that doesn't even get into bag fees, line jumping options, etc.

Sell some F fares, some Y/B fares, and a bunch of middle of the roads and it can become a profitable flight. I'm sure the airlines know exactly what they need to sell to cover their costs, with the rest being profit - whatever the airline's able to get.

Fuel is a huge cost, but bad management and high labor costs were as much to blame.

While I don't think the $250-299 transcons were necessarily profitable, I also don't see them as huge loss leaders either, especially in times when fuel is priced lower.

eponymous_coward

If you're competing in such a way that you're losing money in an attempt to buy market share, that's often a Pyrrhic victory.

Prices that are under your costs during peak demand periods (aka summer on a domestic route) are, well, suicidal. The airline industry wasn't in good shape in 2009. Go look at the SEC filings for DAL, UAL, LCC and AMR if you want evidence of that.

I bought SEA-EWR for $220 earlier this month.

Important to note that this was October, though (in other words, offpeak). I expect deals in shoulder/offseason (this is usually loss leader time for airlines on advance fares, especially when it's out of tourist season). What I don't expect is good deals during peak travel periods.

You're missing the part where this was "during summer 2009". In other words, not a fare way in advance, during peak demand, oh, and during a time where we were in the middle of the worst economic crisis in 70 years.

Expecting that to be the norm for the industry doesn't make sense.

Superguy

See my thoughts above.

Figures jive with what a UA pilot announced once in his pre-flight meet and greet. He stated than an A320 gets about .5 mpg. Spread that out over all the pax (~150 on an A320).

It's quick and dirty and likely not all that accurate, but it at least provides an idea.

A 747-400 gets 109 mpg per pax. Shouldn't be too hard to guestimate cost per pax.

Superguy

No I didn't. I never said it was or should be the norm. You were saying that the airlines were bleeding cash and attributing that, at least in part, to dirt cheap fares. My point was that, especially in 2009 when oil was cheap due to the crash, $250-299 tickets and fuel prices weren't the reason why the airlines were losing money.

And of course, if a plane is going out anyway, getting anything for an empty seat is certainly better than nothing - even if all it does is reduce the cash you're losing on a flight.

FWAAA

I believe they may be a little higher than you have estimated.

Those numbers sound a little low. AirBerlin says its A321s burn 2600kg/hr, which translates to 854 gal/hr.

http://www.airberlin.com/site/seatpl...atTyp=A321_200

An A320 burns about 87% of the fuel burned by an A321, which would equal about 743 gal/hr for the A320. To get down to 665 gal/hr, I think you'd have to have an empty A320 and that still might not include the takeoff/climb fuel burned.

Problem with these numbers is that we don't know whether that's the fuel burn per hour at cruise or whether those numbers take into account the huge fuel burn at takeoff to get to cruise altitude. The other problem is that each addtional passenger (every extra pound) increases the marginal fuel burned - that's why airlines are so obsessed with reducing the fixed weight of the airplane and its accessories (like ovens, beverage carts, etc).

Another way to ballpark the fuel burned is to go to the airline's financials. For the first half of 2013, US mainline fuel costs were $0.0454 per ASM. So on average, that 150 passenger A320 transcon (2,500 miles because I'm lazy) would have consumed $113.50 of fuel per seat, each way, or $227 per seat, roundtrip. That would be the pro-rata fuel burned per seat; somewhere I have some calculations on the marginal fuel burned per additional pound of payload - obviously, it would be much less than the pro-rata share.

When looking at fares, don't forget to subtract all the taxes and PFCs to arrive at the amount the airline gets to keep. A $250 transcon roundtrip ticket would net the airline about $220 or so. A bunch more than the marginal fuel cost of carrying the passenger but probably just enough to cover the average costs.

Superguy

Right. There's a lot that goes in to it ... distance, weather, speed, weight, loads, etc. It's quite possible AirBerlin flies one way while another airline flies differently.

I didn't forget taxes either. But yes, there are other costs into it, and for fuel alone, the $250-$299 mark isn't sustainable for the long term under current market conditions. Maybe for the occasional good deal to sell some last minute seats.

With the 2009 example, however, fuel was a lot cheaper as we just had the market crash. If we dropped the fuel costs even by a 1/3,t he fuel burn would only be about $150. With taxes, it would be quite possible that $250 would cover the cost of fueling and operating the flight, and $299 even allowing a small profit. Add some fees into the mix and the flights could go further into the black.

Of course, that would all depend on what the airline actually pays its workers, fuel, etc. But my main point was that they weren't the cash bleeding fares some make them out to be. Larger economic factors likely kept people's butts out of the seats. You could offer $250-299 fares all day long, but at the end of the day if only 60% of the seats sell, well ...

I think around $400 is the new norm with current fuel and market conditions. Anything below that would be a good deal. Unfortunately, I haven't been seeing much of those, even around $400.

jn in ca

109MPG/pax? Yup, that's a quick and dirty number! Is that with every seat is occupied? What cabin configuration? Does that include all the fuel used at takeoff/climb? How long a flight is it?

I don't think you're wrong. I'm sure somewhere there is a 744 getting 109 MPG, but you've given us no indication what 747 flights this applies to, and anyway, AA dumped its 747s.

IADCAflyer

I had to go through my old inbox archives to find this data - its close to a year old but is the most recent that I have:

Cost per block hour (fuel/oil)
US 733: $2,365
US 734: $2,525
US 319: $2,278
US 320: $2,459
US 321: $2,843
US 752: $3,492

FWAAA

I agree, and IMO, $400 isn't all that bad.

Last year, I looked at the AA annual report from 1981 and saw that AA's yield was about 12 cents per revenue passenger mile. According to the government's inflation calculator, to keep pace with 1981, AA's yield would have to be 30 cents per revenue mile in 2011. But what was AA's yield in 2011? Just 15 cents per revenue mile. Average fares had climbed by 25% in those 30 years to just half of what they should have been if they'd risen by the general inflation rate.

And inflation has caused the price of fuel, airplanes, rent, etc. to rise by at least 170% in those 30 years. In 1981, AA's fuel cost per ASM was 2.2 cents. In 2011, AA's mainline fuel cost was 5.4 cents per ASM. The nominal fuel price per gallon had more than quadrupled but the effects were softened by much more efficient planes than were flown in 1981. But yields were up just 25% in those 30 years.

We have been spoiled by cheap fares for a very long time. In the 1982 AA annual report, Casey and Crandall lamented the widespread availability of "$99 specials" in late 1982 that they said "would continue to plague the industry in early 1983." $99 specials would continue to plague the industry for nearly 30 years.

In 2009, when AA was in a fare war with B6, I flew dozens of LAX/SFO-BOS nonstops for just $69 each way ($158 all-in round-trip). Thanks to a quadruple miles promo, each round-trip netted almost 21,000 RDM, or about $0.0076 per mile.

IADCAflyer

Since we're on airline economics, here are AA's CASMs for narrowbodies for the year ending Sept. 2012:

MD-80 - 9.3
738 - 7.4
752 - 8.1

This includes crew, aircraft cost, fuel, maintenance, etc.

Fanjet

My guess would be around the time oil was trading at under $40 per barrel. You do realize that you can still get really cheap fares on Spirit and Allegiant, right?

IADCAflyer

Could you show me the routings from DCA or IAD to SAN on either Spirit or Allegiant?

hillrider

You might be able to get cheap "fares", but if you're a typical passenger you won't be able to get cheap transportation services from them (due to fees etc.).

If you notice, while the 4 majors + WN/VX/B6 usually match each other's prices, none matches NH and G4. And if anybody ever doubted that air transportation services is not a race-to-the-bottom commoditization play, this is proof here.

eponymous_coward

AS usually matches NK out of PDX for LAS... on the directly competing flight. They also tend to bump and run G4 a lot out of BLI (and to some extent it's worked)