eponymous_coward

Looks like we now know where VX is getting extra capacity from.

Guess the route dartboard didn't work out on that one. LAX-MCO persists, though.

mr27

Interesting move by VX. I have flown MCO-LAX twice and both times they
went out full.

canddmeyer

That was my ticket to Disneyworld, and it was full when I flew it. I wonder what's going on.

VXCabinCrew

This route didn't work because the ticket revenue wasn't as high as we needed for profitability. The flights were full, but low ticket prices mean these flights didn't make money. Too much leisure traffic, not enough business travelers. This allows us to reallocate the planes on routes that attract higher fares. It's too bad because we had a nice, long layover at MCO.

canddmeyer

Then raise the price VX. I always upgraded once on board anyway and I chose the flight specifically because it was nonstop. I'll fly someone else before I connect at LAX. Dumb move VX.

Eastbay1K

Why? Better to raise the price and have a 50% load? Or just cancel the route? 'I was always upgraded once on bard anyway' meant that there was little to no premium traffic, and not even people willing to UG in advance.

canddmeyer

Nice try on the quote, but I bought the upgrades. If folks aren't buying premium seats for that route on VX they're probably not buying elsewhere either. I seriously doubt raising the price would drop the load factor, but requiring a stop when one can take a nonstop from a competitor will drop the load factor. One less competitor on the nonstop equals higher ticket prices for everyone on the remaining nonstops, and in some cases everyones nonstops go goodbye because the competition is no longer required. VX screwed up here, especially doing this during the high season.

canddmeyer

I don't disagree profitability has been a longstanding VX issue, but they should have tried a price increase before dumping the nonstop. In my case, this takes my party of four off VX for this route, as well as the associated MCS upgrade we'd purchase, and puts us onto a different airline offering a nonstop. I would have happily paid $50 more a tkt each way versus flying United, US Air, or making a VX connection @ LAX, and I bet that flight would still fly full. VX worked hard building a clientele and now they're sending me elsewhere for the future. Don't know how that translates to profitablility.

jwright

How do you know they didn't? Airline yield management departments have access to a lot more hard data than "whenever I fly that route it is always full." They are pretty smart people with sophisticated models and tools and I suspect they know what they are doing.

VXCabinCrew

I don't mean any disrespect, and I appreciate the fact that you have looked to our product for travels, but you're missing the point a little here. Leisure routes are notoriously hard to make money on. That's why you don't see a big effort on the part of VX to add leisure destinations. We are even scaling back our Mexico ops for this reason. The destinations that are important to our sustainability are the large business markets, where guests pay high ticket prices and are willing to pay full fare for MCS or F. If we have destinations where guests are upgrading to MCS or F last minute, that is generally not a sustainable process. Guests (many of them families) traveling to places like MCO are going to be looking for less expensive tickets. Other airlines that have larger fleets than we do can often integrate these leisure markets into their business plan. But we have such a small fleet, we need to send our aircraft to cities where we can generate as much revenue as possible. For instance, F sells out at full fare to places like DCA, JFK, EWR and even FLL. So why wouldn't we direct our limited fleet at destinations like that? I do know which of our routes are most profitable, but I have no idea what the revenue numbers are for our cities. But since we are keeping LAX-MCO, my guess is that guests in that market pay more for our tickets (most likely Disney and conventions), and we do see a lot of connecting guests through LAX going to MCO. If there have been seats in MCS of F that have been available for you to upgrade to, that's a pretty good indicator on the lack of financial success for this route.

canddmeyer

Good luck VX. Hope it works out for y'all. I'll be seeing less of you, and I don't know how that will be good for the bottom line.

canddmeyer

I kept my eye on the prices. VX hasn't raised them. Instead they dumped the route.

grt2106

This is dissapointing news as it was a favorite flight and will likely see incredibly prices increases from the competitors when gone.

Still it's worse to hear that an airline can only make money by passengers paying full fare for F or MCS- and I'd wager no more than 50% of those people are paying for their own ticket (i.e. work reimbursement). If flying from point A to point B at near full capacity can't make $$$- the industry has a lot to think about... perhaps the real revenue is in on board purchases?

Eastbay1K

Why yes, you have pretty much summed up most of the domestic industry. I think that last year (or perhaps the year prior) the industry difference between making $$$ and losing $$$ was baggage fees.

Seat2C

The problem is that VX sells their tickets below cost. And unfortunately, the traveling public mistakenly thinks that it's possible for airlines to be profitable by charging fares that match VX. In spite of VX having a load factor in excess of 80% for most of its existance (2009, 2010, and 2011 were all solidly above 80%), they have lost money hand over fist (more than $650 million cash at the end of Q3 2012). Sir Richard Branson has been subsidizing your airfare.
The current calculation is that Sir Richard would have done better to pay every VX passenger (more than 25 million enplanements) $25 each way to fly a different airline. And that's including all of the ancillary fees that VX has collected.

It's not so much that the real revenue is in onboard purchases, it is that airlines are forced to price tickets well below their cost in order to compete. This is why we're losing airlines. And those price rises after VX goes out of business? They're simply tickets priced at a level where the airline can make a razor thin margin.


Virgin America yield management is an oxymoron.