4th attempted airfare hike?

[General Lee]

Press ReleaseSource: Bestfares.com



Delta, United, US Airways Raise Domestic Airfares for the Fourth Time in 5 Weeks, Says Bestfares.com
Friday April 1, 2:01 pm ET

ARLINGTON, Texas, April 1 /PRNewswire-FirstCall/ -- Leisure travelers who need to travel between two non-competitive cities have seen four fare hikes totaling as much as $60 more per roundtrip in the past five weeks, says Tom Parsons, CEO of Bestfares.com. The most recent hike came today as Delta and United raised their domestic fares by $10 per roundtrip. The move was matched by US Airways at midday.


The major airlines have been biting at the bits to get airfares up. Now with Northwest Airlines jumping on-board most fare hikes, it appears airfares could go sky-high, especially in non-competitive markets -- markets with no low-cost airline competition.

"The sad part is that we're seeing these airfare hikes stick only on non- competitive routes, where leisure travelers are already facing the highest airfares in America," says Parsons. "Those fares can be double the cost of fares on similar routes served by Southwest, AirTran, JetBlue, America West and other low-cost carriers. These recent airfare hikes by the legacy carriers usually do not stick on their cheapest matched low-cost carrier airfares."

Leisure travelers have seen several airfare hikes compared to last summer's everyday airfares, notes Parsons. As an example, the airfares from Dallas to Syracuse, which has no low-cost airline service, an everyday airfare on Sept. 10, 2004, was $308 roundtrip. Today, Delta and United, with these new $10 fare hikes, are demanding $428 roundtrip. That is a $120 increase, or an almost 39 percent airfare hike in less than seven months.

 

[michael707767]

The major airlines have been biting at the bits to get airfares up. Now with Northwest Airlines jumping on-board most fare hikes, it appears airfares could go sky-high, especially in non-competitive markets -- markets with no low-cost airline competition.

Sky high. Thats a good one. Relative to inflation, airfares have never been cheaper. You could raise em five more times and they would still be cheap.

 

[MedFlyer]

Sky high. Thats a good one. Relative to inflation, airfares have never been cheaper. You could raise em five more times and they would still be cheap.

Actually, that's not true for routes with no LCC's. If you price out fares on these routes, they aren't so cheap.

For example:

ATL-BNA (214 miles)
Depart 4/4
Return 4/8
Price on Delta: $716

ATL-JAX (270 miles)
Depart 4/4
Return 4/8
Price on Delta: $353

While both are similar in distance, notice the price difference. Of course, ATL-BNA has no LCC, while ATL-JAX has Airtran. You have to admit that $716 is a rip-off for such a short distance.

Unfortunately for the majors, LCC's overlap much of their route network. About 70% of DL's domestic network is overlapped by LCC's, so the overall gains from these fare increases will only offset a portion of the fuel cost increase (until the LCC's are willing to raise fares which most have been reluctant to do).

 

[michael707767]

Actually, that's not true for routes with no LCC's. If you price out fares on these routes, they aren't so cheap.

For example:

ATL-BNA (214 miles)
Depart 4/4
Return 4/8
Price on Delta: $716

ATL-JAX (270 miles)
Depart 4/4
Return 4/8
Price on Delta: $353

While both are similar in distance, notice the price difference. Of course, ATL-BNA has no LCC, while ATL-JAX has Airtran. You have to admit that $716 is a rip-off for such a short distance.

what does the difference in the price of a BNA flight and a JAX flight have to do with airfares relative to inflation? Take a look at airfares twenty or thirty years ago, adjust them for inflation, and you will find that airfares have never been cheaper.

and no I don't have to admit its a ripoff. If people are willing to pay it, then its a fair price. Works that way with anything.

 

[General Lee]

Actually, that's not true for routes with no LCC's. If you price out fares on these routes, they aren't so cheap.

For example:

ATL-BNA (214 miles)
Depart 4/4
Return 4/8
Price on Delta: $716

ATL-JAX (270 miles)
Depart 4/4
Return 4/8
Price on Delta: $353

While both are similar in distance, notice the price difference. Of course, ATL-BNA has no LCC, while ATL-JAX has Airtran. You have to admit that $716 is a rip-off for such a short distance.

what does the difference in the price of a BNA flight and a JAX flight have to do with airfares relative to inflation? Take a look at airfares twenty or thirty years ago, adjust them for inflation, and you will find that airfares have never been cheaper.

and no I don't have to admit its a ripoff. If people are willing to pay it, then its a fair price. Works that way with anything.

I agree. Same thing with INTL fares---they have gotten all of the fuel surcharges too. If you want to go, you will pay. Airtran and Jetblue will try to cover our route structure, but it will take awhile.

Bye Bye--General Lee

 

[MedFlyer]

what does the difference in the price of a BNA flight and a JAX flight have to do with airfares relative to inflation? Take a look at airfares twenty or thirty years ago, adjust them for inflation, and you will find that airfares have never been cheaper.

On a route like BNA-ATL, you would be wrong. People are paying more for these non-LCC routes than they did back then (and that's with inflation adjustment). The airlines have kept fares high on these routes in an attempt to subsidize the routes where they compete with the LCC's. A strategy that has failed.

and no I don't have to admit its a ripoff. If people are willing to pay it, then its a fair price. Works that way with anything.

Problem is, people aren't willing to pay. DL has minimal O+D traffic on this route, because fares are so high. So instead, the ATL-BNA flights are filled with low-yield trash fares from people connecting from other cities. If DL offered more rational (but not rock bottom) fares, they'd be able to fill the plane with more higher-yielding O+D traffic and less low-yield connecting traffic.

 

[General Lee]

What about people in BNA that are connecting in ATL to INTL destinations? Oh, that never happens.....They all go Corpex on J31s or they drive I guess....?



Bye Bye--General Lee

 

[MedFlyer]

What about people in BNA that are connecting in ATL to INTL destinations? Oh, that never happens.....They all go Corpex on J31s or they drive I guess....?


Bye Bye--General Lee

I'm sure there are some int'l connections, but that's only a tiny percent. Keep in mind that many of DL's BNA-ATL flights don't even connect to many international flights. I'm not sure why you are so obsessed with international flights, but they clearly aren't saving DL since DL is projecting losses for this year of 1-1.5 Billion.

And compared to last summer, DL has only added three extra European flights:

JFK-TXL, ATL-SVO, CDG-MAA

That's not that much.

 

[jaxgus]

What Happened to SimpliFares?

My mother tried to fly from BUF to MCO last Thursday. See was asked to pay a one-way fare of $849.00 on DAL. Last time I checked DAL is advertising max one-way domestic fare of $499.00, guess the rate hikes are really sticking.

 

[General Lee]

I'm sure there are some int'l connections, but that's only a tiny percent. Keep in mind that many of DL's BNA-ATL flights don't even connect to many international flights. I'm not sure why you are so obsessed with international flights, but they clearly aren't saving DL since DL is projecting losses for this year of 1-1.5 Billion.

And compared to last summer, DL has only added three extra European flights:

JFK-TXL, ATL-SVO, CDG-MAA

That's not that much.

Forgot about Central America (added Belize City, Cozumel(MEX), and more flights to San Jose), the Carribbean (added St. Lucia, St. Croix) and South America (added additional flights to Sao Paulo, maybe Rio, added Buenos Aires back in Dec of last year). Do you know how many flights we fly Internationally at ATL? Should I review it for you? Here goes:

Amsterdam, Aruba, Barcelona, Belize City, Bermuda, Bogota, Brussels, Buenos Aires, Cancun, Caracas, Cozumel, Dublin, Frankfurt(2), Freeport, Grand Cayman, Guadalajara, Guatemala City, Liberia, London gatwick (3), Los Cabos, Madrid, Manchester, Mexico City (2) Milan, Montego Bay, Montreal, Munich, Nassau, Ottawa, Panama City (panama),Paris (2), Providenciales, Rome, St. Maarten, San Jose (Costa Rica)(2), San Salvador, Santiago, Sao Paulo(2), Shannon, Stuttgart, Tokyo, Toronto, and Zurich. (I didn't add San Juan(4), St, Thomas (2), and St Croix since they are American territories or USVIs etc.)

Hmmmmmm. So, you think BNA wouldn't have any good connection times? Boy are you wrong. Look at all of those INTL departures from ATL. Lot's of cities not served by Airtran. (except Freeport) Now that I have proved that, let's get to your projected loss. Is that due to fuel? Fuel surcharges will bring that number down. If this fourth one sticks, then it may help a lot. Fuel prices go up and down, lately due to the weather in the NE and use of heating oil. As the Spring comes a long, the weather will get warmer and the fuel prices may go down. I don't know if the fuel surcharges will go away or not. Maybe the rest of the losses are due to pension payments, or debt payments. Well, we cut pilot expenses by $1 billion a year, other employees by $1 billion a year, cut lease payments on some planes, now cutting MX jobs and outsourcing heavy MX, and other projects underway that you and I probably don't know much about. I think they are trying the best they can, and adding fuel surcharges is something they should do to combat higher gas bills. The rest, like the pension payments---are also being dealt with thru Congress. They are working on this, and you are speculating again, big time.


Bye Bye--General Lee

PS---here is part of an article about those airfare hikes. Read the last paragraph please:

is the fourth wave of increases in five weeks, according to Tom Parsons of Bestfares.com.
On routes where there isn't aggressive competition from low-cost carriers, fares have climbed the most, he said.

"As an example, the airfares from Dallas to Syracuse, which has no low-cost airline service, an everyday airfare on Sept. 10, 2004, was $308 roundtrip," Parsons said in an e-mail update. The most recent $10 hikes came from United Airlines (UALAQ: news, chart, profile) , US Airways (UAIRQ: news, chart, profile) , Continental Airlines (CAL: news, chart, profile) , Delta Air Lines (DAL: news, chart, profile) and Northwest Airlines (NWAC: news, chart, profile) who matched an earlier increase by American Airlines (AMR: news, chart, profile) , he said.

Higher ticket prices are on the way for summer travelers. Pacific and Atlantic routes, in particular, are going to be an important avenue for airlines looking to bump up their revenue to offset fuel costs in markets where low-cost carriers aren't active. See Weekend Edition.

 

[MedFlyer]

On routes where there isn't aggressive competition from low-cost carriers, fares have climbed the most, he said.

But this is the key. These fuel surcharges only apply where there aren't LCC's. LCC's overlap 70% of DL's network. Keep in mind that DL is also simultaneously slashing fares on routes where LCC's are arriving.

Next month, Airtran arrives in CLT. That means DL will have to lower fares on CLT-ATL, CLT-PNS, CLT-GPT, CLT-MEM, CLT-HOU, CLT-LAX, CLT-DEN, CLT-SRQ, CLT-PBI, CLT-FPO, CLT-BWI, CLT-MSP, CLT-MKE, etc.

Next month, Southwest arrives in PIT. That means DL will have to lower fares on PIT-MDW, PIT-SAN, PIT-OAK, PIT-SEA, PIT-SAT, PIT-AUS, PIT-ABQ, PIT-PHX, PIT-SLC, etc.

Don't get me wrong, the fuel surcharges are a good thing. But DL will have to find a way to compete against the LCC's...something they have failed to do so far. DL simply can't rely on international and non-LCC domestic to carry them.

 

[General Lee]

But this is the key. These fuel surcharges only apply where there aren't LCC's. LCC's overlap 70% of DL's network. Keep in mind that DL is also simultaneously slashing fares on routes where LCC's are arriving.

Next month, Airtran arrives in CLT. That means DL will have to lower fares on CLT-ATL, CLT-PNS, CLT-GPT, CLT-MEM, CLT-HOU, CLT-LAX, CLT-DEN, CLT-SRQ, CLT-PBI, CLT-FPO, CLT-BWI, CLT-MSP, CLT-MKE, etc.

Next month, Southwest arrives in PIT. That means DL will have to lower fares on PIT-MDW, PIT-SAN, PIT-OAK, PIT-SEA, PIT-SAT, PIT-AUS, PIT-ABQ, PIT-PHX, PIT-SLC, etc.

Don't get me wrong, the fuel surcharges are a good thing. But DL will have to find a way to compete against the LCC's...something they have failed to do so far. DL simply can't rely on international and non-LCC domestic to carry them.

That is true. But at the same time DL is finding a way to compete---and that is by trimming costs by $5 billion A YEAR by 2006. It is happening, just look at the recent announcements to outsource MX. That is just one step along the way. We are trying to compete, and it will take awhile but is being done. Some people say we are cutting back customer service, even though mainline just got third place in the customer service survey (better than every other major and a few LCCs), and we just added a new terminal in BOS. Yes, we got rid of pillows, but have you ever looked at them close up? I love those extra hairs on there. We still have blankets that are fresh.....We added Simplifares to every domestic city, and that lowered walk up fares tremendously, which will affect Airtran, Southwest, and Jetblue by taking away the walk up cost advantage they had. Now, business travellers will have a real choice, not just a cost saving choice and taking the LCCs. We took away Sat night stay requirements too, which pax will enjoy and probably fly us more as a result. Business passengers will, and that will show in time.

Again, we are working on trimming down our costs to compete with the LCCs domestically. The extra fuel costs do not help, but fuel surcharges will try to help with that.


Bye Bye--General Lee

 

[michael707767]

Don't get me wrong, the fuel surcharges are a good thing. But DL will have to find a way to compete against the LCC's...something they have failed to do so far. DL simply can't rely on international and non-LCC domestic to carry them.

Delta does have to find a way to compete, and I think they are moving in that direction pretty well. However, don't kid yourself about LCCs. Take a look at any routes served exlusively by and LCC and I think you will find they also charge more where there is lack of competition.