Are Cheap Ticket Prices All That Matter?

[SDF2BUF2MCO]

There is some dialogue on the United concessions thread that sparked a question. Is all the flying public concerned about are cheap ticket prices? To a certain degree the public may look at ticket prices as a mere commodity. What doesn't make sense though that logic doesn't apply to other industries. For example, Wal-Mart overall is probably cheaper than Target yet Target seems to be doing just fine. Think Target "targets" the middle class and on up that doesn't want to be "seen" in Wal-Mart but still wants discount prices. Also, Macy's et.al. are still in business.
In the hotel business you don't see a mad rush of people staying at Motel 6. Hilton, etc. still charges $129 a night for the business traveler.
Hertz still rents full size cars and not all Escorts.
People still are buying BMW's and not all going to Yugo's.
Right now it seems to be a race to the bottom in regards to how cheap can an airline ticket be yet the logic doesn't hold up when compared to other businesses. If the race to the bottom prevails, and catches on in other industries, we'll be competing with the Chinese!

 

[varicam]

Purchase decisions are generally influenced by value, either perceived or real. High end retailers manage to hold on to market share because customers believe their higher prices are justified by better quality products and/or better service. Since all airlines fly pretty much the same equipment, fly under the same rules, and offer service and products of roughly the same quality (p-poor, IHMO), price and schedule are the determining factors in deciding which ticket to buy. Why pay more to fly UAL when SWA offers the same for less?

 

[Publishers]

vericam

vericam pretty well hit it on the head.

Actually the product differences are hard to percieve. JetBlue has new equipment and lots of features but is an LCC as compared to the full service USAirways where who knows what age of the equipment you will be fliying on.

In short, the anticipated downgrade one thinks they will find when they use an SWA or Airtran or Jetblue has not been there at all. Hence, why not go with the lower priced product.

There is another more sophisitcated problem here as well. With yield managment programs of the last few years, the airlines grew but needed to fill seats from all the various classes to be successful. When one of these classes goes away, like business travelers cut back or go to the LCC, the big carrier is killed by his own system. He created it but it is not very flexible.

 

[ksu_aviator]

Actually the product differences are hard to percieve.

Thats exactly right. You have to look at it from a consumer stand point. All they know is they are riding on an airline from point a to point b and getting peanuts or pretzels to go with their 5 oz glass of pop. The only other thing that would influence their decision is how many connections they have to make.

 

[Draginass]

Price is king. The Walmart-ization of the airline industry has reduced airline tickets to a commodity. In reality there is little difference between the carriers when it comes to the trip experience, although many people like AA's more-room-throughout-coach. But, that isn't going to command the 30% premium that Carty and Arpey thinks it will . . . . it's simply not worth paying extra for, but merely a tie-breaker.

The LCCs cherry pick their markets and leave the Big 5 and their commuters to do the yeoman's work of the smaller cities. If passengers REALLY paid the cost of their way, smaller city pax would be paying through the nose and the NY to FLL flight would be cheap.

The problem is pricing in the industry is incomprehensible to the average customer, and the Big 5 managements haven't a clue.

Airline travel is no different than bus travel now, and that's how passengers think the tickets should be priced and airline workers paid.

 

[tarp]

I so glad someone started this thread which the flying public needs to see.

There are differences and maybe it will become apparent when everybody gets turned into a Wal-mart.

As a business traveller (in my past life) I would NEVER fly SWA and the one attempt by my company to force me to do that soured me on SWA forever. Sure, they have friendly folks and good pilots and obviously dependable schedules (weather permitting).

But SWA and the LCC "dream world" (Paradigm, milieu, environment, whatever word you want) is just a dream. I'm not going to put up with a SWA cattle drive, elbowing fellow human beings to get a coveted up-front seat. It's not worth 50,60, 90 dollars to me. I will pay $120.00 more than SWA just to get a reservation, pre-assigned seat with the expectation that I will get my orange juice served to me in a relaxed fashion with possibly a light snack and a little more seat pitch and cleaner bathrooms. On top of that, when I want to fly from Boston to Chicago, I want that flight to leave BOS not PVD. My business center is not in Providence, its Boston (you know in the next state!) Now, Boston has all those landing fees, it costs a lot more to hire people in Boston than in Providence, the fuel is more expensive - hey guess what? It costs more to operate out of the cities that people WANT to fly out of.

So let's look at me the business traveller and me the tourist traveller. As a business traveller, I want point-to-point direct full service and no messing around. No connecting flights unless I'm going really long distance or to some pudunk town for a customer. I don't even want to be on a plane with a bunch of tourists. I want laptop ports, an airphone in front of me in case of business need (important), I want a drink and some food. The airline should be mitigating the fact that this is not my office but I have to arrive at a client or back at work ready to go - the environment needs to almost be peaceful unlike the work at my desk or the rest of my job on-the-run and on-the-go.

Now, as a vacationer, I will make trade-offs for cost savings. I will make a connection but I'd rather go direct. I can live without a snack but I still need a drink of some sort on this travel. I still need dependable transport to my destination because even my vacations are run on a schedule. (I will not personally put up with SWA cattle drives - I'm sorry that method of boarding planes is below human dignity.) Other vacationers may find the SWA / Wal-mart approach less of a hassle and all power to them.

The idea here is that there are different consumers but the airlines have their eyes set on Wal-mart. So what's happening? Well I saw the Signature ramp at both Dulles and BWI this past week. Signature Dulles ramp was so full that they were parking planes almost to 19L using the run-up block as extended parking. I wonder where all those biz-jets came from? I wonder who are all the passengers? You don't think they used to be former First and Business class passengers on the airlines, do you?? (said with dripping sarcasm)

American, Delta, United, US Airways, Northwest should hold a meeting (saying screw the anti-trust guys). Go back to distance based fares and make definite class structures between the cost of the seat and the service you get. And I'm not talking about $200 coach, $1500 Business and $3000 first class prices. That was a throw back. No, I'm talking about: Ok, you paid internet $199 seats - great, you go in steerage, you and 40/50 of your closest friends (or they are about to be) get thrown at the very back of the plane in tight seat pitch and NO, you are not moving up front for any reason, period, I don't care. You buy a steerage seat, you get one and a bottle of water. You may keep the complementary sick-sac found in your seat back.

You pay a "regular fare" for the distance (say $500 NY-Calif) I'll give you a "regular seat" with a little more leg room, some service and a smile. You buy a "class" seat and you get "class" including separate waiting areas, separate "class" lines for security, etc, etc. You pay $1000 for an airline seat and the airline works for you, you don't wait on the airline! Are we making money yet? (The magic is that the "bread and butter" airline customer needs to pay that price between discount and what a fractional jet could run for - you won't make a dime if you make every seat $99.)

I know, I know. SWA does make money flying $99 seats. But look at the audience and look at the city pairs. The big airlines right now need to stop catering to the $99 customer (we don't want 'em) and start stressing service and destinations. The airlines should take advantage of their differences - seat pitch, meals, direct flights. Ask the customer in advertising - what do you want $99 and this (show SWA cabin)? Or $186 and this? (Show lunch being served on trays to smiling relaxed travelers).

My old Lexus/Cadilac butt does not want to go on a three hour trek in a Ford Fiesta, the same goes for my choice in air travel. We just have to find our customers and give them what they want. But putting a Lexus customer next to trailer trash (sorry I know a lot of us live in them - I'm just making a point here) is not giving the Lexus customer what he or she wants.

PS, I 've spent about $20 in Wal-marts in the past 20 years - I hate those stores looking at cheap, imitation products mostly manufactured in countries whose names can't even be pronounced. If I want a Stereo, I'm going to a Stereo store. If I want a refrigerator, I'm going to Sears or an appliance store. If I want clothes (oh please, I would never buy at Wal-mart), I'm going to someplace that has wearable, fashionable stuff. If I want tires, I'm going to Good Year.

 

[Draginass]

Your in the minority Tarp. The business customer was AA's profit, but he's not there anymore. And the ones that are there want business class service, space, flexibility, and frequency at LCC fares.

The problem is that the industry is too capital intensive to adjust to wild swings in customer profile and demand. With the economy dried up, the biz flier is gone and the ones that are there are pinching their pennies.

There may be lots of bizjets around but those people probably weren't customers anyway.

It's bus travel now because that's only what people are willing to pay. If you don't like air travel now, wait about 2 years, you're going to REALLY hate it . . . . it's going to have the ambiance of a New Delhi train trip.

Like it or not, Walmart is the wave of the future. Wouldn't be surpised to see WALAIR pretty soon. Blue vested greeters at the airport and your pilots are making $8.50 an hour. Service in the cabin by a nice old grandmother. Work with me here.

 

[Airpiraterob]

i gots ta say...

when i look to travel...when i'm fendin to raise up and get my travel on..i look at the cheapest ticket prices i can find. I have no doubts about safety on the airlines. so whoever has the cheapest ticket gets my money as long as they meet my time demands. I dont mind travelling for 10 hours as long as i can leave when i want to leave and get there on the day i want to get there in time. No airline has a stigma of being the redneck airline yet. When it does then the low price of the ticket may not be the only consideration. How many #3/#8 complete outfits (including shirt and hat and warm up pants all with #'s on em and with their sponsors jacket) do i want to sit next to?

Wal-Mart vs. Target turf war. I dunno man have you seen K-Mart lately? its gettin rather ghetto lookin inside.

the stigma of 'Wal-Mart' is set. it is now type casted. Put It like this. would you prefer to wash your clothes at a place called
"Laundromat" or "Laundry-o-rama" or "The Clothiery"

 

[tarp]

Dragin,

Gosh I hope we're not going that way. A long time ago I had an assignment that put me on an Eastern European airline (under government control). My question then, was: "Are those chicken feathers in the overhead bin?" I was never so afraid that an airplane would fall from the sky as that flight - and as you said it had all the charm of a Pakistani train ride.

I find it hard to believe that my neighbors in suburbia want to put $1000 golf clubs, $900 skis and Coach Leather luggage in the back of the flying equivalent of a Greyhound bus. If your's is the future, then I guess I better buy that Baron I had my eyes on because all my friends are going to want me to fly them places rather than fly on any airline.

And someone spoke of safety - I wonder how safe minimum wage pilots will be? It reminds me of a scene at my regional operation. A CRJ was badly broken and our incoming bird was to be taxied over to another gate to replace the broken CRJ. As we were doing the repo, we watched a CRJ power out from our gate right over the top of the entire contents of the cargo hold. They only had one good engine (the left one) and used all that blast to send quite a few bags further down the tarmac. These were our finest mechanics taking the wounded bird to the shop - then the rampers directed us to taxi right into the spot over the very same bags. We as pilots, recognizing that this is not a good idea for aircraft or baggage, balked at the suggestion. However, at $8.50 an hour, screw it, the bags, airplane and anything else is not my problem. Kind of like a Wal-mart checkout, eggs on the bottom, canned ham on top - works for me. I guess they better start perfecting those pilotless aircraft - you know - the ones that are built by the lowest bidder!!

 

[350DRIVER]

I think tarp made a few key points in his response. I will not fly on SWA either and will take any alternative route that I need to avoid them. One time flying on them was enough for me to last a life time. I guess I was spoiled by Delta Airlines when I worked for them in HOU but any airline for that matter whether it be AA, UAL, NWA, AWA, are much more "classy" in comparison to SWA.. - It was always amazing to see the "clear" differences between the DAL passengers and those boarding the SWA flights.. Don't get me wrong SWA is profitable for a reason, they hire extremely friendly individuals, etc, etc, I personally just think that paying the extra money to avoid being in a cattle heard is well worth it... SWA will always make money but they will also always cater to that "certain" profile of people. . . . .


Money is not always the objective when it comes to people flying on business and I could not imagine if given a choice to either fly on Delta or SWA that they would pick SWA-

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[Birdstrike]

Excellent points all around but I think Dragin's arguments carry the day. If I don't get what I want out of SWA, the next step for me isn't to go back to the big 5 on my flight from BWI to Omaha, its going to be in the new Ody with leather and DVD video which is still a better deal. The safety issue (for now) is a wash since everybody arrives alive.

Walair is a scream yet why I do I think it's inevitable...and profitable?

 

[Dot_AK]

As a broke college kid, when I'm sitting in the terminal with my backpack, hoping the duct tape on my luggage holds for one more flight, I expect to get three or four layovers, some barely long enough for a full-out run from one terminal to another, others eight hours long, leaving the first point in the middle of the night and getting to my destination at 0300 hours. The only thing that motivates my choice of airlines is trying to have enough left over after the ticket to get bus fare at my destination.

I have nothing in common with those people in expensive suits and breifcases who want to leave in the morning and be back in the evening, and expect to be ready to work when they get there.

I have little in common with the tourists that are talking about scuba diving or going to Europe. They expect to be able to leave at a decent time and get somewhere with only a layover or two at most.

The things that drive ticket price are: Time, Service, Money.

Different classes put different emphasis on what they want - but if we get no impression of service, then only the time and the money matter.

 

[Publishers]

Aspect

There is an aspect of this thinking that business travelers do not care what the fare is, that they want service and as the company is picking up the tab, just make the most convenient times and **CENSORED****CENSORED****CENSORED****CENSORED** the cost.

Good thought, but it is not true.

What is true is that every year, the % of people on the aircraft traveling under some type of discount rose and rose to where almost no one, including your business guy, was paying anything resembling the published full fare.

Even big companies were buying an outbound with a stay over Saturday and an inbound the same way and throwing away the backsides of both as it came out much cheaper. Every year, people became more in tune with how to work the system.

Corporate America was expressing their unhappiness with the system and learing to play the game much better.

Frankly, only on International or legs of over 2.4 hours or so ever made me think about comfort. For a 1.5 trip to ATL, there was not much difference between DAL and Air Tran.

It would also be great if the majors did not have to worry about the vacation crowd or the greyhound set but that is not true either. Their system and costs required both to be on the aircraft and there was no way to clearly delineate the service level between the two. In 5 across seating, you probably had 5 different fares paid.

Same plane, same seat, same destination, 5 different prices for the same thing. How was that to ever work?

 

[tarp]

"It would also be great if the majors did not have to worry about the vacation crowd or the greyhound set but that is not true either. Their system and costs required both to be on the aircraft and there was no way to clearly delineate the service level between the two. In 5 across seating, you probably had 5 different fares paid.

Same plane, same seat, same destination, 5 different prices for the same thing. How was that to ever work?"

-----------------------------------------

And that, Publisher is the heart of our problem today.

When airlines started, the model was that of the steam ships they replaced. There was first, second and economy/coach. Sure there was class envy and everybody wanted what first class had.

Just like the new favorite vacation package, the upper decks of my wife's cruise ship arrived at port at the same time as the lower decks. But my wife hates port holes - she wants a window or better yet a sliding glass door. She wants those upper decks free of screaming kids and K-mart shoppers. She wants to put on an evening dress and have a formal dinner after the show.

Back in the air, we must have had some grand Marxist revolution, but nobody ever told the crew that this riot was going on. Suddenly, it was "tres chic" to sit in first class (remember Seinfeld and Elaine trying to sneak forward). United put in Economy plus, but everybody from the back rows immediately roved forward into those ample legroom seats. And the great precursor of evil - "mileage plans" took over so that everyone "expected" an upgrade somewhere along the line(with the magic American word - "free").

We had a class war and the capitalists lost. Here we had scratched and clawed a better life for ourselves by maximizing our stock prices and mere mortals barged in and took our first class away. They invaded the business section and completely took over the finest bathroms and drank all our vintage Chardonnay.

Wouldn't it be great if all the major airlines took all those "dividend miles" and flushed them down the Bankruptcy drain. Then banish the mileage programs and reopen the gold, silver and platinum clubs - of course these clubs would now only reflect your current level of spending and loyalty to the airline of choice. Once again, saying you are "Royal Crown" customer could mean something - you fly Delta or you don't fly at all. In return for that loyalty, Delta makes sure your ride is perfect or as close as they can get weather permitting. Sure, there's some jerk who paid $99 for a seat 45 rows behind you, but you can't hear, smell or see him. He's getting a bottle of water and you're sipping champagne. When the weather goes bad, Delta calls you on your cell phone and tells you how they are going to resolve the problem. For Mr. ninety-nine, he'll get the next plane they can make available - so sorry.

We created bulletproof cockpit doors, we can add three more doors to the cabin and create classes again.

We're capitalists dam it (spelt incorrectly for censor). Let's build a class system and get things back to normal - we keep up this Marxist equality stuff and before long we'll have socialized medicine, an out of control welfare state and cops and spy's everywhere under the guise of "home land security" - hey wait a minute!

 

[350DRIVER]

Pub,

Very interesting perspective however I do not think that "cost" is everything when considering what airline one will fly on. I have yet to meet one business person where money is no object at all that would pick a SWA over a Delta, AA, UAL, or others when all variables are factored into the equation. Take a stroll through the SWA terminal in HOU on any given friday....Obviously in today's society where corporate America is cutting back and slicing into expense accounts this may hold true to a certain extent BUT there are many many other corporations that are making an awful lot of money "still" and the "added" expense is no problem. Time is money and money is time and I cannot see how one could possibly justify taking a SWA flight from say CLE to LAX with many stops versus taking a CO nonstop flight for a few hundered dollars more when someone needs to be there asap and doesn't want to play take-off and land three or four times before "finally" arriving in LA. One of the best parts of working for Delta is that you knew what kind of passengers where going to be flying on you and it truly was special to see how many repeat business people that would fly weekly on you and most absolutely knew that he!! had a better chance of freezing over before they would jump ship to SWA just to "save" money. . . The other airlines just have more to offer and give you that added comfort factor not to mention that you will not be stuck sitting across from someone for a three hour flight in a 37 with seats that are backwards.

SWA will always make money because many in society cannot afford to fly on the others but people who are "lifers" on the big lines are not goin to be jumping ship anytime soon.

My hat is off to the success that SWA has year after year, I just am not a fan at all of flying on them as well as the many others who have expressed their thoughts and preferences....

Corporate America was expressing their unhappiness with the system and learing to play the game much better.

This is true to a certain extent but also keep in mind that most of the larger airlines have drastically slashed fares and have removed many restrictions on reduced fare tickets that were unheard of in the past. Like I said if given the choice of whether you want to fly on UAL or SWA I think most would pick UAL hands down, atleast I sure would.

Same plane, same seat, same destination, 5 different prices for the same thing. How was that to ever work?

If you have been treated extremely well for years and have had nothing but pretty good experiences on a certain airline then I think this is going to weigh heavily into the equation of choosing what airline one will pick... I do not believe "cost" is everything especially if money is not a major concern- Keep in mind that as many people that are just getting by today there are also many others who are pretty successful and who are not overly concerned with how much a ticket is going to cost them-

I think alot depends on personal preference, not just cost.

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[GoldenEagle]

IT doesn't have to be about price!!!

This is my first post, but I might just have something worth saying here. Cheap ticket prices don't have to be all that matters to the airline customer. If the majors make some changes, they can be competitive again.

They need to start making their service noticeable different than the competition's (mainly LCC's). They need to start where the LCC's left off. In-flight TV's, headphones, movies, a hot meal people would want to eat, a newspaper to read if requested, warm blankets, more comfortable seats, and enthusiastic flight attendants. Maybe even something to keep kids entertained like a word search or drawing with crayons. There is soooo much an airline could do to entice customers to fly with them. The majors also need to make flying fun again for the airline public with enthusiastic, well-trained, highly visible flight attendants. I'm sure you could find plenty of business travelers and even vacationers willing to pay $50-250 dollar premiums (depending on the length of the flight) on the ticket price to get what they would consider first class service. The airlines need to make the passenger feel like a king on their trip again. If they do this, passengers are sure to return time and time again. If the majors are innovative with new ways to service the customer, I am sure they will be able to save themselves. Great service put together with great advertising will pull in higher paying customers that will return time and time again (remember the Virgin Atlantic Airways ads??? Sure had me wanting to fly with them). Customers need to get a unique service. Song (although an LCC knock-off) is a step in the right direction. The higher labor costs of the majors are no obstacle to making money. If the pilots copilot get are paid an extra $250 combined over a two hour trip, that's still only about 1.5 to 2 tickets needed to cover the extra cost. It doesn't make that much of a difference.

If airlines started stressing service and competing with one another for better in-flight service, flying would be fun again for both both the passenger and the crew. Pilots and crew take pride in their job if they know their service is great and that customers appreciate the extra things they do for them. Competition (not just for price) makes flying more fun and more rewarding! All of the extra things that we could do for passengers would cost dollars on the cost per seat, yet make a world of difference in the passengers mind.

Majors are just headed in the wrong direction right now by imitating all aspects of LCCs. They need to be stressing the perks in their products rather than cutting back on them! Keep in mind, I'm not yet a pilot; I'm just writing what I would want as a passenger.

 

[Publishers]

good points

Good points but still not quite on target.

The extra money you through in for the pilots may not seem like much but it is. The same for the rest of the people needed for that first class service that you want to give/

You see technology as in the yield management program, cutting the commission of travel agents, driving traffic to your web site, reservation systems, printing those individual boarding passes. Better catering, inflight systems, all of this stuff costs money and we still need ma and pa in the back of the plane at a severe discount.

The number of people who want and will pay for all this are out numbered by those who are willing to save a few bucks. Sure, they may not do the 4 stop SWA flight, but they will do one.

 

[SDF2BUF2MCO]

I'm still not understanding why there is a race to the bottom. But I'm from Kentucky so it takes a little longer.
I agree with some of the posters that given a choice I'd rather fly a major. Granted, living in Orlando, all tickets are "cheap" compared to other areas so ticket costs aren't that much different between majors and LCCs.
I flew ATA last fall to IND on an emergency trip. Plane was pretty full coming and going. Both trips were a sea of gray hair. The help was laid back and friendly. I'm glad there is a niche for ATA and others.
There are fixed costs in running a business. The plane costs so much, the fuel, labor, etc.
Where the difference has to be made up is the level and/or type of service and type of amenities. Labor compensation plays a big part but so do work rules. But to pay someone poop compensation so they can offer cheap tickets is beyond my logic. I think there is still a market for the business traveler. Don't know the extent. Of course, the more jobs and businesses that move to China, the fewer Yankee business travelers.
What is perplexing when it comes to pilots pay is a lot of companies want a four year degree and ratings/hours to meet the minimums. Yet some companies want pilots to paid wages less or equal to that of a non college degree, non rated person.
The next few years will be interesting indeed to see how this all washes out. I will fondly remember my flights as a kid on Frontier, Ozark, and Piedmont. Ah the good ol days.

 

[WrightAvia]

FARES DON'T MATTER...

Two reasons why people are not riding on the airlines...

One...People are funny this way...they don't and never did like being off the ground in flying contraptions in the first place and the repeated telecasting of the video of airliners smashing into the WTC, is not going to be easily wiped from the travelling public minds by saying "all BETTER now!"

Two...There are massive layoffs, business failures and people that are flat busted broke after the stock market slumped. It dosen't matter what price the airline ticket is, IF you cannot afford to anything once you get there or are having problems putting food on the table or tires on the car at home.

Ticket price is not going to bring scairdy cats into being rational and it won't bring the homeless, unemployed or bankrupt masses to the ticket counter.

Here's a tip to know approximately when the upturn in the airlines will occur...when factories start placing orders for tool and die. That's a FACT, JACK!

 

[sf3boy]

I once had a aviation business professor in college who had been a big shot at NWA years before. I still remember him saying that the traveling public is will get on the media and demand safer airplanes. Implore the airlines to better rest their crew. Scream at the top of their lungs that they wanted chicken teriyaki, not *#&@ing pretzels. But when all the demanding is done with, all the passengers really care about is getting from Scranton to Vegas for $39.99.

I have seen it myself. A passenger yelling at the captain of a DC-9 that had a hydaulic pump failure then fire. Her connection HAD to be made because she was important. The passengers say that they want safety, but all it takes is low fares to get business.