Raise ticket prices, could be a solution?

[av8er2]

Comair made every Comair pilot really mad, and unhappy for $17 million a year savings. My guess is all those unhappy pilots will be giving the minimum now and it will cost the company many millions a year.

ASA wants to save money but they don't want to give the pilots anything and make it hard to support their families. Same thing, give the pilots a bad contract and it will cost them the savings they get every year in millions.

Make you employees happy and content, they will save you millions a year.

ASA carried 12 million passengers last year. Sounds like if they just raised the ticket prices a few dollars they could still make plenty of $$ and treat their pilots with respect. And on top of that still be competitive. Who is going to go fly another airline for $2 less?

But instead they spend millions trying to give the worst contract they can.

Comair could of raised their tickets a couple of dollars and kept happy and safe pilots.

This seems simple, so I think Mgt. does not care about the pilots and safety. If they did they would look at other ways to save money and pay their pilots a reasonable wage that provides a style of living someone deserves at this skill level.

Pilots are more skilled and worth more to the company then any Mgt. person who is constantly making mistakes. The problem is the pilots are not in control, and Mgt. does not care to treat the pilots with respect.

Raise the tickets a few dollars and get a pilot group that is safe, efficient, and saves the company millions. Duhhh?

 

[Nixon]

Wouldn't it be nice if it was that simple. Except that it is not.

There is this little theory in economics called "supply and demand" (see http://en.wikipedia.org/wiki/Supply_and_demand). It says that for every increase in price, you will see a decrease in sales. The trick in any business is to set a price that maximizes profit. The bean counters any given airline have figured out (correctly or otherwise) that an increase in ticket prices will not result in an increase in profit. Otherwise they would have already raised prices - not to pay the pilots (or mechanics or gate agents) more, but to increase profits (or decrease losses).

 

[81Horse]

av8er2, what a great idea!

Sadly, most folks would rather buy $5 coffees in the terminal, rent $75/day cars, and stay in hotel rooms that cost more than their flights, than spend more on airline tickets. They also don't seem to mind the lack of amenities such as food, blankets, pillows, and assigned seating.

So, there's your traveling public. You know, except for the ones who travel on fractional jets.

 

[pilotyip]

Yes raise ticket prices and face the shift of the flying public from your airline to the lower priced airline. Fewer passengers, fewer pilots needed, fewer Captains' needed. It will result in fewer jobs at the airline that raises ticket prices. Airline seats have become commodities like corn and wheat futures, the internet makes it too easy to shop by price. Ever airline that has raised ticket prices has seen an instant drop in reservations, and rescinded the raise almost the day it was announced. BTW the low price leader SWA is profitable and has about the highest paid pilots in the business, so it has to be something besides ticket prices.

 

[superrav]

We shouldnt be taken put cuts for the public...lets keep it simple. Forget supply and demand...lets get back to the basics of how you run a business..you can't sell below you cost...I wish we were like the MTA guys in NYC...airline pilots have no balls..that will never change.

av8er2, what a great idea!

Sadly, most folks would rather buy $5 coffees in the terminal, rent $75/day cars, and stay in hotel rooms that cost more than their flights, than spend more on airline tickets. They also don't seem to mind the lack of amenities such as food, blankets, pillows, and assigned seating.

So, there's your traveling public. You know, except for the ones who travel on fractional jets.

 

[h25b]

We shouldnt be taken put cuts for the public...lets keep it simple. Forget supply and demand...lets get back to the basics of how you run a business..you can't sell below you cost...I wish we were like the MTA guys in NYC...airline pilots have no balls..that will never change.

Um.... That's why the airlines are trying to LOWER THEIR COSTS !!!

They've already decided that the market can not sustain increased prices.

 

[Stifler's Mom]

I'd like to see the prices raised a few bucks. I don't cringe at paying $2.25/gallon for gas anymore. Give it time and people will get over it.

 

[h25b]

I'd like to see the prices raised a few bucks. I don't cringe at paying $2.25/gallon for gas anymore. Give it time and people will get over it.

In the airline business you don't have the time for people to get used to it. There is no brand loyalty and too many other carriers with profitability to sustain beating a fare to steal passengers away. Airline fares exist on an easily accessible spot market...

 

[TCAS]

Why don't they just raise ticket prices?

Airline One and Airline Two both fly between ABC and DEF. Both airlines fly the routes with identical 100-seat aircraft, have identical 75% load factors and charge a $100 fare. The revenue collected by each airline for a flight between ABC and DEF is $7500. The cost for each airline to fly the route between the two cites is $7800 so both are losing money.

Airline One, in an effort to stem it's losses, increases it's airfare from $100 to $105. The first thing that happens is that on Orbitz, Travelocity and Hotwire Airline One drops down on the page because its airfare is now higher then Airline Two's price between ABC and DEF. Because of the fare increase five passengers who used to fly on Airline One now decide to book their flight on Airline Two for the lower fare. Airline Two sees it's load factor increase to 80% and it now collects $8000 of revenue for a flight between ABC and DEF. By raising its price to $105 for the flight Airline One sees its load factor drop to 70% and now only collects $7350 in revenue rather then the $7500 it collected with the lower fare, resulting in even steeper losses for the company.

Meanwhile Airline Two, with it's lower ticket price of $100 and now known as the Low Cost Carrier, is able to collect $8000 in revenue and is now a profitable carrier due to the higher load factor it has on the route.

Airline One's management is now faced with a predicament. To stem its deepening losses it can either cut it's fare to $98 in hopes of recapturing the passengers it lost to Airline Two's lower fare or it can cut its cost to a level that allows it to make a profit with the higher fare it's charging, or it can do a combination of both. None of the choices are easy to make.

This is a very simple example of how raising fare prices can cause you to lose even more money while further strengthening your competition. But even in its simplicity it is a very real example of what has been occurring over the last four to five years in the airline industry.

 

[TCAS]

BTW the low price leader SWA is profitable and has about the highest paid pilots in the business, so it has to be something besides ticket prices.

Southwest does not sell its tickets through the online ticket sellers such as Orbitz, Travelocity and Hotwire. SWA only sells its tickets through its website. Therefore the pricing transparency that you have among the airlines that do sell their tickets in that manner does not exist.

The key to Southwest success is that it has kept its cost relatively low from the beginning and it continually advertises that it is the low price carrier even when in quite a few select markets it is not. People believe the advertising claim of SWA's low prices because of SWA's reputation and a lack of interest on their part of actually comparing the SWA price to that of other airlines on other websites.

 

[81Horse]

TCAS, Airline One and Airline Two need to engage in some good old-fashioned yankee collusion. ;]

 

[TCAS]

TCAS, Airline One and Airline Two need to engage in some good old-fashioned yankee collusion.

Do you mean like when Bob Crandall, CEO of American, told the CEO of Braniff over the phone that if both airlines raised their prices in Dallas they would both benefit, which caused Crandall to be censured by the Justice Department because the Braniff CEO had been recording the conversation and turned the tape over to the Feds?

 

[81Horse]

Well, obviously there has to be some degree of mutual trustworthiness; and since we're discussing airline CEO's, well ...

 

[Publishers]

TCAS makes the valid point and it also shows that the simple can be complex. This is especially true in hub and spoke systems which add the additional factor of feed out of the hub.
I would also point out that every airline I know that had pilot's as it's management has failed miserably. Think KIWI as example.

 

[GoingHot]

Airline One and Airline Two both fly between ABC and DEF. Both airlines fly the routes with identical 100-seat aircraft, have identical 75% load factors and charge a $100 fare. The revenue collected by each airline for a flight between ABC and DEF is $7500. The cost for each airline to fly the route between the two cites is $7800 so both are losing money.

Airline One, in an effort to stem it's losses, increases it's airfare from $100 to $105. The first thing that happens is that on Orbitz, Travelocity and Hotwire Airline One drops down on the page because its airfare is now higher then Airline Two's price between ABC and DEF. Because of the fare increase five passengers who used to fly on Airline One now decide to book their flight on Airline Two for the lower fare. Airline Two sees it's load factor increase to 80% and it now collects $8000 of revenue for a flight between ABC and DEF. By raising its price to $105 for the flight Airline One sees its load factor drop to 70% and now only collects $7350 in revenue rather then the $7500 it collected with the lower fare, resulting in even steeper losses for the company.

Meanwhile Airline Two, with it's lower ticket price of $100 and now known as the Low Cost Carrier, is able to collect $8000 in revenue and is now a profitable carrier due to the higher load factor it has on the route.

Airline One's management is now faced with a predicament. To stem its deepening losses it can either cut it's fare to $98 in hopes of recapturing the passengers it lost to Airline Two's lower fare or it can cut its cost to a level that allows it to make a profit with the higher fare it's charging, or it can do a combination of both. None of the choices are easy to make.

This is a very simple example of how raising fare prices can cause you to lose even more money while further strengthening your competition. But even in its simplicity it is a very real example of what has been occurring over the last four to five years in the airline industry.

Outstanding TCAS. So few people seem to understand simple market forces.

 

[rjcap]

There is one other issue you might consider regarding raising ticket prices a buck or 2. There are a couple airlines out there, Frontier and Jetblue for example, that not only offer cheaper ticket prices but better service and a better product. I for one would pay a small premium to fly these two airlines over the crap that Delta offers.

 

[badog]

Man, Pilots are the dumbest smart people

You F*&cking Idiots This is why we're all screwed! There are 2 business models that work in this industry, Southwest and Airtran. It's not what you pay the LABOR It's what we allow management to STEAL. All of the legacy carriers are way too top heavy. Too many chiefs and not enough indians. Managements' compensation is waaaaayyyyyy too much money. Lets call a spade a spade. Yeah you're all soooo smart. Let's keep the pay cuts coming for the labor, keep the ticket prices dirt cheap and pay our upper management 1.5 million annual salary with 3 million dallar bonuses and preferred stock.

 

[tuna pimp]

You F*&cking Idiots This is why we're all screwed! There are 2 business models that work in this industry, Southwest and Airtran. It's not what you pay the LABOR It's what we allow management to STEAL. All of the legacy carriers are way too top heavy. Too many chiefs and not enough indians. Managements' compensation is waaaaayyyyyy too much money. Lets call a spade a spade. Yeah you're all soooo smart. Let's keep the pay cuts coming for the labor, keep the ticket prices dirt cheap and pay our upper management 1.5 million annual salary with 3 million dallar bonuses and preferred stock.

You may be correct about management number of mgmt and pay. Problem is even if you shed executives and cut their pay the savings amount to a drop in the bucket compared to the overall cost of operating an airline.

$1.5 mil is just a tad bit high. Maybe for a CEO; not too many VPs or Directors making near kind of bling last time I checked.

 

[pilotyip]

This is a repeat post but it fits here. This is a pilot board so saying anything in defense of management is like peeing into the wind, that it is going to come back to you. Eliminating management will bring the end quicker for the airplane industry, and their salaries are insignificant to the airlines operating costs. Without management you could not operate the airline, The FAA would shut it down without approved Part 119 key management. Would the pilots step up and become management for free in their spare time. Why is every time, pilot salaries come up, they are immediately compared to top management. I saw an article in ATW in the past couple years that stated at DAL there were 17 members of top management made more than the top DAL Captain. The combined top 17 salaries equaled less than 1/6 of 1% of the combined pilot salaries. If management worked for free all pilots in the company would get a 1/10 of 1% raise. (for a $100K per year pilot that would be $3/wk increase in take home) Boy that raise would really make the pilot group happy. Top management possesses skills that allow them to move from job to job and command high salaries. And every one of these managers wants to see his/her airline prosper. They just can not do it.

 

[wmuflyguy]

I'd like to see the prices raised a few bucks. I don't cringe at paying $2.25/gallon for gas anymore. Give it time and people will get over it.

But if the Gas station down the street was only charging $2.15 a gallon, 80% or more peopel would drive the extra block to go there. I know I do.

 

[Dirt Doctor]

The original post was exactly correct. I have called in sick twice since our Comair vote, and plan to do it on a regular basis from now on. And when I do go to work this week my flights will be cruising at mach .65 and we will be late on every leg. Also I think the brakes may get a bit hot on all my legs. I wonder how much this will cost on a yearly basis?

 

[wmuflyguy]

mach .65? That sounds like a typical cruising speed now a days for new fuel saving system.

 

[Dirt Doctor]

Maybe when your on time and trying to save gas. Not when your late and trying to get to there in time for passengers to make connecting flights!!

 

[DrProc]

The original post was exactly correct. I have called in sick twice since our Comair vote, and plan to do it on a regular basis from now on. And when I do go to work this week my flights will be cruising at mach .65 and we will be late on every leg. Also I think the brakes may get a bit hot on all my legs. I wonder how much this will cost on a yearly basis?

Max cont power with spoilers extended works better.

 

[Dirt Doctor]

Excellent Idea!!!

 

[suupah]

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[Icelandair]

I'd like to see the prices raised a few bucks. I don't cringe at paying $2.25/gallon for gas anymore. Give it time and people will get over it.

I still do and its makes me furious to see the gas prices rising again. I guess the fat cat station owners aren't happy enough with one new BMW they got after gouging us after Katrina, they need another one!

 

[FlyFlyFly]

I have never understood the continual complaining of low fares, low pay and poor working conditions in the regional airline industry.

Anyone ever consider quitting and working elsewhere?

Are there higher paying jobs with better conditions you could get and be happy with?

When you chose to work for a regional, you basically told the management of the company: "I am on your team. I have seen your leadership and like what I see." If you quit, you rescind that vote. If you purposefully perform your job poorly, I hope you are ready for the problems that will cause you and your buddies in the long run (like furloughs). You can think that there is this us and them, but in fact you are drilling holes in your own boat.