VA-keeping competitors honest

[Andy]

With what you are saying, it makes me think John McLeod had an instant effect on our bottom line. That lines up with the numbers we have started having since I was hired, and since he got here.

Here are the year over year route/price comparisons that I found in the latest DOT report.

Route/2011 avg fare/2012 avg fare
SFO-SAN/$108/$120
LAS-SFO/$114/$130
DFW-SFO/$169/$226
WAS-SFO/$262/$325

The 4.5% increase I used was based on other carriers' fare increases; I used a high estimate. Delta was +7.0% (but minimal overlap with VX), JetBlue was +3.6%, Southwest was +3.5%, AMR was +0.5% and United was -0.3%. The above price increases were much higher than even Delta's fare increases. And keep in mind that VX's avg fares were the lowest on the above routes, priced ~10% below the leading carrier on those routes so there's room for the prices to be raised further.

 

[bri5150]

http://www.fool.com/investing/general/2013/04/26/is-united-airlines-shooting-itself-in-the-foot.aspx

 

[Kalifornia]

Price below who's cost? I looked at a roundtrip for EWR on United earlier this year with more than a 2 week notice and it was over 1,100 dollars roundtrip from SFO. Sorry but that is a ripoff. I could do a roundtrip to London for that.

Delayed reply to this thread, but W T F ???????????????????????????????

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone. A cute Volkswagon Bug with a flower pot might cut out some of those gas dollars. A $30,000 vehicle with an average life span of 200,000 miles would be use up 2.5% of its life to do the RT drive between SFO and EWR. or $750 linear depreciation. In addition instead of 5.5 hours it would take 3 days absolute minimum each way nestled between big rigs. Sometimes pilots are some of the most self depreciating circuit breakers to a fully functional career.

 

[Flyer1015]

Delayed reply to this thread, but W T F ???????????????????????????????

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone. A cute Volkswagon Bug with a flower pot might cut out some of those gas dollars. A $30,000 vehicle with an average life span of 200,000 miles would be use up 2.5% of its life to do the RT drive between SFO and EWR. or $750 linear depreciation. In addition instead of 5.5 hours it would take 3 days absolute minimum each way nestled between big rigs. Sometimes pilots are some of the most self depreciating circuit breakers to a fully functional career.

I like when pilots start comparing flying to cars for gas price as if that's somehow relevant. Kinda like those pilots comparing themselves to doctors.

2500 miles separates EWR and SFO. RT that's 5000 miles divided by 25 mpg would yield 200 gallons of gas to drive times $4 a gallon would be 800 dollars in petrol alone.

Which is why I'm not driving. It's an A320. Assuming an average tailwind, assume ~ 32,000lb burnoff for SFO-EWR. 32000/6.76 = 4,733 gallons. Assuming 140 pax on that flight (not full flight), 4733/140 = 33.8 gallons. That is MY share of gas on that route on a passenger average basis. At 3 bucks/gallon, 33.8x3 = 100 bucks. That is my approx. share of the gas bill for that flight. So yeah, I stand by my comment. More than 2 weeks out, $1100 roundtrip is a ripoff. Less than 2 weeks, that's fair game for the premium one pays for travel on short notice.

 

[Kalifornia]

I like when pilots start comparing flying to cars for gas price as if that's somehow relevant. Kinda like those pilots comparing themselves to doctors.


Which is why I'm not driving. It's an A320. Assuming an average tailwind, assume ~ 32,000lb burnoff for SFO-EWR. 32000/6.76 = 4,733 gallons. Assuming 140 pax on that flight (not full flight), 4733/140 = 33.8 gallons. That is MY share of gas on that route on a passenger average basis. At 3 bucks/gallon, 33.8x3 = 100 bucks. That is my approx. share of the gas bill for that flight. So yeah, I stand by my comment. More than 2 weeks out, $1100 roundtrip is a ripoff. Less than 2 weeks, that's fair game for the premium one pays for travel on short notice.

So you're talking about the cost of the gas on one half of the trip. How about all the employees it takes to get you from point A to point B plus insurance which is in hundreds of millions for liability, the overhead in facilities to accommodate passengers, plus landing fees, plus maintenance. And then there is the lease or ownership of the airframe and engines. Do you know much a battery on a small GA airplane compares to the cost of a battery in a car? Take any car part multiple it's cost by 10 to achieve proper FAA certification. And that's comparing an auto to GA airplanes. Any new part other than replacing screws or likewise in a modern airliner is minimum $10,000. It's not landing on the moon, but it's making popcorn either.

There's a reason the list of airlines over time that have ceased business and or declared bankruptcy is far greater than any other industry besides independently owned restaurants. $1100 RT coast to coast is a ripoff if you're of the Yugo mentality.

 

[Flyer1015]

So you're talking about the cost of the gas on one half of the trip. How about all the employees it takes to get you from point A to point B plus insurance which is in hundreds of millions for liability, the overhead in facilities to accommodate passengers, plus landing fees, plus maintenance. And then there is the lease or ownership of the airframe and engines. Do you know much a battery on a small GA airplane compares to the cost of a battery in a car? Take any car part multiple it's cost by 10 to achieve proper FAA certification. And that's comparing an auto to GA airplanes. Any new part other than replacing screws or likewise in a modern airliner is minimum $10,000. It's not landing on the moon, but it's making popcorn either.

There's a reason the list of airlines over time that have ceased business and or declared bankruptcy is far greater than any other industry besides independently owned restaurants. $1100 RT coast to coast is a ripoff if you're of the Yugo mentality.

That's the nature of the business. My assumption was coach class. First class roundtrip is in the thousands. The airlines can make money on transcontinental flights, and many do it well. You are detracting from the main point, which is that UniCal had a monopoly on the nonstop SFO EWR market and therefore charged very high fares. Now that VX came in United not only matched the fares, they doubled daily frequency. United isn't going to make money on that route as they used to before, and doubling capacity is going to hurt them.

As for the other points you made, wages, insurance, liability, fuel, all that is accounted for in the airline's finance and revenue managment department. $1100 roundtrip is still too much. I've found cheaper fares on other airlines for that market, but with a stop. Again, UA charged a premium for that route because they had a monopoly.

 

[skypine69]

Why shouldn't ual charge as much as they can? If they put that price on the website then they feel they can get that price.

 

[jayme]

Exactly. Supply & demand set prices, not some arbitrary idea of what is fair.

 

[Bolo]

I am glad that VA is keeping competitors honest, but at the end of the day you have to make money! Is VA making money? If the answer is no, then good luck.

 

[Flyer1015]

Why shouldn't ual charge as much as they can? If they put that price on the website then they feel they can get that price.

I explained why. United had a monopoly on that route and could charge what they wanted. Now that VX came in, the United price came crashing down, along with double the frequency.