November 12, 2004

NO PRICING POWER:

Dueling airlines cut fares: Holiday rivalry seen giving fliers a big lift (Keith Reed, November 12, 2004, Boston Globe)

American Airlines, AirTran Airways, and US Airways all started winter or holiday fare sales this week, offering travelers deals such as a $178 round trip to Chicago on American, and seats for $198 round trip to Atlanta on AirTran.

Most of the sales have restrictions, limiting passengers to so-called off-peak travel days that exclude the days before and after Thanksgiving and Christmas, and requiring tickets to be purchased by Nov. 17, a week before Thanksgiving.

But this year, things may be even better for passengers and worse for the airlines than in years past. Airlines are expecting to carry more passengers this year than they did for the holidays in 2003, when passenger traffic finally began to approach levels before the terrorist attacks of Sept. 11, 2001.

Yet the airlines, which are already suffering financially because of high fuel costs and almost no pricing power, are in many cases offering sale fares lower than they were a year ago, say some airline officials.


Raising interest rates in an economy where suppliers have no pricing power is lunacy.

Posted by Orrin Judd at November 12, 2004 9:05 AM
Comments

Basing a major segment of your transportation network on the theory that investors will continue to pump in capital even though, so far, after 75 years, they have taken out no net profit, is also lunacy.

Posted by: Harry Eagar at November 12, 2004 2:14 PM

Harry:

That's the spirit--down with air travel!

Posted by: oj at November 12, 2004 2:31 PM

Harry:

We can drive if things get bad. You will need a very big boat. Better be nice to the airlines.

There was a great piece in the WSJ about 10 days ago which described how Delta totally missed the boat after 9/11 - it looked to be the best positioned airline, but they just could not adjust.

Posted by: jim hamlen at November 12, 2004 5:09 PM

Other than Southwest and some of the new, smaller airlines like AirTran, every American airline I've ever flown is run worse than the NY Port Authority and their terminal and in-air personnel appear to have studied at the Leonid Brezhnev School of Hospitality. Air France and Lufthansa give better service, let alone Singapore Air.

Posted by: Bart at November 12, 2004 6:58 PM

It's worse than you think, jim. Not only can I not drive, we have a duopoly, featuring the worst features of monopoly and free market combined.

Posted by: Harry Eagar at November 12, 2004 9:48 PM
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