Why are commuter flights so expensive?

Supply and demand.
Low supply, low demand, high cost.
Michelle

Jay Honeck wrote:

Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Their actions seem to defy logic. In the lodging industry, you're going to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no airline
seems to do it this way, at least on the short hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!

There must be something else in play here -- anyone know?



--

Michelle P ATP-ASEL, CP-AMEL, and AMT-A&P

"Elisabeth" a Maule M-7-235B (no two are alike)

Volunteer Pilot, Angel Flight Mid-Atlantic

Volunteer Builder, Habitat for Humanity

Jay: Correct me if I'm wrong, but as I recall from my tourism industry
days-Hotel people work on Average Daily Rate. Some people walk in the
door and pay your Rack Rate, some pay Corporate Rate, some have a AAA card
discount, some have Government Rate. And it all averages out to your
Average Daily Rate. In the Airline biz they have Revenue Per Seat Mile.
Some pay First Class, some are coach, a few got a package, some purchased
through a consolidator, and some bought the ticket on Priceline. The bean
counters in Chicago, Minneapolis, Dallas, and Atlanta crunch the numbers
and voila!
- - -
Al Gilson
Skyhawk N3082U
KSFF Spokane, WA



In article fIspd.85397$V41.82999@attbi_s52, "Jay Honeck"
wrote:

Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Their actions seem to defy logic. In the lodging industry, you're going to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no airline
seems to do it this way, at least on the short hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!

There must be something else in play here -- anyone know?

--
Al Gilson
Spokane, WA USA
1970 VW Convertible
1964 Cessna Skyhawk

In the Airline biz they have Revenue Per Seat Mile.
Some pay First Class, some are coach, a few got a package, some
purchased
through a consolidator, and some bought the ticket on Priceline. The
bean
counters in Chicago, Minneapolis, Dallas, and Atlanta crunch the
numbers
and voila!

Right, but -- correct me if I'm wrong -- aren't the airlines pretty
much universally losing money?

Sounds like their method is flawed, to me.
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

"Jay Honeck" wrote in message
oups.com...
In the Airline biz they have Revenue Per Seat Mile.

Right, but -- correct me if I'm wrong -- aren't the airlines pretty
much universally losing money?

Sounds like their method is flawed, to me.

There's a couple layers of issues here.

First, the strategy of "yield management" is designed to try and maximize
the revenue per seat-mile. In and of itself this makes perfect sense. The
apparent oddities this leads to, like the Saturday-night stay rule, all make
perfect sense towards making each person pay as much as possible for their
seat. This, too, is logical: a vacationer heading to Miami does not value a
seat nearly as much as a businessman headed to an important meeting. This
benefits the vacationer because it allows for the availability of very cheap
seats, and benefits the businessman because it increases the odds he will be
able to get a seat at the last minute that he desperately needs.

Second is the issue of cost structure. No matter how you look at it, running
an airline is a hellish business. It's as capital-intensive as real estate,
only your main assets are always depreciating. Operating costs are
astounding, and not easily adjusted. Pilots, mechanics, FAs, gate leases,
etc. all add up very quickly, and it takes years to adjust the formula. So
newcomers will always have the advantage because they built their business
models around last year's conditions, and not the last decade's. But come
ten years from now those newcomers could be in just as bad shape.

Third, you have the destabilizing role of the low-cost carriers. The
critical thing that these guys have done is to throw out the yield
maximization strategy in favor of a simplified flat pricing model. And
because their built-in costs are much lower, they can undercut the majors'
prices at every step of the game. The only way for the majors to compete is
to reduce costs, and as we already explained, this takes years to
accomplish, years during which incredible sums of money fly out the door.
Their management has been at turns arrogant, ignorant, and incompetent, but
then this can be said of nearly every established company in every industry
at one time or another. Today's darlings will get their turn at the rack
sooner or later.

The problem that we have is that traditionally the low-cost carriers lived
by cherry-picking routes and thus could not be looked to to provide a truly
national network. This is a "must-have" in the same sense that the
Interstate highway system is a fundamental component of our economy and way
of life. Interestingly for us, the future is in some ways headed in our
direction. Regional jets are replacing not only the Saab 340s and Dash 8s,
but MD-80s and DC-9s as well. Many of the new airlines have all-RJ fleets
from the ground up. I suspect the smaller-is-better trend will continue as
far as technology and passenger comfort allows, with on-demand taxi services
using VLJs possibly displacing Part 121 carriers flying into less-dense
areas. Who knows.

-cwk.

Colin W Kingsbury wrote:



Second is the issue of cost structure. No matter how you look at it, running
an airline is a hellish business. It's as capital-intensive as real estate,
only your main assets are always depreciating. Operating costs are
astounding, and not easily adjusted. Pilots, mechanics, FAs, gate leases,
etc. all add up very quickly, and it takes years to adjust the formula. So
newcomers will always have the advantage because they built their business
models around last year's conditions, and not the last decade's. But come
ten years from now those newcomers could be in just as bad shape.

Look at Southwest. They are doing it right. All the people really want
is a seat at the cheapest possible rate. We don't need your fancy clubs
and we certainly don't care about boarding the plane 5 minutes before
everybody else. Just get to my destination when you say you will and be
friendly about it.

Interestingly for us, the future is in some ways headed in our
direction. Regional jets are replacing not only the Saab 340s and Dash 8s,
but MD-80s and DC-9s as well. Many of the new airlines have all-RJ fleets
from the ground up.


That's because an airline pilot just isn't worth $175K per year.
Period. Get a jumpseat ride in an RJ and you'll see a 7 year can fly
one. When the computer voice says 10 feet pull the power and the nose
up and you land. There's nothing to do anymore. Which is good, that's
what makes it safe.

"Newps" wrote in message
...

Look at Southwest. They are doing it right.


I agree, but the problem is that Southwest cannot serve the whole country
and sustain its business model. They exist by operating direct service on a
very narrow range of routes. This is why you do not see SWA flying in and
out of BOS, LGA, or any number of other extremely high-volume airports.

All the people really want
is a seat at the cheapest possible rate. We don't need your fancy clubs
and we certainly don't care about boarding the plane 5 minutes before
everybody else.

Well, I used to fly upwards of 100,000 miles a year, rarely going two weeks
without at least one trip. When you do that you get to spend a lot of time
waiting for missed connections and weather delays, and the clubs really do
help. It's one thing to put up with the cattle call a few times a year but
every week? You'd go mad.

Likewise, the early boarding offers one key benefit: guaranteed overhead
luggage bin space. This meant (a) I could save time by carrying all my
luggage and (b) still be comfortable by not having to put a bag under the
seat. Like I said, when you do it constantly, it really adds up.

With times being tough the past few years, companies were free to force
their traveling employees to eat a lot of s--t and fly only the cheapest
available fares. As conditions improve this will change. Good employees will
demand better accomodations or they will quit. This is why I think Airtran
has been very smart to offer Business Class seating at reasonable prices. I
used to run a team of consultants and was always willing to spend a little
more to make the trip easier on them. As for the client, I would explain
that they were paying $1800 a day for the consultant's time, so they ought
to be willing to spend a few hundred more to make sure that nice fellow
showed up refreshed and ready to work, not chewed up and spit out.

IMHO we need to weed the 6 majors (UA, US, AA, DL, NW, CO) down to three or
four, probably by allowing some of the mergers that would have been
unthinkable previously. UA, US, and DL are all sick men and I expect them to
look nothing like they do today within a few years. I do not expect US to
survive at all and do not understand how UA has managed to avoid going back
into bankruptcy.

-cwk.