The result of consumerism

[thirdcup]

This discussion reminds me of a European airline that did short shuttle runs. They wanted to increase capacity by removing the seats and having their passengers stand for the duration of the flight. It would be the same as those amusement park roller coasters that required standing up for the ride. I don't know if they were successful or not.

I just wish someone would hurry up and give us a transporter beam already.

 

[BlueLaser]

People want cheap flights and don't care about frills. There's nothing wrong with this.

That doesn't mean we should allow the government to deregulate the industry to save us money and create more dangerous situations.

It's interesting you say that they don't care, and yet constant complaints stream in about level of service and on-time performance. People seem to understand you get what you pay for in virtually every industry except air travel.

 

[onthebottom]

It's interesting you say that they don't care, and yet constant complaints stream in about level of service and on-time performance. People seem to understand you get what you pay for in virtually every industry except air travel.

I think people have come to the realization that they get shit regardless of who they fly so they go low bid.....

 

[BlueLaser]

Consumerism usually means excessive materialism and waste in consumers behaviour.

Seeking the best price/quality combination an attribute of consumers that capitalism depends on. In airline prices, the quality of the flight experience isn't really apparent to most, so people choose the lowest price.

If it isn't apparent, why are review websites bombarded with complaints about the quality of flights? For that matter, read the comments on any CBC article about WestJet, and you find people talking about how they prefer WestJet over Air Canada for the service. I think people do recognize the difference, but just don't think to consider it when buying a ticket.

 

[BlueLaser]

I think people have come to the realization that they get shit regardless of who they fly so they go low bid.....

Well, if you can buy a ticket for $99 and have to pay $100 in fees, are you really better off than paying $179 for full-service?

 

[whitewaterguy]

Flying to London a few times a year, I pop
On the noise cancelling headphones for 8 hrs, shit my eyes and tune
Out til it's over. I don't give a shit about service level. Cheapest flight, and don't want to be disturbed by those fake fuck
Chicks in uniforms who
Can barely break a smile. There's simply nothing glitzy glamorous nor enjoyable about a tin can zipping thru the air. I feel bad for ALL you pathetic saps that have to earn a living associated with air travel. Nasty business

 

[onthebottom]

Well, if you can buy a ticket for $99 and have to pay $100 in fees, are you really better off than paying $179 for full-service?

I think most people can do the math....

 

[BlueLaser]

I think most people can do the math....

Except you usually don't realize the fees until after you've shown up. Fly on the majors, and even the lower-cost ones give you basic service. Fly on the cheapest of the cheap and you lose that luxury. I remember reading when RyanAir starting deciding that purses were a carry on. So a lady that booked on RyanAir to save $100 and showed up with a purse, a carry on and a checked back suddenly found herself paying $50 to check her bag and $50 to check her carry-on because her purse was her free one. For the same price, she could've had a free snack, a free drink and not been bombarded by salesman every 5 minutes trying to sell her something else. Hidden fees are the name of the game with these low-cost clowns, and everyone knows that. Yet, they still book with them when they price is $50 cheaper, or even just $20 cheaper, only to be raped by fees. It tells the big boys how they have to do business if they want to survive.

 

[onthebottom]

Except you usually don't realize the fees until after you've shown up. Fly on the majors, and even the lower-cost ones give you basic service. Fly on the cheapest of the cheap and you lose that luxury. I remember reading when RyanAir starting deciding that purses were a carry on. So a lady that booked on RyanAir to save $100 and showed up with a purse, a carry on and a checked back suddenly found herself paying $50 to check her bag and $50 to check her carry-on because her purse was her free one. For the same price, she could've had a free snack, a free drink and not been bombarded by salesman every 5 minutes trying to sell her something else. Hidden fees are the name of the game with these low-cost clowns, and everyone knows that. Yet, they still book with them when they price is $50 cheaper, or even just $20 cheaper, only to be raped by fees. It tells the big boys how they have to do business if they want to survive.

There are plenty of anecdotes but at the end of the day people are reasonably good at making decisions in their own interest. Airlines get you from one place to another - nothing else. It's a commodity service that should have commodity pricing. Airline pricing is so non-transparent that you can only feel you're getting screwed at every turn - be that fees or sitting next to someone who paid half as much for the same thing. It's like gas stations charging you more based on how empty your tank is - inherently shady.

The two best airlines in the US, Continental and Delta have been through big mergers, Delta bought Northwest (shitty old planes and flight attendants) and Continental was bought by United (which is a HORRIBLE airline).

Airlines are in the same category as banks, telcos and cable companies - despised for shitty customer services, very few if any options, and required - I wonder if those things are related.

 

[BlueLaser]

Blue Laser,

I hear you. I face very much the same issues in my industry where "low price gets the job"

But with respect to airlines, the problem is a lack of transparency and a total lack of customer service or ethics on the part of airlines. My impression is that it's all about fucking over the customer.

For example - prices are all over the map ON THE SAME CARRIER. I'm in a seat that cost a grand (Say) and the guy right beside me is paying $500. It makes no sense.

Second, there are so many classes on a flight, none of it makes any sense to me. EVER. The only thing I (and probably everyone else) understands is "first class" and "economy class" yet the prices don't reflect this simple logic.

Third, heaven help you if you want to change your flight. Example. Air Canada. I had booked a flight to Las Vegas for a work thing and I had to cancel (for a different work thing). I paid top dollar for that AC flight to Vegas. Almost 2 grand. 6 months later, I wanted to book a vacation to Italy. The flights to Florence were about $1,100.00. Now, in my world, you'd think that if I dropped 2 k on a flight to Vegas that had to be cancelled that I would have 2 grand of "credit" towards any other flight. But no. They give you this song and dance BULLSHIT about why it can't be done and they FUCK you out of your money. It's all about class this, and airport that, and timing and god only understands what. In the end, my 2 grand of money spent at Air Canada bought me about $700.00 towards the flight to Florence. All I understood was that Air Canada fucked me out of a lot of money.

I mean WHAT THE FUCK IS THAT? If I go to Walmart and buy something for $100.00 and then have to return it, Walmart gives me my $100.00 back. That's good customer service and I understand it. Only in the airlines as far as I know do they NOT credit you in dollars, and in fact, they steel your money.

And you (Air Canada) expect my loyalty?

Seriously?

Now you add in the over all experience and treatment that we all get on the ground side from AC. Everything from long lines, to BS fees, to lost luggage 50% of the time, to AC employees who are pissed off and don't give a fuck about customer service and treat you like shit, to waiting an hour at the luggage carosel. And God help you if you ever need to phone Air Canada. Expect at least an hour on hold, maybe more.

You add all of this absolute BS up and you think that it should inspire loyalty to Air Canada on my part?

While I agree with you that flight crews should be experienced and that experience comes with a price. But one would think that having a safe flight would be mandatory.

An airline like AC should really work on its customer service to inspire me to pay their higher prices. Instead, it's all about fucking me over for my money.

I apologize, I had missed your post. It wasn't my intention to ignore it.

The classes are actually pretty straightforward. There are seating classes and ticket classes. This is borrowed from the train model. For example, I was on a train in Eastern Europe on a 3rd class ticket. The people sitting next to me had a 2nd class ticket. Same seating class, neither of us were in the first class lounge. However, their ticket had additional perks. Let's look at Air Canada as an example:

Tango: Cheapest fare. Aeroplan miles are earned at 25% rate. If you want to change your flight, you pay a fee plus the difference. No standby status allowed. $150 fee to change flight on the same day. No advanced seat selection for free. Non-refundable, non-upgradeable.
Tango Plus: Earn 100% Aeroplan miles. If you want to change your flight, you pay a fee plus the difference. No standby permitted. $50 to change flight on the same day. Upgradeable, non-refundable, free seat selection.
Latitude: Earn 100% Aeroplan miles. No change fee, standby permitted, refundable. Free sports equipment check-in, free seat selection.

Tango, Tango Plus and Latitude sit in Coach or Economy, or whatever you want to call it.

Executive: Most expensive fare. Sit in Executive First Class. Earn 150% Aeroplan miles. No change fee, refundable, standby permitted. Free access to the Maple Leaf Lounge. Board at your convenience. Free sports equipment check-in plus up to 3 checked bags. Free seat selection.

As for seats on the same aircraft right beside each other at a different price, there are several possible reasons.

1) They booked somewhere else. Maybe you booked Air Canada and they booked British Airways. Code Sharing agreements mean British Airways can charge whatever they want, but Air Canada gets the full revenue of the seat. So even if he technically paid less, Air Canada got the full value for the seat.
2) You booked with a travel agent that took a cut.
3) You booked full rate a week before the flight left, they booked 6 months ago during a seat sale. (It's like you both walked into Walmart to buy something, but that had a rain check from a sale months earlier and paid 50% off. Walmart didn't scam you, you just missed the sale)
4) They're operating on an upgraded fare.
5) They're coming from a connected flight or are connecting on a flight, or book a bundled package where the cost of airfare has been discounted.
6) A combination of the above.

It's not exactly unethical or unfair. Every sale works this same way. Get a bundle? Cheaper. Shop around? Cheaper. Use a shopping service? Pay their overhead.

Changing flights isn't like returning an item. You buy a footstool from Walmart and return it, they can resell the footstool. You buy a ticket on an airplane and then cancel, they may not resell that seat. Hence why cancellation and change fees exist. It's no different than many things in life. I take guitar lessons. If I cancel, I pay a fee. In my case, I pay 100% of my fee. Goods and services are treated differently. Now, you book early enough and cancel early enough, yes, you usually get 100% back in credit, or a straight up refund. Why are you only entitled to take some of your credit on a flight to Florence? I don't know about that individual case, and perhaps Air Canada's treatment is indefensible. But I only have your side of the story and not enough details to even try to explain it. I know I have had people complain to me about situations like this and when I looked into it, the situation didn't even exist. I'm not saying you're lying, i'm just saying it wouldn't be the first time someone made up a story to insult the airlines that I am aware of. And as I said, it's possible the airline's position was indefensible. I've certainly seen that happen too, where there was a policy that made no sense, or sometimes even a policy misapplied by customer service staff (still the fault of the company, they are the agents, don't think I'm absolving a company of that). It happens, I won't deny it. The other possibility is that you had a non-refundable fare. Many airlines, including Air Canada if I'm not mistaken, allow credits on non-refundable flights with a 6-month to 1-year expiry. It's a perk and at that point, restrictions will be as per the credit policy you're offered at the time. You can choose to decline those conditions if you want, but the airline can also chose to honour the policy that was agreed to at time of booking and not issue any refund at all.

You don't know any store that only honours refunds in story credit? Really? You've never gone into a store for a refund and been given credit? I certainly have. I mean, I don't return things often, but I do recall it happening to me before.

 

[BlueLaser]

There are plenty of anecdotes but at the end of the day people are reasonably good at making decisions in their own interest. Airlines get you from one place to another - nothing else. It's a commodity service that should have commodity pricing. Airline pricing is so non-transparent that you can only feel you're getting screwed at every turn - be that fees or sitting next to someone who paid half as much for the same thing. It's like gas stations charging you more based on how empty your tank is - inherently shady.

The two best airlines in the US, Continental and Delta have been through big mergers, Delta bought Northwest (shitty old planes and flight attendants) and Continental was bought by United (which is a HORRIBLE airline).

Airlines are in the same category as banks, telcos and cable companies - despised for shitty customer services, very few if any options, and required - I wonder if those things are related.

And therein lies the problem. Airlines do much more than take you from point A to point B, and if people would treat them the same way they treat other services, they wouldn't have the grounds to complain. And I get that people make their own decisions for their own reasons. I'm simply pointing out the result of those decisions. I'm not dictating how or what anyone should buy, I am saying here are the consequences of only valuing price-point and perhaps you should think twice before you make that your #1 priority at booking time.

The fees are pretty transparent on my airline, and its structure is virtually identical to our full-service counterparts. Air Canada's fee structure, for example, is essentially identical. Our fares at the time of booking are posted on our website. Anyone that books through us at the same time as you will pay the same price. The fee structure is well laid out and well defined (one carry-on per person, plus one laptop or personal item like a purse or briefcase, one checked back free, additional checked bags $25, complimentary non-alcoholic beverages and a snack on all flights less than 4.5 hours, a meal and a snack on all flights 4.5 hours or longer). Do we have seat sales? Yes. But if you're on the same flight and one of you booked via a sale and the other didn't, how is that us not being transparent? Now if one of you books via a travel agent or some other website, all bets are off. The travel agent may not actually pay for the ticket that instant, they might wait until they have 20 people that want the same flight then call up and ask for a volume discount. Volume discounts are pretty common. That's not us being opaque, that's a travel agent being smart. Same issue with websites like Expedia (although I will say that every single time I have checked, the prices on our website have been cheaper than expedia's prices for "flight only", bundles may vary but again, it's not uncommon to save if you bundle).

I once had a customer complain to me about this very thing, they paid more than the guy next to them, and they were travelling further! So I looked into it: one guy was going Toronto to Amsterdam with a stop in Frankfurt, one was going Detroit to Frankfurt with a stop in Toronto. The Toronto to Amsterdam was cheaper. Significantly cheaper. So I explained that our airline doesn't fly Detroit to Toronto or Frankfurt to Amsterdam even though both booked with us. The flight Detroit to Toronto, with one of our code-sharing partners, was more expensive than the flight from Frankfurt to Amsterdam, with a different code-sharing partner. So he looked it up, and the flight from Detroit to Toronto was cheaper at that time for a flight next week. But this wasn't next week, and neither was booking right now. That's not us being opaque, that's fluctuations in market price.

We offer a service, not a good. We didn't buy a table for $60 and are selling at with a markup at $70. The price of gas changes, labour situations change, landing fees change, flight loads change, aircraft availability changes, consumer demands change... Our prices can't be fixed day to day. We need to account for variations. Book early when a flight is empty and you probably get a cheaper price (higher supply). Book last minute and usually pay more (fewer seats available lowers supply). If revenues are down and loads are light due to a competitor with a lower price, we may offer a sale for a week, or even a weekend, to try and put butts in seats. What about that isn't transparent? What about that is unethical?

PS. Both examples of buyouts you mentioned were actually mergers. And your gas example is inherently flawed. If you buy gas today and I buy gas tomorrow, should I rant and rave and accuse the station of not being transparent if I pay more? Just because you fly the same day doesn't mean you bought the same day. And like your cars, our aircraft need fuel, the price of which changes on a daily basis.

 

[onthebottom]

And therein lies the problem. Airlines do much more than take you from point A to point B, and if people would treat them the same way they treat other services, they wouldn't have the grounds to complain. And I get that people make their own decisions for their own reasons. I'm simply pointing out the result of those decisions. I'm not dictating how or what anyone should buy, I am saying here are the consequences of only valuing price-point and perhaps you should think twice before you make that your #1 priority at booking time.

The fees are pretty transparent on my airline, and its structure is virtually identical to our full-service counterparts. Air Canada's fee structure, for example, is essentially identical. Our fares at the time of booking are posted on our website. Anyone that books through us at the same time as you will pay the same price. The fee structure is well laid out and well defined (one carry-on per person, plus one laptop or personal item like a purse or briefcase, one checked back free, additional checked bags $25, complimentary non-alcoholic beverages and a snack on all flights less than 4.5 hours, a meal and a snack on all flights 4.5 hours or longer). Do we have seat sales? Yes. But if you're on the same flight and one of you booked via a sale and the other didn't, how is that us not being transparent? Now if one of you books via a travel agent or some other website, all bets are off. The travel agent may not actually pay for the ticket that instant, they might wait until they have 20 people that want the same flight then call up and ask for a volume discount. Volume discounts are pretty common. That's not us being opaque, that's a travel agent being smart. Same issue with websites like Expedia (although I will say that every single time I have checked, the prices on our website have been cheaper than expedia's prices for "flight only", bundles may vary but again, it's not uncommon to save if you bundle).

I once had a customer complain to me about this very thing, they paid more than the guy next to them, and they were travelling further! So I looked into it: one guy was going Toronto to Amsterdam with a stop in Frankfurt, one was going Detroit to Frankfurt with a stop in Toronto. The Toronto to Amsterdam was cheaper. Significantly cheaper. So I explained that our airline doesn't fly Detroit to Toronto or Frankfurt to Amsterdam even though both booked with us. The flight Detroit to Toronto, with one of our code-sharing partners, was more expensive than the flight from Frankfurt to Amsterdam, with a different code-sharing partner. So he looked it up, and the flight from Detroit to Toronto was cheaper at that time for a flight next week. But this wasn't next week, and neither was booking right now. That's not us being opaque, that's fluctuations in market price.

We offer a service, not a good. We didn't buy a table for $60 and are selling at with a markup at $70. The price of gas changes, labour situations change, landing fees change, flight loads change, aircraft availability changes, consumer demands change... Our prices can't be fixed day to day. We need to account for variations. Book early when a flight is empty and you probably get a cheaper price (higher supply). Book last minute and usually pay more (fewer seats available lowers supply). If revenues are down and loads are light due to a competitor with a lower price, we may offer a sale for a week, or even a weekend, to try and put butts in seats. What about that isn't transparent? What about that is unethical?

PS. Both examples of buyouts you mentioned were actually mergers. And your gas example is inherently flawed. If you buy gas today and I buy gas tomorrow, should I rant and rave and accuse the station of not being transparent if I pay more? Just because you fly the same day doesn't mean you bought the same day. And like your cars, our aircraft need fuel, the price of which changes on a daily basis.

I think you are under-estimating at the ability of airlines to fix their costs over bands of time, they purchase forward contracts for fuel, they have very large fixed cost base, union contracts - all of these are easy costs to predict. The goal is to use the non-transparent pricing model to follow the demand curve as close as they can. I fly for business, I really don't care what the fare is - airlines gouge the living crap out of my company, and I get the same shitty service as the guy next to me.

What service, are you talking about the safety briefing, the gate agent that is too busy to help, the small bag of peanuts and a plastic cup of soda. There is no service on these flights, they are airborne busses, nothing more.

 

[BlueLaser]

I think you are under-estimating at the ability of airlines to fix their costs over bands of time, they purchase forward contracts for fuel, they have very large fixed cost base, union contracts - all of these are easy costs to predict. The goal is to use the non-transparent pricing model to follow the demand curve as close as they can. I fly for business, I really don't care what the fare is - airlines gouge the living crap out of my company, and I get the same shitty service as the guy next to me.

What service, are you talking about the safety briefing, the gate agent that is too busy to help, the small bag of peanuts and a plastic cup of soda. There is no service on these flights, they are airborne busses, nothing more.

You just explained the ways we try to fix costs. But we can't do anything to fix supply and demand. Not to mention the fact that, as a general rule, in a flight of 140 people, 120 of them paid roughly the same price. If we're talking about a literal 50% price difference, then that's abnormal. The fluctuations are pretty minor. 10-20% usually to cover the variability of supply and demand. What do I mean by that? Let's say our Rapid Air service Toronto-Montreal runs 1 flight every 3 hours. Our competition runs 1 flight every 4. our more frequent flights mean people can find more favourable departure times so we manage to keep a 70% load. Our competition only keeps a 55% load, but due to changes in the market, like the one I'm about to describe, in a different region, they attempt to make up costs by trying to increase their load factor. So they offer a seat sale. We notice their loads are increasing to 75%. Some of that at least is being diverted away from us. We could run a seat seal right now as well, but we would either have to offer their rate, which may be lower than we can make a profit off if they're a low-cost airline, or we could we wait. We opt to wait. 3 months later, to try and recoup the losses we had during their seat sale, we run our own. Maybe we don't cut costs as much, but it's cheaper than our usual fare. And that combined with our better selection of departure times recovers the revenue we lost to them initially. Or we could do what they did, and instead offer a sale on Vancouver - Montreal flights which have a traditionally lower load factor to bring those numbers up and recoup the costs there. But maybe that forces Air Canada to run a sale on Toronto - Orlando flights to make up for the revenue they lost to us on Vancouver - Montreal, so we lose load on that route to them. So we offer a discounted flight to London, and the ripple floats around.

We can't control that. It's a variable cost that we can't predict. We don't always know when a competitor is going to offer a sale, or start a new route, or close an old route. And when those fuel contracts expire, prices may need to go up to cover the cost of the next one, and if half the people on a flight have already bought tickets, the rest may find the cost has gone up.

All business have fluctuations in price. We could avoid that be eliminating advance sales. You show up the day you want to fly, stand in line and hope you get a ticket. Then we could charge the same price for everyone. But I don't think anyone wants that. If we could charge a reasonable rate and people would recognize that our rate may be higher but it's offset by our services, we maybe wouldn't need to respond so quickly and so "drastically" to market fluctuations. We could weather the storm of a competitors seat sale. But we can't. Rapid Air already operates at a loss, for example. But the trade off is building loyalty from frequent fliers who get used to our level service and don't want the downgrade.

As for what "services"... You're obviously fired up. Gate agents too busy to help? Are you seriously telling me that every single time you have flown, which I assume is often for business, gate agents are too busy to answer your questions? I've never heard of that happening so regularly. I've flown occasionally in civilian attire and never once had a problem getting a gate agent to attend to my needs.

Aside from that though, pillows and blankets are free on the full-service airlines. Not a big factor for the business traveler on a 2-hour flight to LGA, but for family of 4 flying to Paris, it's nice to have. Peanuts, sure. Or cookies. Or pretzels, or various other snacks. On longer flights, free meals. As for your small plastic cup of soda... You're a business traveler that implies you fly frequently, and you have never once noticed that they call it "complimentary"? You've never once seen a person ask if they could have the whole can, or a second cup (or third or forth), or a water, a coffee and a soda? If the little cup isn't enough for you, ask for more! If you're on a full-service airline, that stuff is free, and we carry A LOT of soda, coffee and tea.

Other services you get on full-service airlines: skycheck, where your carry-on can sort of be "checked" but it's checked at the end and given back to you as soon as you deplane. Extra checked bags (or as the trend is growing, at least 1 checked bag free). Additional free carry-ons. You also get a better on-time performance from a full-service airline because of priority gating that they enjoy at airports they fly to. That difference is significant. I could go on, but I think you get my point. You obviously have an idea in your head about airlines, your statement about half priced (or double price depending on which side of the debate your on) tickets and gate agents unwilling to help and the comments about "gouging" show me you have long decided how you think, so who I am to tell you otherwise.

I think you need to revisit the idea of "gouging" though. The average profit right now is about 2.4% per flight. It's an average of $5.42 per passenger. So when our competition undercuts us by $16 per seat, you can see why we can't afford to match it for long. Losing $9 per seat on a 140 seat or larger aircraft 7 or 8 flights a day really starts to cut into the profitability of the route. If you look at the cost, based on the value of the dollar, per flight, you'll see that despite labour and fuel prices going up, the average cost for a flight is going down, and has been for some time.

From last year:

http://www.forbes.com/sites/tedreed...-they-want-to-be-make-21-cents-per-passenger/

Despite incredible growth, airlines have not come close to returning the cost of capital, with profit margins of less than 1% on average over that period. In 2012 they made profits of only $4 for every passenger carried.

From February of this year:

http://www.economist.com/blogs/economist-explains/2014/02/economist-explains-5

The latest statistics from Airlines for America, the leading airline trade group, show the industry is not quite where it wants to be. In a year-end report, the ten airlines that have reported full-year results for 2012 made a combined profit of $152 million on revenue of $143.4 billion. That works out to a profit margin around 0.1%. For each passenger they carried, U.S. airlines made a scant 21 cents.

And then more recently from June:

http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-than-6/

"It's always very cyclical," he says. "If you look at the last 20 years the average net profit margin for airlines in terms of revenue is zero."

And if you prefer pretty pictures, there's this:

So when we're making a profit margin of anywhere from 0.1%-2.5% profit, tell me how we're "gouging". Can you name a single industry that operates on less than 3% profit margins year after year? If airlines made 25% profit, I'd agree there was gouging going on. But when a quarter comes and goes and a 0.1% profit is recorded, how can you turn around and say anyone other than airlines are being gouged?

 

[onthebottom]

You just explained the ways we try to fix costs. But we can't do anything to fix supply and demand. Not to mention the fact that, as a general rule, in a flight of 140 people, 120 of them paid roughly the same price. If we're talking about a literal 50% price difference, then that's abnormal. The fluctuations are pretty minor. 10-20% usually to cover the variability of supply and demand. What do I mean by that? Let's say our Rapid Air service Toronto-Montreal runs 1 flight every 3 hours. Our competition runs 1 flight every 4. our more frequent flights mean people can find more favourable departure times so we manage to keep a 70% load. Our competition only keeps a 55% load, but due to changes in the market, like the one I'm about to describe, in a different region, they attempt to make up costs by trying to increase their load factor. So they offer a seat sale. We notice their loads are increasing to 75%. Some of that at least is being diverted away from us. We could run a seat seal right now as well, but we would either have to offer their rate, which may be lower than we can make a profit off if they're a low-cost airline, or we could we wait. We opt to wait. 3 months later, to try and recoup the losses we had during their seat sale, we run our own. Maybe we don't cut costs as much, but it's cheaper than our usual fare. And that combined with our better selection of departure times recovers the revenue we lost to them initially. Or we could do what they did, and instead offer a sale on Vancouver - Montreal flights which have a traditionally lower load factor to bring those numbers up and recoup the costs there. But maybe that forces Air Canada to run a sale on Toronto - Orlando flights to make up for the revenue they lost to us on Vancouver - Montreal, so we lose load on that route to them. So we offer a discounted flight to London, and the ripple floats around.

We can't control that. It's a variable cost that we can't predict. We don't always know when a competitor is going to offer a sale, or start a new route, or close an old route. And when those fuel contracts expire, prices may need to go up to cover the cost of the next one, and if half the people on a flight have already bought tickets, the rest may find the cost has gone up.

All business have fluctuations in price. We could avoid that be eliminating advance sales. You show up the day you want to fly, stand in line and hope you get a ticket. Then we could charge the same price for everyone. But I don't think anyone wants that. If we could charge a reasonable rate and people would recognize that our rate may be higher but it's offset by our services, we maybe wouldn't need to respond so quickly and so "drastically" to market fluctuations. We could weather the storm of a competitors seat sale. But we can't. Rapid Air already operates at a loss, for example. But the trade off is building loyalty from frequent fliers who get used to our level service and don't want the downgrade.

As for what "services"... You're obviously fired up. Gate agents too busy to help? Are you seriously telling me that every single time you have flown, which I assume is often for business, gate agents are too busy to answer your questions? I've never heard of that happening so regularly. I've flown occasionally in civilian attire and never once had a problem getting a gate agent to attend to my needs.

Aside from that though, pillows and blankets are free on the full-service airlines. Not a big factor for the business traveler on a 2-hour flight to LGA, but for family of 4 flying to Paris, it's nice to have. Peanuts, sure. Or cookies. Or pretzels, or various other snacks. On longer flights, free meals. As for your small plastic cup of soda... You're a business traveler that implies you fly frequently, and you have never once noticed that they call it "complimentary"? You've never once seen a person ask if they could have the whole can, or a second cup (or third or forth), or a water, a coffee and a soda? If the little cup isn't enough for you, ask for more! If you're on a full-service airline, that stuff is free, and we carry A LOT of soda, coffee and tea.

Other services you get on full-service airlines: skycheck, where your carry-on can sort of be "checked" but it's checked at the end and given back to you as soon as you deplane. Extra checked bags (or as the trend is growing, at least 1 checked bag free). Additional free carry-ons. You also get a better on-time performance from a full-service airline because of priority gating that they enjoy at airports they fly to. That difference is significant. I could go on, but I think you get my point. You obviously have an idea in your head about airlines, your statement about half priced (or double price depending on which side of the debate your on) tickets and gate agents unwilling to help and the comments about "gouging" show me you have long decided how you think, so who I am to tell you otherwise.

I think you need to revisit the idea of "gouging" though. The average profit right now is about 2.4% per flight. It's an average of $5.42 per passenger. So when our competition undercuts us by $16 per seat, you can see why we can't afford to match it for long. Losing $9 per seat on a 140 seat or larger aircraft 7 or 8 flights a day really starts to cut into the profitability of the route. If you look at the cost, based on the value of the dollar, per flight, you'll see that despite labour and fuel prices going up, the average cost for a flight is going down, and has been for some time.

From last year:

http://www.forbes.com/sites/tedreed...-they-want-to-be-make-21-cents-per-passenger/



From February of this year:

http://www.economist.com/blogs/economist-explains/2014/02/economist-explains-5



And then more recently from June:

http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-than-6/



And if you prefer pretty pictures, there's this:

So when we're making a profit margin of anywhere from 0.1%-2.5% profit, tell me how we're "gouging". Can you name a single industry that operates on less than 3% profit margins year after year? If airlines made 25% profit, I'd agree there was gouging going on. But when a quarter comes and goes and a 0.1% profit is recorded, how can you turn around and say anyone other than airlines are being gouged?

I'm sorry but pillows and a can of soda isn't "service".

You don't have to tell me it's a shitty business, I can't imagine who invests in airlines.

You can't convince me it isn't a commodity.

 

[BlueLaser]

I'm sorry but pillows and a can of soda isn't "service".

You don't have to tell me it's a shitty business, I can't imagine who invests in airlines.

You can't convince me it isn't a commodity.

There's more, but like I said, you've obviously decided. And considering you've gone from "a small cup" to "a can" and still haven't realized it's "as much soda as you want", I'd say you're obviously bitter but obviously don't even know what you're talking about.

I'm still waiting to hear you defend your claim that somehow airlines are gouging anyone when they have a 0.1-2.5% profit margin.

This isn't Rogers we're talking about, making $1.2 billion profit in a quarter and fighting tooth and nail to avoid cutting fees or offering better plans/services/rates. Remember the system access fee that was ordered removed and was replaced with a $5 hike in rates and a $3.46/month "government regulatory recovery fee? That's gouging. Air Canada had a net gain of $133 million last quarter, but has a $2 billion deficit to pay down ($10Bn in assets, 12Bn in liabilities). Total shareholder equity of revenue plus equity minus expenses minus liabilities comes to $1.822 billion after removing non-controlling interests.

What about WestJet? They're better right? They don't have to deal with the Air Canada mismanagement I hear people say. Sure, how about WestJet? They're Revenue per Available Seat Mile was 15.02 cents. Not $15.02, 15.02 cents, or $0.1502 per available seat mile. They're cost per available seat mile was 13.72 cents. That gave WestJet a profit in Q2 2014 of 1.3 cents per seat.

At a profit of 1.3 cents on the sale of the ticket to your company, I'd really love for you to explain how these airlines are gouging anyone.

 

[wilbur]

A lot of misconceptions about airlines gouging the hell out of the poor travelling public. Frankly, if anyone thinks that airlines are making money hand over fist, why don't you go an invest in airline stock? Airlines have very low profit margins because of cut-throat competition and high operating costs, including unpredictable fuel costs. Sure, they buy futures contracts, but bad timing means that an airline is stuck with a high price when the price of fuel suddenly goes down. In the US, most have gone bankrupt, or gone into bankruptcy protection and reorganization and undertaken mergers. So go ahead and invest your money in airlines, and see the spectacular profits. BTW, Air Canada has never in living memory paid dividends.

And those who think that US airlines offer a better service than Air Canada have obviously never flown on a US airline, or on Air Canada for that matter. Service on US majors is horrendous: clapped out airplanes, shitty interiors and bitchy flight attendants.

Canadian airlines have a cost disadvantage compared to US carriers. Major Canadian airports are still owned by Transport Canada, and the latter exact high fees to the local airport authorities. That measn high vendor concession fees so your hamburger is outrageously expensive because the money grab from Transport Canada is passed on ultimately to you the passenger. Toronto Pearson operates on a cost-plus basis, and passes on their overbloated operating costs to the airlines; it has the second highest landing fees in the world after Narita, Japan.

US airports tend to be municipal owned, and rather than gouge the users, consider that low fees actually encourage airlines to serve the airport, and this enables economic development. Jet fuel has a Federal excise tax on it, that does not exist in the US.

The various governments consider that air travel is a luxury, and if you travel, you must be able to pay all that as you're considered a fat-cat. That includes high parking fees, high taxi rates, etc etc.

Of course, the Canadian passenger considers that he has a God-given right to fly for next to nothing, thus continuously ranting about his misfortune at having to pay for something, while the true cost of air travel has gone down over the last decades. And the Canadian government has fostered that idea by permitting unfettered competition between airlines to the point where both major ones went bust just over 10 years ago trying to kill each other.

 

[onthebottom]

There's more, but like I said, you've obviously decided. And considering you've gone from "a small cup" to "a can" and still haven't realized it's "as much soda as you want", I'd say you're obviously bitter but obviously don't even know what you're talking about.

Do you know how pathetic that sounds while I'm sitting in a $1,000 seat.... I've been Platinum on Delta, Continental and Qantas for over 20 years.... I think I know what I'm talking about.

I'm still waiting to hear you defend your claim that somehow airlines are gouging anyone when they have a 0.1-2.5% profit margin.

It's a shitty business, not being able to make money even when you gouge business travelers doesn't mean you're not gouging them, just that you have a terrible business.

This isn't Rogers we're talking about, making $1.2 billion profit in a quarter and fighting tooth and nail to avoid cutting fees or offering better plans/services/rates. Remember the system access fee that was ordered removed and was replaced with a $5 hike in rates and a $3.46/month "government regulatory recovery fee? That's gouging. Air Canada had a net gain of $133 million last quarter, but has a $2 billion deficit to pay down ($10Bn in assets, 12Bn in liabilities). Total shareholder equity of revenue plus equity minus expenses minus liabilities comes to $1.822 billion after removing non-controlling interests.

Yes, as I said, shitty business.

What about WestJet? They're better right? They don't have to deal with the Air Canada mismanagement I hear people say. Sure, how about WestJet? They're Revenue per Available Seat Mile was 15.02 cents. Not $15.02, 15.02 cents, or $0.1502 per available seat mile. They're cost per available seat mile was 13.72 cents. That gave WestJet a profit in Q2 2014 of 1.3 cents per seat.

At a profit of 1.3 cents on the sale of the ticket to your company, I'd really love for you to explain how these airlines are gouging anyone.

 

[Anynym]

Airline pricing isn't about what *you* are willing to pay for the services you want.

It's about 300 people all voting together on what they are willing to pay for the services they collectively want.

 

[MRBJX]

This is hillarious.....

another version of American Crapitalism

http://www.tickld.com/x/capitalism-explained-this-is-so-accurate-it-hurts