Air travel demystified

Discussion in 'General Discussion | Travel' started by guinnessxyz, Jul 10, 2013.  |  Print Topic

  1. http://www.bbc.com/capital/story/20130710-air-travel-demystified

    Brewer: In my opinion, the current pricing systems are consumer unfriendly, tremendously outdated and will change. It’s a broken system. The vast majority of legacy carriers price based on market power (how can I optimize each flight) as opposed to consumer-based pricing (how can I entice you to fly). Leisure customers book further in advance and business customers book closer in so the price for a seat [on the same flight] can vary from $150 to $3,000.
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    Montie Brewer is the ex president of Air Canada whom I met several times. He was a smart operator but was not a restructuring expert which is what AC needed most back then
     
  2. mattsteg
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    mattsteg Gold Member

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    Interesting quote to hear from an airline exec, but perhaps his current association with Allegiant is more relevant than his former AC connection in this case. Enticement is great, and I'd love more enticing fares, but when airlines in a good year slide by on single-digit profit margins there's not really much room for prices to get too much more enticing...

    And a board member at Allegiant talking about consumer-friendly pricing practices? That's a bit of a laugh.
     
  3. The way they are making profits is unsustainable in my opinion. The margins seem to be coming mostly from excess baggage charges and change fees.
     
  4. mattsteg
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    mattsteg Gold Member

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    The industry is always on the brink. Big costs, and competition has kept fares down historically. Load factors are high right now, so there's not a ton that "enticement" can do to generate revenues without bringing costs up as well. The growth of mergers, acquisitions, joint ventures and other competition-reducing measures may mean fares creep up to provide that margin, along with the rise of fees and added-value services.

    The airline industry as a whole has never been a big profit maker.
     

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