Budget talks: This is getting nasty

I doubt it. If the prices are too high, they won't sell the tickets. And, since their inventory expires every day, they can't afford to do that.

Airlines frustrate me as much as anyone. I get it. But, they have invested a ton of money in pricing models. The goal is to sell nearly every seat, at the highest price they can sell each, individual seat.

The prices move as seats are sold, and as you get closer to the travel date. Computer programs manage it, and there is an analyst assigned to every single flight, who is responsible for maximizing the revenue.

It's actually quite fascinating.

 

AZ's answer would seem to indicate that the outcome has long been decided, and the rest is just for show.

Now, maybe I've misunderstood his comments, but I don't think the outcome was predetermined.

 

The "greedy" airlines might be able to harvest that revenue in the (very) short run, but that harvesting depends on them sticking together. Take this to the bank: The sticking together approach is not going to last.

 

That's also interesting to watch. With this fee, I think they'll stick together.

But, yeah it's a big factor in general. There are two less major airlines than when I worked in the business. We (Continental) were fairly aggressive about trying to raise prices and would often go first. Then we'd sit back and watch to see who matched. If everyone didn't match, the price increase would fall apart.

I'm trying to remember who it was now -- maybe Northwest -- but one airline consistently held out and was the target of a lot of anger.

For a long time, Southwest's vastly superior hedging program allowed them to be invulnerable to fuel costs. And American, in particular, had no hedges and would get killed every time fuel costs rose.

 

You could ring the Guggenheim with hundreds of monitors looping last night's speeches, call it "Daddy Needs His Ativan," and it would be as empty and disturbing as any installation ever done by Matthew Barney.

 

Just hang on, brother, it'll be OK.

 

Imagine how much an airline ticket would cost if the airlines had to bear the entire cost of commercial air traffic control.

 

No doubt. Security & air traffic control are huge expenses that the airlines, for the most part, do not have to bear.

 

I know this is an off-topic tangent a little bit, but nothing drives me crazier than the idea that corporations that charge high prices for their product are "greedy." You guys are talking about it in regards to the airline industry. I saw it recently in regards to Netflix, something along the lines of, "Netflix can't justify price increase." Look, I get monopoly and antitrust laws, particularly when it comes to utilities. But in a competitive situation, businesses should be able to charge whatever people are willing to pay. I don't understand why people don't get that, whether it's baseball tickets or airline tickets or movie rentals.

 

Dick,

I never called companies that charge high prices "greedy." All I said was that companies can and do increase prices to raise revenue, regardless of the competitive environment of their particular industry.

 

Netflix remains in a very good spot, pricing-wise. It remains a fantastic business model, and a license to print money. The customer in a personal position to fully exploit, say, a two-disc-at-a-time subscription can get a great deal for their money on a monthly basis. Good, all around.

 

I know. I was more using that line of posts as a springboard to address a general pet peeve of mine, which is that there are plenty of people out there that think companies somehow owe us low prices. One of the most traumatic memories of my childhood is of my dad making a scene and storming out of a department store when he saw a shirt for sale for $20.