Monday, August 04, 2008
This USA article discusses the sharp rise in airfare this year. The law of unintended consequences rears its ugly head with the fact that if airfares continue to rise, only the rich will be able to afford them. With less passengers flying, the airlines will not be able to cover their costs, despite the increased fare. With less revenue...less passengers paying higher fares do not necessarily translate into more revenue...the airlines will lose even more money. Read how the traditionally higher paying fare customers, the business travelers, are adapting to the higher fares by cutting back on their travel. By the way, how is it that Southwest, now the largest domestic carrier in the United States, able to weather this temporary higher fuel costs storm and remain profitable? Is it better management? Better business model? Are the nickel and dime fees now the vogue for the legacy airlines driving more passengers to Southwest instead of raising revenue for themselves? Remember Southwest has determinately abstained from adding fees to its fares. Instead they have used their "fees don't fly with us" policy as their new marketing slogan with great success. From the Southwest website, " We despise fees as much as the other airlines seem to love them. So we'll just keep taking care of you, rather than charging fees for the stuff that should come with your fare in the first place. We believe in not asking you to pull out your wallet every few minutes."