Many key players in the airline industry are on the brink on bankruptcy... again. US Airways need to secure $800 million in salary and benefits cuts by the end of the month to avoid liquidation. It looks like the US national carrier will face bankruptcy for the second time in two years as discussions with the pilots' union have not been smooth. If, the airline manages to overcome this threat of bankruptcy (and that's a pretty big if), the airline chairman says that his plans is to restructure US Airways as a low cost carrier (think Jetblue and SouthWest)
Being in Singapore for so many years has ingrained into me the notion that a national carrier should be a source of pride. Malaysia's national carrier MAS appears decently prestigious despite poor revenues. A national carrier is like a national flower or anthem -- something symbolic of the country, a physical representation of their ideals. It saddens me to hear of the difficulties the American carrier is having. It's not the only one within the US airline industry with troubles either. Delta Airlines, the nation's third largest carriers is cutting 10% or 7000 of its jobs over the next 18 months and will no longer be serving one of its hubs - Dallas - to avoid bankruptcy; Italian flagship carrier Alatalia is near bankruptcy. The union negotiations are hauntingly reminiscent of the ones in Singapore between SIA and their pilots. Cathay Pacific also has a history of pilots on strike. It would appear that pilots are pretty high maintenance but it's probably because I'm not looking at it from their point of view.
In general, the industry seems to be hard hit by escalating oil prices and declining fares due to the presence of budget carriers. Price wars among the budget carriers in Singapore also makes me wonder if these companies are actually making money. The recent $1 airfare to Thailand by Tiger Airways has prompted AirAsia to start a $0.49 promotion fare to the same destination. Hmmm actually now that you think about it, the tickets are one-way only, which means that the return ticket would be full fare (?) If so, it actually translates to about 50% discount which is nice but not something to make me bubbling with excitement.
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2 comments:
50% off is better than nothing.
The way they do it in Europe is to sell fares really cheap if you book way in advance, if you book closer to the deadline, the fares go up to almost full fare. That way they can discriminate between customers: between the cheapskates with high elasticity of demand (eg poor starving students) and those with lower elasticity of demand (working adults who can't usually confirm their availability for holiday until nearer the day of departure).
The logic is good if they sell some tickets at almost full fare, and if they get many passengers. Because most flight I think are usually half empty anyway, so any additional passengers they can get in (eg the early-bookers) is pure profit, cos once a flight is sceduled you have to fly anyway, even if the plane is mostly empty.
They also have special arrangements with the bookings: cheaper if you buu round-trip fare, and they might kill you on the return price. or they have inconvenient timings and so on.
Well, 50% off tickets that was ~S$40 don't seem to be worth the time you have to spend trying and retrying to book the ticket online. I guess that shows that I'm not really price sensitive... or that I just don't care about Thailand.
Supposedly, companies have these online deals/promotions to gauge the market demand for the particular product from the response the promotions receive. Those sly marketing people!
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