Flight fight: Airlines battle to sell $1,000 tickets
Coast-to-coast routes can generate huge profits, and carriers are rolling out the perks to attract high-paying passengers.
If you live between the two U.S. coasts, you might feel miffed at how the major airlines are treating you. Along with offering fewer flights, some carriers are also cutting back or even ending service to some of the smaller airports in "flyover country" as part of their recession-induced contraction strategies.
But hey, don't take it personally. As said in "The Godfather," it's just business. In fact, recent reports show that two specific air routes -- running between the metro New York area and either Los Angeles or San Francisco -- are major moneymakers for airlines providing service to those cities.
Carriers are competing bitterly with each other for passengers on those lucrative flights, especially in business and first class.
In his "Seat 2B" blog at BizJournals.com, Joe Brancatelli provides some compelling statistics. The route between Los Angeles International Airport and John F. Kennedy International Airport in New York is the busiest in the U.S, he says, carrying about 3.2 million passengers who annually generate about $1.4 billion in sales. A close second is the New York-San Francisco route, with an estimated 2 million passengers yearly.
The Wall Street Journal's Middle Seat blog quotes government data showing that 9% of American Airlines (AAMRQ) passengers on New York-to-Los Angeles flights last year paid more than $1,000 for their tickets -- and that 9% of passengers produced 45% of the $202 million in revenue in that market. United (UAL) charged nearly 14% of its Los Angeles-to-New York passengers more than $1,000 per ticket -- and those customers made up 58% of the carrier's $101 million in revenue for that market.
Any upside to this news for those of us not currently traveling coast to coast? Well, Brancatelli says, "eventually, product and service innovations that debut on the (transcontinental routes) trickle down to routes that serve the flyover skies."
And there's a bit of irony as well, he says. As American, JetBlue and other airlines install larger luxury seats to woo the "transcon" fliers, they're reducing overall passenger capacity on their planes -- which in turn will probably mean higher overall fares.
"I'm already paying about twice as much as I used to," Susan Sonimal, a New Yorker who files to San Francisco on business twice a month, told Brancatelli. "Now I'll be asked to pay a fortune to fly up front or pay more and get less back in coach."
Now one realizes why there is no movement on upgrading passenger rail to high speed rail. It would cut into the airlines' profit.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
A basic income policy can actually ensure a decent standard of living for everyone.
- People left $500,000 in coins at airports last year
- How your driving can affect your credit
- Obamacare projected to cost hundreds of billions less
- November jobs report: Winners and losers
- Student loan debt climbs for 5th year in a row
- Wall Street finally notices Bitcoin
- Part-time workers hurt by on-call system
- 5 myths about late payments and your FICO scores
- Auto loan interest rates hit record low
[BRIEFING.COM] A solid November employment report translated into a solid day of gains for the major averages. While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn't believe there would be a tapering this month or that it doesn't fear a tapering this month.
It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr ... More
More Market News
The Fed may start tapering in just a few months. Here are a few of the likely winners and losers.