Sunday, October 30, 2011

Airline Fees

It was recently reported that airlines, including United Continental and US Airways, have made a smaller profit since the end of the third-quarter. Five of the biggest airlines have been following the "charge more and fly less" strategy ever since the jet-fuel bills peaked to $3.14 billion. Obviously, this method is not working. Profit for US Airways has dropped about 68 percent to $76 million, when just last year profit was at $240 million. the CEO of farecompare.com, Rick Seaney, told Dallas Morning News that there has been 18 attempted faire increases in 2011 thus far, only about half succeeding. When such a large business, such as an airline, and you see that your revenue is decreasing, wouldn't you want to lower the prices in hopes of making more money? Because airfare is so high, people have been flying less, taking away from Delta, US Airways, United Continental, Southwest, and Jet-Blue's income. I personally think that they would have a better chance of surviving this dilemma by lowering their prices so more people will be willing to fly with airlines. Eventually, they would be able to pay for the jet-fuel bills. If the companies are expecting lower demand like the article reads, then why not do something about it? Am I wrong for thinking this?

2 comments:

Megan Riney said...

I definitely agree with this. From my own personal experience, airline fees make an impact on how we fly. Especially, in my case with a family of five, costs add up, and despite gas prices sometimes my family chooses to drive in order to save money on expensive plane tickets. Lowering their prices would increase demand for airline tickets, and probably would eventually cover the debt made by jet-fuel bills. Lowering demand in the state of this economy is not a smart decision on the airlines part.

Anonymous said...

I agree with you as well that the airlines need to lower their price of tickets. Some people that use the airlines to travel short distances every week for work or other reasons would potentially stop using their services because the price's add up. As well as any long time trip big families would most likely choose to drive because the price of gas is still lower. Lowering the price would increase demand and they could get out of their debt.

-Lauren Bookout