Two cheers for all those airline mergers


When I think about the benefits of airline mergers, I’m reminded of Karen Griffin’s story.

Griffin, a library clerk from Blue Springs, Mo., booked a non-refundable ticket on US Airways from Kansas City to Wilmington, N.C., a few months ago. “The day before I left, my mother had a stroke and was hospitalized,” she says.

She had to extend her stay, for which US Airways charged her an extra $200. Griffin politely asked if the carrier, which recently merged with American Airlines, would waive the fee. It refused.

Thank goodness for the merger. I gave the “new” American a little nudge, and it refunded the fee on compassionate grounds.

That’s one of the perks of an airline marriage. Afterward, the new company typically embarks on a goodwill tour, making nice with customers like Griffin.

And those aren’t the only benefits. These days, merged airlines — including American, Delta, Southwest and United — are obscenely profitable. Even passengers can find a silver lining in these corporate mash-ups. So can I. In fact, I’m ready for more.

A year ago in this very column, I argued against the combination of American and US Airways. But the government allowed it anyway after a silly settlement that forced the new airline to divest itself of a few slots and gates. Last month, American announced a record quarterly profit of $1.5 billion. At the time, American CEO Doug Parker said he found it “hard to believe” that less than eight months ago, American was in bankruptcy. Me too.

American is hardly alone. United Airlines (which merged with Continental) recorded a quarterly net income of $919 million, Southwest Airlines (AirTran) $485 million, and Delta (Northwest) $801 million. How could a shareholder not love, love, love these mergers?

Let’s ignore, for a moment, the critics who claim these corporate marriages have decimated airline service, leaving us with companies that put profits over people.

The biggest benefit to consumers, once you look past the cuts in service, the new fees and the higher fares, is that you get a strong airline industry.

“What the consumer has gained over this time is a much more stable industry — airlines that aren’t teetering on the brink of bankruptcy,” says Andrew Henry, a vice president at Uniglobe Travel International.

Ah, the argument that what’s good for the airlines is good for you. How often was that repeated during congressional hearings? Until everyone accepted it as fact.

Mergers are adored by frequent business travelers, who see an airline’s route structure grow and with it the opportunity to redeem their frequent-flier miles. Kent Zimmermann is a legal analyst in Chicago who has close to 1 million miles on United.

“I’d say the United-Continental merger has been largely positive for me,” he says. “That has resulted in benefits I didn’t previously enjoy on United.” Those include wireless Internet access on most flights, modernized airline lounges at O’Hare and other airports, and better connections in Houston and Newark.

Oh, and who am I kidding? I shouldn’t have fought so hard to stop United from combining with Continental and or been so skeptical of American and US Airways. Because now, readers like Griffin enjoy a little corporate welfare from the “new” American, until, of course it invents a new junk fee that will make it billions.

I can see other “benefits,” too. For example, Northwest Airlines and US Airways, which were never overachievers in the customer service department, disappear. This may not seem like a big deal, but for travelers, it’s one or two fewer airlines to avoid. If there’s enough consolidation, it could give rise to new start-ups.

Or maybe not.

Consolidating your way to profitability seems to work so well, I’m surprised more airlines aren’t trying it. Alaska Airlines, JetBlue Airways, Frontier Airlines and, uh, Spirit Airlines, what are you waiting for?

Of course, I’m being facetious. Airline mergers are great for shareholders and business travelers, but they’re negligible for steerage class. With regulators asleep at the wheel and Congress in the airline lobby’s pocket, it is not a question of if, but when, we’ll be down to one or two underperforming, expensive and highly profitable airlines.

I’m going to need to hire an assistant to handle the complaints.

Were the airline mergers of the last decade good for passengers?

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Have your say on merger mania

Buy local. Patronize your hometown airline even when it’s less convenient or affordable. By rewarding local businesses, you’re sending a message that bigger isn’t necessarily better.

Complain. If you’re unhappy with the results of the last few mergers, let your representative know. Bonus points if your congressional representative is on one of the House or Senate committees that oversee aviation.

Next time, get involved. When the next merger is announced, let the airline, your representative and regulators know that fewer airlines are not in your best interests.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at Got a question or comment? You can post it on the new forum.

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  • sirwired

    Airlines have always put “profits over people”, they often just haven’t been very good at the whole “profit” part of that.

  • Christopher Elliott

    Well, they are now.

  • Alan Gore

    That “goodwill tour” is always a short-lived marketing exercise. After a merger, there is less competition than before, so everyone is free to get a little nastier.

    If you want “nice guy” as a basic policy, stay with Southwest. Other airlines refuse to deal with it because it’s too nice to people. Wouldn’t want to give them ideas.

  • PsyGuy

    Personally I would like one national airline. Look at Singapore, they are a small island country and they have one airline and it consistently ranks amongst the top airlines in the world (and their airport is pretty amazing too). What we need is one airline and then regulated airfares, with a similar scheme as Southwest. You want to fly from LAX to DFW it costs $250, 30 days in advance, $400 2 weeks in advance and $650 anything less than that (all for economy class). Doesnt matter if your staying over a saturday night flying a positioning flight at midnight or what not, the fare is based on the distance, etc.

  • rick

    Southwest has been consistently profitable without having to screw its passengers. As a bonus, Southwest employees appear to genuinely like their customers. If there is a choice, I will almost always fly Southwest.

  • AndTheHorseYouRodeUpOn

    They get away with changes (most never for the better or after years of consumer/employee complaints) under the guise of “we’re hearing your concerns” or “we’re giving customers what they want” rants. Amazing, they never ASK the passengers if they want the changes made (no meal service, ancillary fees, etc., bag fees, seating issues, etc.).

  • Stephen0118

    Good point, but some of the national airlines of other countries have to merge with others to avoid going into bankruptcy (Alitalia and Cyprus Airways come to mind).
    Alitalia had to let Etihad take a 49 percent stake to avoid bankruptcy and Cyprus is in talks with Ryanair (and others) to take it over.

    I do agree we need more regulation, but what happens when prices (like fuel) keep going up? Airlines have to go into bankruptcy again.

  • bodega3

    Actually they heard the lowest denominator of travelers, the budget ones who shop online, who don’t want to pay for what they claim they don’t use and look at where we are now. Are fares less? Heck no and now we get less in what we pay for an airline ticket.

  • bodega3

    Is that a bad thing?

  • Christopher Elliott

    I don’t know. Is it?

  • bodega3

    I asked you.

  • Christopher Elliott

    It is a good thing to be profitable. But there’s a line between turning a profit and being predatory, and too often, the airline industry crosses it. You of all people should know that. We may disagree about where the line is, but we are probably in agreement that they cross it too often.

  • bodega3

    We want them to be profitable. We are starting to see something positive from it. I am sure you have read about meals coming back in business/first on some flights domestically. Right now there is some competition back between UA and AA. It should be interesting to see how this plays out. As for being predatory, what industry isn’t? Ever read about Gould and Vanderbilt? Now that was one nasty game!

  • LFH0

    First banks. Now we will see air carriers that are “too big to fail.” (Remember, too, the Penn Central mess.)

  • Cybrsk8r

    And a lot of those airlines are either owned, or heavily subsidized by their governments. And you want OUR government, which can’t legislate what brand of toilet paper to use in the congressional rest rooms, to run an airline?

  • MarkKelling

    Domestic business/first meals never went away, at least on all of the airlines I fly (they actually got better for a while on UA after the last merger).

    But the actual quality of the food has been slipping greatly in the past few months. And I got exactly the same 1st class meal flying from DEN – HNL that I got from DEN – IAH. You would think the longer flight would have better/different food considering the cost was exponentially higher on the longer flight. Microwave burrito anyone?

  • MarkKelling

    OF course the merger have not been good for the passengers.

    You have less competitions prices are not kept low. There is no real differentiation between one airline and the others as far as service on board. Many airports served pre-mergers are no longer major hubs or in many cases are no longer served at all. The larger networks of flights the airlines now have mean that it is very easy for a small event at one hub (weather for example) to completely destroy the schedule across the entire country for days. There is less capacity so if a flight is canceled there is little or no chance of finding an alternate flight within a reasonable time frame. Record high fees are now in place for nearly everything an airline does.

    Some of this probably would have happened anyway as the airlines struggled to find ways to be profitable. But overall passengers have fewer options when flying.

    Maybe the profitability will mean that the flood of fees will slow down for a while since the airlines cannot justify charging excessive fees when they are experiencing a record period of profitability. That is the only good thing that might come from the mergers.

  • MarkKelling

    I always hate when I get something from a company that starts with “In order to serve you better …” because it is never going to do that. It is to serve THEM better.

  • bodega3

    A hot meal is what UA is bringing back to first class on flights longer than 1,000 miles to lure back business travelers. On some flight, a hot meal is already served, it is on the midhaul flights they are going back to it. Thumbs up on it!

  • VoR61

    Don’t mind them making a profit. It’s making a KILLING that I mind. And meals for 1st class is not a positive as it never should have gone away. When you pay what they pay, a meal is the LEAST you can do for them.

    As for me, one of your “lowest denominator of travelers” (i.e., “wretched refuse, tempest-tossed”, etc.), I couldn’t care less what they offer me on a two-hour flight. Just get me there safely okay? If that’s too much to ask, then change the seat pitch to 40 inches everywhere and charge $1000 per seat. Then we regular folk can go back to driving. Otherwise, treat every flyer with the dignity they deserve, whether or not their name is Rockefeller …

  • VoR61

    Agreed. We used to fly Frontier because they had DirecTV available for $5. Perfect reasonable charge for a truly optional service. But now airlines charge us to reserve a seat which costs them what? Conversely if they wanted $1 for a soda I’d decline. On a 2 – 2.5 hour flight, I just want to get there. No frills are needed …

  • VoR61

    My recollection is different. The airlines were struggling to make a profit, and began cutting services that were previously included in all fares. Made sense from a certain point of view. Hard costs for meals, blankets, pillows, fuel/handling for checked bags, etc. No one asked (nor should they).

    Once done, they reasoned that they could re-introduce those at a charge. It was a small leap from there to start charging for everything but the seat itself. And Ryanair and Spirit took that to a whole new level.

    A common sense approach has yet to be achieved (IMO). Once you start down the road of “fees”, you run the risk of alienating your customer base, which is where we are today. Just look at the stress caused by the $40 seat assignments just so parents can sit with their baby/toddler.

  • MarkKelling

    I had to go read up on this. I have always gotten the hot meal choice when flying domestic 1st on UA since the merger. But that is because most of my flights are between DEN – IAH which is specifically called out on their web site that it will always have a hot meal during meal hours even though it is less than 1000 miles.

    I wonder if the new hot meals will be the same as what we get on the DEN – IAH flights? They have a nice green salad with soup or a hot “entree” with the same soup to choose from now. I usually get the salad because the “entree” looks like something that came out of a microwave at a convenience store and tastes about like that too, hence my burrito comment earlier.

    But, good for UA for actually adding something back instead of taking more away.

  • bodega3

    I care. I want to check my luggage for no additional charge just like we use to do. I want something to drink and eat for no cost, just like we use to. I want comfortablee seats, more leg room, closer to what use to be offered in coach. I also want a cleaner plane, like we use to have, not the filthy, dirty ones I seem to fly on domestically. My last flight on Southwest was also disgustingly dirty, so it isn’t just the major carriers. I also want people to bathe, put on clean clothes and look decent when on a flight, just like they use to. Don’t need men in coats and ties and women in heels and gloves, but decent clothes, ones that cover their bodies.

  • bodega3

    What I read yesterday, is that AA has removed meals. So UA is jumping in and using that, which is fine with me. During the Persian Gulf War, I got upgraded to business class on AA, over all the FA’s, pilots and agents who were leaving corporate headquarters to get home. Back at that time, AA served a cold lunch in a box. I thought that was disgusting back then and it has gone down hill since. It will be interesting to see how this goes.

  • MarkKelling

    The fee frenzy that has developed at Frontier has made me exceptionally sad because I feel it is ruining a formerly perfectly good airline. Starting next month, you won’t even get a cup of water on their flights unless you pay an extra $1.99. And you won’t be able to watch TV at any price – they are removing all of the screens on all of their planes.

  • VoR61

    Me too. Sad to see the TVs going, but that’s a business decision for which I don’t fault them. But water? Smacks of Ryanair charging to use the bathroom …

  • VoR61

    You want more seat pitch, which means we who don’t have to subsidize you – no thanks. You can fly JetBlue or pay more for business/first class. But please don’t force the rest of us to pay for your preference. It has been said often in this forum that flyers won’t pay $3 more for ANY “extras”. I’m not in that camp, but I AM in the camp of not paying $100 or more for what you want and I don’t. So for me seat assignments, blankets, pillows, bathrooms, etc. would be fine as included in every flight.

    And anything can be taken to extremes. Cleaner plane? If it’s filthy, yes. But if I’m only in it for 2 hours, it can be a little dirty. As for flyers’ odors and clothing, fine, but that’s an airline enforcement/policy issue not related to how much we pay.

    Edited: according to what I read, a 40 pound bag costs about $25 if fuel, so there ya are!

  • PsyGuy

    Well the group of monkeys in the government can’t do any worse than the group of monkeys running the airline.

  • bodega3

    You are not only paying $25 more in airfare for that ticket, you also have to pay that fee if you check a bag. Give me the days it was all included! I remember $19 fares with a checked bag and food on board for no additional cost. Sigh.

  • bodega3

    Never have flown them and won’t. They probably will be out of business…again, in the not too distance future.

  • bodega3

    But most disagree with you, yet the airlines cater to the budget traveler. Flying domestically is like flying on a garage truck these days….dirty and smelly.

  • Carver Clark Farrow

    I see it a little differently. Many people don’t differentiate amongst airlines. When that happens, there is little incentive to pick the higher priced airline, thus the race to the bottom.

    If I offered you two identical apples, one for $0.50 and one for $0.51, which one do you choose? Of course, the $0.50, every time. The difference is all of a penny.

    Thus, the guy selling the $0,51 apple has great incentive to figure out how to reduce his apple to $0.49. As long as you perceive the apples to be the same, you will switch to the $0.49 apples even if the more expensive apple is a better deal.

  • VoR61

    I’ve not had the experience you claim to have. Sorry.

    And “most”? Site your sources please …

  • Carver Clark Farrow

    I would opine that most coach travelers want the lowest price, period.

  • VoR61

    So then, you’re a fan of “free” state park access too. That way I (as a resident) pay for your use of the park. Within reason (i.e., high cost), passengers should pay for what they use. If you check an extra bag, YOU should pay the $25. Otherwise, the rest of us are …

  • VoR61

    Perhaps “most” would, Carver, but I’d need data to believe that. Personally, I just want prices within reason. I’d pay some extra for leg room but that’s about it. If you have to save money, keep your food and beverages unless I’m on a 4+ hour flight, charge for extra bags, etc. But reserving seats? In the words of Chris Carter: “C’mon man”

  • Carver Clark Farrow

    I’m with you. I’d happily pay extra for a coach seat that was wider and had more leg room.

    I’m too lazy to look it up, but I recall someone here posting that as little as a dollar was sufficient to drive purchasing behavior. That would be consistent with economic theory that states that when an item is considered a commodity, i.e. undifferentiated regardless of the source, customers purchase solely on price.

    From Wiki…

    The exact definition of the term commodity is specifically used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market

    That’s what has happened with the lowest tier coach seats. Curiously, it has absolutely not happened with premium class seats.

  • VoR61

    Yes, I recall that post, but question the validity. Surely flyers consider schedules. Non-stop, 1 stop, 2 stops? Departure (at origin) and Arrival (at destination)? Length of stopover?

    That said, if I have a wide range of times that work for me, $20 can make me book a certain flight. After all, how much do I care about a 3PM arrival vs. 6PM?

  • Carver Clark Farrow

    A point of clarification. The differentiation is being compared across carriers, not flight parameters

    So, a Delta flight going from Point A to Point B and a United flight with the same parameters, e.g. time, number of stops, etc. will be considered the same flight.

    The consumer (most, not all) will not consider seat width, seat pitch, friendliness, presence (or lack) of food, cleanliness, etc. in determining whether to book Delta or United.

    Thus, if Delta is $299 and United is $300, most people will book Delta for no other reason that to save the $1.00. Thus United gets rid of food, so it can charge $298, and it ping pongs back on forth until they are both at $200 with 28″ seat pitches.

    The airlines would much rather NOT be a commodity so they could add say $5.00 in food and increase the fare by $8.00.

    Thus, the irony of the entire discussion. It’s actually to the airlines best interest to bring back the amenities and increase the fares.

  • VoR61

    You may be correct, Carver, but I still question that. In my booking experience, airlines are NEVER that close in price or schedule, and I’ve looked a good bit over the past 17 years. But hey, if the moon is in the seventh house and Jupiter aligns with Mars and someone wants to pay $1 less without checking things like seat pitch, so be it.

    My guess? One in a thousand flyers at best …

  • bodega3

    I grow apples, so I don’t buy them :-) But I am not your bottom feeder traveler. I pick what works for me, not price. Example. SFO-HNL vs OAK-HNL. We pick SFO due to times, not price as time is what works best for us. I refuse to get into OAK at 11pm! WeI also pick flights based on type of aircraft. I also sell tickets to people and often, once we look at all the variables, they don’t always pick the flight based on price. It is the online shoppers who do and that is who the airlines has lowered their standards for.

    Back to the apples. Where I live, most buy organically grown produce, which costs more.

  • bodega3

    In 3 decades of selling, you will find many routes having similar times for 2 or more carriers. As for price, they 99% of the time have the same fares in a market. What you see is availability. That is very different.

  • Carver Clark Farrow

    Really? I don’t see how that is possible.

    I just plugged in the data from a flight that I am thinking about taking. SFO-LAX leaving 9/5 returning 9/8.

    Travelocity returns the exact same coach price $218.19 for United, American, US Air, Virgin, Delta, and Alaska. That’s true for every time slot.

  • VoR61

    I disagree about it being different. We typically look 6-9 months out and RARELY see prices AND schedules that are close. One may be, but not both. And since we are not TAs, I can only state what I have seen.

  • VoR61

    “bottom feeder traveler”? Thanks, bodega …

  • Carver Clark Farrow

    I was clarifying earlier. People care about times, number of stops, etc.

    What they don’t care about is which airline. That’s why we have FF programs. It’s one way for airlines to differentiate between themselves, at least in the eyes of the individual passenger.

    On my next trip to LA, 6 carriers have the same price, but I will pick Virgin because I get a complimentary upgrade to a seat with better pitch and on checked bag will be included at no additional cost.

  • Carver Clark Farrow

    Since she can see them and we can’t, I’m not sure how we can dispute her assertion.

  • VoR61

    I wonder if you looked close enough (no insult intended). I just did the same search, narrowing the take off and landing times to a 4 hour window both ways (to get the times as close as possible). United has multiple flights and Delta has one on a regional jet (I’m impressed) for $212. Next closest are American and US Airways at $268 followed by Virgin America and Alaska at $280.

    So … this is what I see all the time. Prices and schedules can be close, but not less than $5 apart and with times that could make a difference.

  • VoR61

    I can and do. She said that availability is “very different”. If that’s all I see, then that’s MY experience. I CANNOT do otherwise. And (no offense intended) if the fares ARE similar but I can’t ever see them (6 – 9 months out should show me most fares), it’s not relevant to my search.

  • bodega3

    The rest of us are paying the higher price without getting our bag checked. Wow, what a great deal this all is :-( The carriers stated that fares would be lower….and I bet they have some swamp land in FL they would like to sell, too.

  • bodega3

    It is relevant to your search because you are making a false statement. I see fare basis’ daily, which is different than pricing. I can pull up SFO to Kansas City and will see the same fare in the market for all or most of the carriers, but what I price will be based on the available class of service on the flights I book. You don’t see fares basis’, you see prices based on what is available for the carrier, city pair and dates you put in. I put in city pairs and dates to see what fare basis is in the market. I then look at availability, either general or by carrier. A fare basis determines the price you pay. I can also request the class of service needed for booking that low fare basis, which I often get, which you can’t, as what you see online is what the carrier wants you to book.

  • bodega3

    Yes, what you see is what is available at that moment and what the carrier wants to show you. Not all flights show up online, but they do in our GDS as it is regulated by the US Gov, where online isn’t. So you see what the OTA or airline wants to put out there for you to book.

  • bodega3

    I buy yearly park passes. But I wouldn’t be happy to buy the pass, then still have to pay to park, pay to hike a trail, pay to use the restroom.

  • VoR61

    In TN for example, state park access is free to all, which means TN residents subsidize non-residents’ access.

  • VoR61

    Thank you for making my point. The statement has been made that flyers (not TAs) will book a similar flight that is $1 cheaper without regard for other factors (e.g., seat pitch). Since I can’t see anything other than what’s in front of me, and I don’t see fares within $5 of one another AND that have similar schedules (take off, landing, # of stops, and layover times), I can’t book the “$1” less fare of which Carver spoke. It does not matter what you can see.

    But to re-check, I searched for a flight that we completed last year. Here’s a snapshot based upon the same relative dates:

    DEN-ATL Sep 27-Oct 4 nonstop
    Frontier $215 (includes Airtran)
    Delta $260, $320
    United $260 (dep 5:15p)

    Granted, we are close to those dates, which will reduce availability, but this is what I have from which to choose. As a further test, I chose other SAT-SAT dates into next year with similar results.

    Edited: please note that I show United as departing at 5:15p, which is much later than the others.

  • VoR61

    I’m not following you. We both (you and I) pay $300 for the same flight, but you pay another $25 to check an additional bag. How am I paying a higher price without the bag check?

  • Carver Clark Farrow

    I’m not sure which four hour window you selected, but suspect that it included late Friday. or early Monday. Both times on that route tend to have wild fluctuations. But besides that, looking at the fares and using the four hour window that I generally travel on that route (knowing to avoid Friday after 12pm and Monday before 12pm).

    Leaving 9/5 in the early morning 6-10am,
    and returning 2-6pm on 9/8

    You can price a fare on Yahoo Travel (travelocity) for $218.19 on


    United 261
    United 635
    Virgin 922
    AA 1232
    Virgin 1930


    American 209
    US Airways 2841
    United 273 (6:10pm)
    United 1581
    United 1184

    If you go directly to the sites the prices will probably be about $5 cheaper across the board which would account for your $212. As stated before, prices are identical.

  • Carver Clark Farrow

    I’ll let Bodega speak for herself, but the argument that has been proffered is that yesterday the $300 included a bag, but today it doesn’t, thus a price increase.

    The argument is a red herring. Yes, of course its a price increase. Prices increase regularly. The question is who should pay the price increase. Should it be spread out amongst all citizens (e.g. taxes), all passengers (raise all fares), or just the passengers who incur the costs.

  • VoR61

    I see the difference in our searches. You only care about ONE takeoff and ONE landing time. For an apples-to-apples comparison, I filtered for take off and landing both ways. Thus, if you want to compare flights for the $1 question, you HAVE to (IMO) narrow the search that way. In other words, using your search you could leave LAX coming back to SFO anytime you want, and that widens the options (for same price) considerably.

    While that may be fine for you, it doesn’t address the issue of flyers booking the “same” flight(s) on an airline that is $1 cheaper.

  • VoR61

    Yes, and that’s my point. She longs for the old days when everyone had to pay for her checked (additional) bag, and I would like her to pay for her own, as I consider that particular charge to be reasonable.

  • VoR61

    And, I want to say one more thing, bodega, with all the back and forth we’ve done and that is that I have read many of your posts here and consider you to be skilled and highly articulate. You have my respect …

  • Carver Clark Farrow

    I don’t understand what you mean when you say filter searches both ways.

    Can you show what you mean and how that is meaningful.

  • VoR61

    I use Kayak. In their search screen they present sliders that you can use to narrow a given search. For the purposes of this discussion (can an ordinary passenger book similar flights on different carriers for $1 less), I plugged in your itinerary and set the sliders for a DEP of 9a-1p (both ways) and an ARR of 11a-3p (both ways). Thus it showed me only the SFO-LAX-SFO flights that:

    Left SFO between 9a and 1p and arrived LAX between 11a and 3p
    Left LAX between 9a and 1p and arrived SFO between 11a and 3p

    This narrows the results sufficiently to compare carriers’ fares for flights leaving AND arriving at similar times for BOTH airports.

    While you may care only when you leave SFO and return there, the $1 comparison needs a narrower search criteria.

  • bodega3

    Thank you.

  • bodega3

    City parks are free to visitors but citizens of that city pay for it. So it all evens out, which is why I think the old way was best. IMHO, it is very selfish of travelers to want to take away what we had, making us pay more, when in reality, they are paying more, too, as fares haven’t dropped but gone up.

  • PsyGuy

    Speaking of apples and oranges. Here in Tokyo, we use the yen, and at a very rough conversion it’s about 100Y to $1. Apples here can go for about 500Y-800Y depending on the apple and the store. For those who are math challenged, thats $5.00-$8.00 for ONE apple. At that point a single yen really does make the difference, and people will cross the street, go down the street around the corner, wait until the end of the day to go buy the fruit market they know literally to save the equivalent of few pennies.

    In the spring/summer you often find markets set up in the hallways of various train stations (usually the bigger ones) and a common item is a kilo or oranges, these are those really small oranges that aren’t very sweet, that you would get in the US for 10-15 for $1, here they sell for 500Y-600Y a kilo, and a lot of the vendors will attempt to outbid each other. You can literally see one vendor across from another vendor mark down their oranges by a single yen or a couple yen and it will shift the consumers to that vendor. Most of them end up selling their oranges at cost or below cost, because the oranges get the attention, but the customer stays and buys something else ina ddition to the oranges.

  • PsyGuy

    I would really like to see an updated study or report done on what constitutes “necessary” services. It wasn’t that long ago when having a bank was optional. You got a pay check, you went to the grocery store, they cashed it for you. A lot of people didn’t have bank accounts and if they did they had “passbook” or savings accounts. That’s not too much different for some countries. Even here in Tokyo, the vast majority of people pay in cash, with stops at an ATM to fill up. Sure we have debit cards and credit cards, but we don’t really use them here, unless your eating out at a high end restaurant. You really can’t live without a bank account now in this time period, everything we do is so focused on auto deposit to get your money and the use of debit cards (alas the ATM card in the States is almost extinct) to spend your money. Remember when ordering something you actually called a real person on a phone (who was in the USA0 and you could order something COD (Cash on Delivery)? You really cant do that now, and if it still exists in some niche, youd be way overpaying by not ordering it from Walmart or Amazon (at least in the USA, in Japan you can order items from Amazon, and prepay for them at a convenience store). The people in the USA without bank accounts essentially pay more (and a significant amount more).

    A recent article I read had stated that more people in the 20 and 30 something, age bracket considered internet access a higher priority than a car. I wonder what else would be considered a “necessity” now???

  • Carver Clark Farrow

    As I surmised above, your slider included leaving Monday morning which as mentioned above, tends to skew results on that particular route. Change your 4 hour window to leaving between 2pm and 6pm, and arriving between 4pm and 8pm and I”ll bet you’ll be surprised at the results. And no, I have not checked.

    On that particular route, there are three times (roughly) which the prices tend to fluctuate wildly, Friday after 12pm, Sunday after 12pm, and Monday before 2pm. Other than that, the prices tend to be fairly stable and consistent among the airlines.

    The range of arrival time on a short hop, non-stop is irrelevant to the discussion. Mathematically, since the transit time (Flight Time plus layovers) is effectively a constant (Flight time is 1 hour, layover is “0”), once you determine the departure range, the arrival time range is also determined.

    Arrival time = Departure Time + Transit Time
    Transit Time = Flight Time = 1 hour
    Arrival Time = Departure Time +1 hour

    Thus, if the departure time is constrained to be between 9am and 1pm, the arrival time is similarly constrained to be between 10am and 2pm. You cannot schedule a non-stop flight to leave SFO at 1pm and arrive at 3pm.

    Now, if the flight is not a non-stop, then mathematically, we have to consider the arrival time as transit time Flight Time and neither remains constant (different routing and layovers). But that’s not the situation with my SFO-LAX-SFO simple hypo.

  • Carver Clark Farrow

    Ahhhh, loss leaders.

    I have not had the privilege to go to Tokyo. One day.

  • Carver Clark Farrow

    I would also point out that leaving at the same time on different days is not necessarily a better or even meaningful comparison. Friday morning and Monday have very different cost structure because different people are flying. Friday morning is an average morning, Monday morning is laden with business travelers. Even when I was a 100k miles per year traveler, I went to LAX on Monday morning with fear and trepidation.

    Friday afternoon is packed because it’s when people, who couldn’t leave work early, begin their travel weekend. Sunday afternoon is similarly packed because they’re coming home. Monday afternoon is unremarkable for travel.

  • VoR61

    Using just your two time slots, I checked SFO to LAX, LAS, and ORD. All are major market cities and the fares match exactly, so we can’t apply these to the argument about “I flew with XXX airlines because they were $3 cheaper). Go to a lesser market and the fares will vary more than a few dollars.

    Over the 17 years that I have flown more frequently the from was not considered a major market city so perhaps that’s the controlling factor in my not seeing flights for the same-or-similar schedule within a few dollars of one another. As previously stated, I’ve never seen them differ that slightly.

    I just find it improbable that “most” flyers will buy “an identical” flight on airline XXX just because that airline was $1 (or $8) less. The odds seem low to even find one …

  • VoR61

    Travelers didn’t take away what we had, airlines did. Many were filing bankruptcy and looking for ways to cut costs and increase revenue, so they took away meals and started charging for everything as “an option”. I recall them saving millions by just eliminating food items.

    Then came the inevitable seat pitch changes and charges for reserved seats, checked bags, etc. I’ve never heard or read of anyone saying they’re paying for your sandwich, your better seat pitch, or your checked bags. A la carte was the brainchild of the airlines. The rest is a myth …

  • Cybrsk8r

    Actually, I do care which airline. US Airways could be flying where I want to go for free, but since I NEVER check their price, I’d never know that. I check Southwest’s site. If they go where I want to go, the search ends right there.

  • Carver Clark Farrow

    That’s exactly the point. 100% as expected.

    Economics tells us that if an item is considered a commodity, the price will be identical to the extent the the goods and services are the same. There will be no price differentiation because if one supplier is higher no one will purchase from that supplier.

    Since the lowest cost coach seats are a commodity, in major markets, such as SFO-LAX, etc with lots of competition and supply, we rapidly approach the economic situation known as perfect competition which what you found leaving SFO. Lots of supply of an undifferentiated product –> identical prices which is exactly what you found.

    Now, having said all of that, you are correct about smaller markets because it’s harder to approach perfect competition. The limited supply permits differentiation between the carriers based on scheduling, routing, etc. That’s the key, differentiation.

    But as to your point about the $1, it’s easily shown. If you have no preference between Delta and United. IF, and remember this is just for illustration, you found the identical flight, same time, routing, departure gates inches from each other, same with arrival gate, etc, Delta is $299, United is $300. Why would you choose United?

  • Carver Clark Farrow


  • VoR61

    “Let me count the ways …”

    #1 – I really don’t care about $1
    #2 – United has a more favorable schedule
    ……..(times are NEVER exactly the same – sorry)
    #3 – I prefer United (maybe I just do)
    #4 – I dislike Delta (some do)
    #5 – I have a mileage number with United

  • Carver Clark Farrow

    You’ve proven the point, which I can’t take credit for since it’s simple economic theory. To show why you would prefer United, you had to change the hypo.

    1 Create a more favorable schedule for United
    2. Show a preference for United
    3. Show a dislike of Delta.
    and add a FF account, to further bolster a preference.

    But the point is that the reason that the flights were all the same price in those major markets is because travelers don’t have a preference and chose the lowest price. Thus, if someone is lower than you, you must lower your price to match when your consumers don’t have a preference.

    Now, you have a preference for United over Delta. The result is that there is some amount of extra money “X” that you would pay to fly United over Delta. If that were normative within the market, then United would charge “X” amount of money extra on a comparable flight.

    The fact that it doesn’t, again, in those markets that you checked, necessitates that there United cannot charge a premium, i.e. the extra amount “X” is zero, i.e. lowest price coach seats are a commodity and travelers so not choose based on airlines amenities such as space, food, etc. (Note, at no point did you articulate those as being reasons )

  • VoR61

    I was answering in the hypothetical, Carver. I, in fact, do not have a preference for United, but some travelers may. And I don’t have FF miles with United – just a mileage number for Delta, so why not use it.

    I’ll describe my approach this way. I sort by price (low to high), but then proceed through the details of the flights offered. My wife and I prefer to depart between 9-10 AM if leaving from home, 11-12 if leaving from one of the multiple airports near us (2 hours away). And we prefer to arrive between 5-6 PM, but no later than 9PM (ideally). For layovers, we really try to schedule a 1.5 hour minimum, with 2 hours being ideal. If a nonstop flight is over 4 hours, we prefer 1 stop to deplane, stretch, and get a bite to eat.

    So you can see that, for us, we would pay slightly more (although it’s sometimes less) to meet our criteria. The difference has to approach $50 per person for us to deviate from the desired schedule. And I have checked out seat pitch and/or class upgrades, but for us a 2 – 2.5 hour flight is normal and therefore paying extra for “amenities” holds no value for us.

    Of course, you’re used to this last one. When flying west to east, we are forced to adjust our departure preferences or else we arrive very late.

    Perhaps this all highlights why I doubt that “most” would select the theoretical $1 less fare. Even a 1 hour difference in the schedule could be worth a few dollars more.

    Finally, Carver, I really appreciate your back and forth with me on this thread. I follow your comments with intrigue and admiration and you always articulate your position with politeness and incredible patience. I envision you as a very successful attorney …