How can Southwest sell tickets for this price??

"Johnny Jack Johnston" wrote in message
ups.com...
Hi all

I live Ft. Collins, CO which is just north of Denver. Although the
small airport to the sout of us does have passenger service it is
limited. That is to say the only Allegiant flies to and from The Ft.
Collins/Loveland airport and they only fly to Las Vegas. Needless to
say I always fly out of DIA. Well, as I have still have several days
during my holiday break from work I thought I might give Allegiant a
chance. That was until I starting doing some research on airfares.
Below is what I found doing a search for 01/06/06-01/09/06.

Allegiant - FNL-LAS: $188.40
Frontier - DEN-LAS: $335.00
Southwest - DEN-LAS: $88.60

I can't figure out how Southwest can offer fares that low. Anyone out
there know can they can make money with such low fares?

They just started serving Denver today, January 3, 2006. With some start-up
fares.

Johnny

James Robinson said:
"Even today, when Delta pilots agree to a slightly lower pay rate"

Slightly lower? The cuts have totaled about 40% haven't they?

The highest paid Boeing 777 captain on Delta got $216 per hour with a
guarantee of 65 hours per month and this was surely before the latest
give-back.

The highest paid Southwest captain made $190 per hour with a guarantee
of 78 hours a month.

A third-year Delta 737NG copilot made $100 per hour with a guarantee
of 65 hours a month, again probably before the latest reduction.

A third-year Southwest 737 (any thype) copilot makes $94 per hour with
a guarantee of 78 hours per month.

While I don't think USAir has any third-year 737 copilots, they would
make $62 per hour with a guarantee of 72 hours per month.

http://www.airlinepilotcentral.com/b...omparisons.htm

wrote in message
oups.com...
James Robinson wrote:
. For one thing, the aircraft have higher
utilization, than domestic aircraft, given that they fly at night.

I've been told the opposite, that the aircraft get lower
utilization since they
tend to only fly twice a day and sit at one airport or another for
hours
at a time. They do rack up the miles though.

Planes flying between eastern USA and Europe are in the air around
14-15 hours a day. I don't think any plane in domestic USA service can
match this. Chicago / Texas Hawaii might be an exception.

Robert J Carpenter wrote:
Planes flying between eastern USA and Europe are in the air around
14-15 hours a day. I don't think any plane in domestic USA service can
match this. Chicago / Texas Hawaii might be an exception.

This is a simplistic comparison.

What really counts is how much revenus an aircraft generates per day and
how much it costs to operate that aircraft on that same day.

The standard wall street lingo such as passenger revenu miles, available
seat miles are great PR tools for airlines but mean squat in terms of
their profitability and efficiency. It only measures the airline's size
in a certain way and prevents meaningful comparison between different
airlines with different networks.

The cost per seat mile start to give some meaningful information but
even that is vague unless average stage length is also provided.

If the airline broke this number down into ground costs as well as
in-flight costs, you could then start to make neaningful comparison
between legacy and low cost carriers.

If an airline has fare higher ground costs (reservations, airport staff,
airport fees, aircraft leasing, aircraft maintenance), then this would
really show.

And an airline who is "behind" because if its ground costs being higher
than competitors wouldn't get much credibility in the market by
announcing it is cutting meal service, pillows, blankets on board its
flights when it would be clear that the custbacks are needed on the ground.

But as it stands, because statistics given by airlines are meaningless,
the legacies are getting away with silly cutbacks that don't necessarily
fix their problems.

And consider the cost per mile. Of course, the cost per mile is higher
for shorter flights because the ground fees represent a higher
proportion of total costs. But that doesn't mean that the airline is
less efficient. Its ground costs per passenger may be lower than that of
the legacy carrier which can hide its inefficiency behind longer flights
where the inefficient ground costs are diluted and don't appear as bad.


The success of the low cost carriers is partly due to them using real
metrics to measure performance and not try to hide behind fancy numbers
that mean squat to measure efficiency/profitability. Yeah, Southwest
does publish the wall street useless statistics. But they know very well
if a flight/route is profitable or not and they won't hesitate to pull
the plug on it if it doesn't genetate money, and they only go into
markets that fit their aircraft.

More importantly, because low cost carriers are on a mission to make
money, they aren't out wasting money with extra capacity and extra
frequencies just to kill competitors. They know that their formula of
most efficient operation and lower ticket prices will kill compettors as
the same time as making the LCC profitable.

Legacies decided to combat LCCs by purposefully losing money on a route.
But this made them less efficient and less competitive in the long run.

wrote in message
oups.com...

Hmmm. First flight, 06:00. 20 minute turn arounds, nominal 2.5
hours
flights, that's 2.2 hours per flight. Last flight say 22:00.
That's
about 15
hours per day. Start on the east coast and work ones way west and
they might squeek and extra 3 hours out of the day. Then there's
red
eyes. 3 four hour legs alone would get you 12 hours.

Your theory is great. There used to be a place where one could find
average daily utilization by airline and aircraft type. WN was way up
there in terms of a domestic airline ... at close to 12 hours per day.
Ten hours was more common for other lines.

Twenty-minute turnarounds and 2.5 hours per flight ignores taxi time.
Taxi time is hardly ever much less than 8-10 minutes, and is closer to
15 minutes at some airports WN uses ... and we know they try to avoid
"inefficient" airports. But they serve FLL which has about the
greatest non-weather-related delays in the USA. PHL also has lots of
delays. Add 20 minutes per flight getting from gate to runway and
back to gate at the destination.

Look at http://www.flightview.com/default.asp and you'll find that WN
and others often arrive ten or 20 minutes early. This is because they
have factored long taxi and gate-hold times into their schedules.

Last time I departed FLL on WN I got there very early. "My" aircraft
was already at the gate two hours before departure. I never
understood that.

" wrote:

Robert J Carpenter wrote:

wrote:

James Robinson wrote:

For one thing, the aircraft have higher
utilization, than domestic aircraft, given that they fly at night.

I've been told the opposite, that the aircraft get lower
utilization since they tend to only fly twice a day and sit at one
airport or another for hours at a time. They do rack up the miles
though.

Planes flying between eastern USA and Europe are in the air around
14-15 hours a day. I don't think any plane in domestic USA service
can match this. Chicago / Texas Hawaii might be an exception.

Hmmm. First flight, 06:00. 20 minute turn arounds, nominal 2.5
hours flights, that's 2.2 hours per flight. Last flight say 22:00.
That's about 15 hours per day. Start on the east coast and work ones
way west and they might squeek and extra 3 hours out of the day. Then
there's red eyes. 3 four hour legs alone would get you 12 hours.

That is too high. Here is a link to a web page with some actual numbers
from 2003:

http://tinyurl.com/dkjzt

As you can see, the typical airliner flies about 9 to 11 hours a day in
domestic service. JetBlue was the highest at 13.5 hours, and Midwest
the lowest at 8.5 hours.

In transoceanic service, airliners fly about 11 hours a day, with US
Airways achieving 16 hours a day. Overall, aircraft in these services
get about an hour a day greater use than domestic airliners.

"James Robinson" wrote in message
. 97.142...

Here is a link to a web page with some actual [aircraft utilization]
numbers
from 2003:

http://tinyurl.com/dkjzt

Aircraft utilization is meaningless if they are flying with few
passengers because of an inconvenient schedule.

"Robert J Carpenter" wrote:

"James Robinson" wrote in message

Here is a link to a web page with some actual [aircraft utilization]
numbers
from 2003:

http://tinyurl.com/dkjzt

Aircraft utilization is meaningless if they are flying with few
passengers because of an inconvenient schedule.

We were talking about international vs domestic. Along with utilization,
load factors on international flights are also higher.

In article ,
Richard Steiner wrote:
BTW -- most of WN's current financial advantage is due to fuel hedging
as much as it is to the luxury they possess of having a much simpler
set of operational requirements. They got lucky on the fuel market;
otherwise, they'd be posting losses every quarter just like the others.

While they did get lucky with the fuel hedging, isn't there still value
in hedging fuel even if fuel prices don't go up?

I.e. if you're selling tickets six months in advance, and you buy fuel
futures six months in advance, you can set ticket prices based on the
fuel price fixed by the futures, eliminating risk of the fuel price going
up and making the cheap tickets you sold early on unprofitable. If fuel
prices go down, too bad, but at least your previously sold tickets were
sold at prices that make sense to you based on the price you are actually
paying for the fuel.

--
------------------------------------------------------------------------
Timothy J. Lee
Unsolicited bulk or commercial email is not welcome.
No warranty of any kind is provided with this message.

nobody wrote:

The standard wall street lingo such as passenger revenu miles,
available seat miles are great PR tools for airlines but mean squat
in terms of their profitability and efficiency. It only measures the
airline's size in a certain way and prevents meaningful comparison
between different airlines with different networks.

The statistics certainly are valid, but of course do not tell the full
story on their own. They cannot be simply swept under the rug.

An airline that generates 10,000 seat-miles per employee is going to have a
much easier time making money than an airline that only generates 2,000.
Yes, profitablility is the end measure, but all of the other stats tell you
why one airline is performing better than another, and tell management what
they need to do to correct poor performance. That is why airlines, or any
company, regularly benchmark their operation against their competitors.