Airlines lost money in 2009, how can they be suprised?

[bavaria]

Those LCC's are NOT cheap. I have often posted about how 1 Euro fares are higher in the end than LH 99 Euro fares. They charge for vitually everything - including using a non chip/pin credit card such as most American credit cards. And many of the airports are far away from where they claim to be - the 'Frankfurt' airport they use is actually almost in Holland and over 100km away from where it appears to be.

It is a myth and people who don't do their research in advance may be surprised to find how all the fees add up on those LCCs, including transport to/from the often remote location. Ryanair was even charging a 'wheelchair' fee for guests with mobility issues.

What surprises me is how many people moan about the bag fees on US carriers but claim that the European LCCs are so cheap. Do the research and see how many fees THEY charge.

 

[ecuagoddess]

The thing they need to realize is there is always a way around travel. ..

The thing is, when you're in a disposable income industry you are at the mercy of the consumer.

Not everyone can drive/take a bus/train. I HAVE to fly to get anywhere good. As a result, we take 2-3 airplane trips/yr. I don't necessarily look for the lowest fare around, but for the lowest fare on American/OneWorld alliance, since that's where I hold my miles. Not sure what effect that has on the individual airlines involved, anyone know?

I completely agree with your second point though.

 

[PaulaSB12]

In Europe there are also low cost carriers like RyanAir and they get fares even cheaper then ours so I guess price is important for them as well. I do wish we had a decent rail network here which would put some more competitive pressure on the airlines.

We have stopped almost all business travel because of the cost. We spent some money up front to install some Cisco video conference equipment and have cut our travel to practically nothing. That is another form of competition for the airlines in the business sector. The last straw for us was the baggage fees. The dishonesty of claiming they were to recoup the losses for fuel yet not discontinuing them when the fuel price came back down.

We have already made back our entire investment in the equipment and it has been just about a year.

Ryanair have got a bad habit of adding on to the fares for example a £10 per person booking fee, £5 to check in online. All sorts of nasty little add ons wouldn't touch them with a barge pole myself.

 

[chicagodisneyfan]

The reasons why upstarts do so well is that they don't have loads of pilots with 25 years of seniority. The arrangements that the unions are willing to go to the mat to protect, readily willing to drive their employer out of existence rather than compromise on, are the major source of uncontrollable costs affecting the industry. The way to reduce costs is for the government to let airlines go bankrupt, and then take the union contract and rip them up, forcing the employees to accept market wages and benefits if they want to keep their jobs.

Then how do you explain Southwest Airlines - the most heavily unionized airline? Highest paid workers?

Yet they just announced they made a PROFIT in 2009 - as they have every year for 30 plus years.

 

[taitai]

The airlines are losing money as they are not charging enough to cover their costs. It really is that simple. Fortunately, the market is correcting itself by contracting. There are far fewer flights than in the past. Flights that do go out are full so the airlines are not flying empty space like they used to. They are cutting routes and frequency. This will continue. Eventually, the supply and demand curves will meet at a price to be determined. My guess is that it won't be low.

If the cost of flying is too expensive, then drive, take the train, take Greyhound, don't go, whatever. Travel is not a right.

Finally, to answer the OP's question, I can't imagine a single airline executive was surprised that they lost money.

 

[eliza61]

They won't make a profit if people decide flying is too expensive and choose other options...and right now, many carriers are teetering right on the edge (especially since they recently upped the price of luggage to a ridiculous amount).

For some, the hassle and cost of flying isn't worth it. And people will only pay what they feel is a good value. If they weigh cost vs. perceived value/hassle, cost will win almost every time.

.

It's a fine line. Can you honestly imagine all vacation travelers going back to road trips? I can't. Yes, we will weigh the cost but we are accustom to our "style" of life. Next we simply don't have the infrastructure to support a massive exodus from flying. Our rail system and bus systems are old and very limit. don't think so, try visiting Canada or Paris and comparing.

I'm in NY, no way am I ever driving out to the West Coast.

 

[SaraJayne]

In the rest of the world there isn't this sense of entitlement that people deserve low airfare and deserve low cost vacations. People save up for their vacations, and if they cannot afford it, they don't go, or choose an alternate destination, or only fly every few years or so.

And I do think that this website doesn't represent the greater American psyche. I don't read this type of whinging or sense of entitlement on other travel websites that I visit, including a few Disney ones.

Regardless of what you seem to believe about Americans, this is what most of us do, too.

 

[Sarah_Rose]

Those LCC's are NOT cheap. I have often posted about how 1 Euro fares are higher in the end than LH 99 Euro fares. They charge for vitually everything - including using a non chip/pin credit card such as most American credit cards. And many of the airports are far away from where they claim to be - the 'Frankfurt' airport they use is actually almost in Holland and over 100km away from where it appears to be.

It is a myth and people who don't do their research in advance may be surprised to find how all the fees add up on those LCCs, including transport to/from the often remote location. Ryanair was even charging a 'wheelchair' fee for guests with mobility issues.

What surprises me is how many people moan about the bag fees on US carriers but claim that the European LCCs are so cheap. Do the research and see how many fees THEY charge.

I have to disagree with your statements on the European LCCs. I lived for several years halfway between London Stansted and London Luton airports (I moved back to North America in 2008) and, as a teacher, traveled every 6 weeks during school breaks. As long as I planned at least 6 weeks out, I never paid more than £40 per person roundtrip including all taxes and fees. Yes, Ryanair flies into some airports that are a ways out from the city centers (including both London Stansted and London Luton - neither of which are in London) but EasyJet isn't much more expensive and between the two of them, it's easy to find flights that get you where you need to go. For example, if I was flying to Berlin, Ryanair was the easy choice - £1 flights and they land at the main Berlin airport, which is easy to access by the U-Bahn transportation system. If I was flying to Paris, EasyJet would get me there for about £7, and they fly right into Charles de Gaulle airport, on the RER system.

And yes, Air Canada is making a profit right now, but let's not mention the fact that the airline had to apply for bankruptcy protection in 2003 after hemorrhaging money for many years.... despite the fact that at that point they were pretty much the ONLY option for Canadian travelers. Or the fact that the only reason that many Canadian routes are just so expensive is because of the fact that Air Canada is the only one who flies them - after Air Canada bought out it's only competition in 2001, Canadian Airlines, the common joke was "Air Canada: flap your arms if you don't like it". Or the fact that WestJet, the other Canadian airline choice, has been handily crushing Air Canada for years, with their "no frills" model based off of SWA. They pull off the low fares very well and have been steadily expanding their destinations since they started flying in 1996. I grew up in Calgary, where WestJet's corporate headquarters are located, and while in college, EVERYONE wanted a WestJet job - they pay well, treat their employees right, and share their (constantly growing) profits with their employees.

Anyway, I do agree in theory that the constantly lowering fare model cannot survive in the face of increasing wages and fuel costs, however I do not believe that the US is the only place that demands (and receives) low cost flights, as you seem to state.

 

[bicker]

Southwest has benefited greatly from the fact that they've paid their pilots much lower than the rest of the industry for most, if not all, of the last 30 years. A couple of decades of effectively getting a discount on your labor costs really helps you avoid the worst financial problems that your competitors face. If you want to call Southwest's union less effective than the Air Line Pilots Association, I won't disagree. It sure helps that they pilots actually have to switch unions if they wish to switch employer. To be fair, Southwest's workers are getting more like the rest of the industry, and so you'll see Southwest encountering the same cost concerns as their unions progress.

 

[kaytieeldr]

Then how do you explain Southwest Airlines - the most heavily unionized airline? Highest paid workers?

Yet they just announced they made a PROFIT in 2009 - as they have every year for 30 plus years.

Respectfully, you must have missed the $111,000,000 loss Southwest experienced in the fourth quarter of 2008.

 

[kaytieeldr]

For example, if I was flying to Berlin, Ryanair was the easy choice - £1 flights and they land at the main Berlin airport

Since the poster you quoted is a lifelong European resident who flies frequently for work - do you mind if I ask how much that one pound fare actually cost you?

Or the fact that the only reason that many Canadian routes are just so expensive is because of the fact that Air Canada is the only one who flies them -

Could it not be, instead, that unlike most U.S. airlines, Air Canada charges fares that allow it to fly at a profit?

 

[Sarah_Rose]

Since the poster you quoted is a lifelong European resident who flies frequently for work - do you mind if I ask how much that one pound fare actually cost you?

Could it not be, instead, that unlike most U.S. airlines, Air Canada charges fares that allow it to fly at a profit?

Actually, no problem, because that Berlin trip was the one I was most proud of as far as being dirt cheap. The flights for two people with all taxes, fees and everything came to £38 round trip. We did not check luggage (rarely do) and did not check in online, so we saved those fees. We got a 72 hour Berlin u-bahn pass that was... if I remember correctly, about 8 euros and that got us to and from the airport (as well as around the city for 3 days). And then we paid for parking at Stansted and I have no idea how much that was, but we would have paid for airport parking anywhere we flew from because we lived in the middle of nowhere (no rail service).

Believe me, I wouldn't have flown to Frankfurt Hahn with Ryanair, but if you do your homework, there are some fantastic deals to be had on the European low cost airlines.

And yes, you could argue that Air Canada made a profit in 2009 because of their high fares. However, how would you explain that as soon as WestJet (the Canadian low-cost airline) came on the scene, Air Canada nearly went bankrupt? It has taken the airline many years to dig itself out of the hole that it was in, and they did so largely by slashing their fares (and services, accordingly) to come closer to WestJet's fares. WestJet has been making a profit since the beginning. For the routes that WestJet does not fly (Seattle to Calgary, for one - one that I fly regularly), Air Canada's fares are ridiculous. $700 for a 75 minute flight (that was the fare last time I looked it up - for travel in early December) with no service just isn't realistic. I chose to drive the 13 hours in the snow through 4 mountain passes, instead.

 

[MiniGirl]

Southwest has benefited greatly from the fact that they've paid their pilots much lower than the rest of the industry for most, if not all, of the last 30 years. A couple of decades of effectively getting a discount on your labor costs really helps you avoid the worst financial problems that your competitors face. If you want to call Southwest's union less effective than the Air Line Pilots Association, I won't disagree. It sure helps that they pilots actually have to switch unions if they wish to switch employer. To be fair, Southwest's workers are getting more like the rest of the industry, and so you'll see Southwest encountering the same cost concerns as their unions progress.

This is true to a certain extent. One reason their overall pilot cost is lower is because the legacy carriers fly bigger planes. However, for the same equipment, SWA pilots are making as much as or even more than the legacy carrier pilots.

What has really helped SWA over the years has been fuel prices. SWA bought oil futures when oil was cheap. As fuel prices began to rise, SWA was able to pay less than half the price for fuel the other carriers were paying.

SWA just also has a different corporate mentality. You almost never see an interview with a top SWA exectutive in which they don't talk about their wonderful employees and how they are largely responsible for the success of the airline. Where as I remember Bob Crandall and others talking about us as a liability and an expense, SWA has always talked about their employees as their best asset. Guess which company's employees are willing to work harder and put up with more?

 

[SaraJayne]

Since the poster you quoted is a lifelong European resident who flies frequently for work - do you mind if I ask how much that one pound fare actually cost you?

Could it not be, instead, that unlike most U.S. airlines, Air Canada charges fares that allow it to fly at a profit?

Your quote tags are wrong. I am not the author of the post you quoted.

And can you please stop deliberately misspelling my name when you quote me? Thank you.

 

[DMRick]

Since the poster you quoted is a lifelong European resident who flies frequently for work - do you mind if I ask how much that one pound fare actually cost you?

Could it not be, instead, that unlike most U.S. airlines, Air Canada charges fares that allow it to fly at a profit?

I'm not the one you asked, but we flew from London to Ireland in May on Ryan, and our fare was $48 US one way total each. We had to offload most of our luggage to our son, when our cruise ship docked in Dublin, however, because it was way overweight for Ryan, and would have been a second suitcase for one of us..both which cost dearly. Our tickets also said if we decide not to fly when you want to go, tough. Well, words to that effect. So, I'm not sure it was worth the worrying, that we would get to Ireland.

 

[Sarah_Rose]

Your quote tags are wrong. I am not the author of the post you quoted.

And can you please stop deliberately misspelling my name when you quote me? Thank you.

I noticed that as well, but chose not to comment on it. I'm not sure how you can even make a mistake like that, if you're just clicking the "quote" button to reply to a post.

 

[bavaria]

Until recently, Ryanair's flights to 'Bavaria' didn't actually land in the state. Nor did they land in the neighbouring state. They landed at BSL/MLH, which is, well, not even in the country! It is an airport spanning the French/Swiss border and depending on how one exits, one ends up in either France or Switzerland.

After failing to bully the airport, Ryanair actually did move into Bavaria; their 'Munich' airport is only 1,5 hours away from the city by train and slightly less by car.

The reality is that LCC's don't work for everyone. Their lack of interline agreements, lack of preassigned seating, fees for service, service to outlying or remote airports often with a lack of connections or rail service, lack of alliance partners, lack of rewards programs, etc make them a poor value for many customers. (Not every LCC has or doesn't have those items)

I recently had to fly on one of the DISDarling airlines due to irregular ops, and it was an extremely painful experience for me. I can see how an infrequent flyer may find value in the experience, but it wasn't for me. I am self-aware enough to know that LCCs usually don't meet my needs.

I usually take the train to/from London if going only to France or western Germany, but fly from LHR if going any further. I can take the HEX after work easily and end up at the LH terminal in just over a quarter of an hour. I don't need to try and get to the minor airports which are nowhere as near convenient. If I am in London for just a day or two, after one of my long trips I often leave my suitcase at the left luggage at LHR and take just my carry on.

My time is money. For someone who spends much of the year on airplanes, LCC's are often no value.

DMRick, you would also have had to pay for them to reprint your boarding pass if you hadn't been able to print it during online check in - 40 Euros or 40 pounds. Reprinting a boarding pass (or simply printing one) is something that many of us do at airports as we may not have a printer available at time of check in. And they charge 5-10 Euros for online check in.

If one can meet the very tight baggage restrictions of 33lbs, doesn't care about a seat assignment, can print a boarding pass and avoid the myriad of other fees, the fare can be 'low'. But add in all the fees for things which are the norm on other carriers, or which are unavoidable, and the fees can add up very quickly indeed.

 

[bavaria]

And kaytieeldr, most shocking to me is that you would have had to pay £18 (25€) to board your Ryanair flight, until that fee was challenged in court.

That is probably the single biggest reason why I refuse to give them my business.

 

[bavaria]

I noticed that as well, but chose not to comment on it. I'm not sure how you can even make a mistake like that, if you're just clicking the "quote" button to reply to a post.

A lot of posters just highlight and copy/paste instead of using quote, I suspect, and then just add the name and quote feature into the post. I have done that myself in past.

I know that I have often misspelled kaytieeldr's names (screen and real) over the years, but hopefully she doesn't hold it against me.

 

[FireDancer]

Ryanair have got a bad habit of adding on to the fares for example a £10 per person booking fee, £5 to check in online. All sorts of nasty little add ons wouldn't touch them with a barge pole myself.

Yeah, I know they add some fees, they were just the one I thought of. When I flew to Italy in 2008 I flew US Air to Frankfurt, took the shuttle to Hahn, and then took RyanAir to Venice. We returned on US Air direct from Rome two weeks later. The price we got was so great (less than $100 total) it was worth the inconvenience. I never paid less than $50 per way to Disney let alone paying that to go to Italy. It pays to travel with someone who has family in the Secret Service, they have favors they call in .

I am not too proud to admit being a chiseler when it comes to airfare and hotels.