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Tuesday, March 29, 2011

Airline price increases & pack mentality

I watching a nature documentary about lions and in the video, this one lion was being bothered by a hyena who was much smaller and weaker.  So eventually the lion attacked the scared hyena but just enough to slightly wound.  The hyena was pretty angered by this but left since it was no match for the size and strength of the lion.  But by evening, the hyena returned with the rest of his/her pack- a dozen or so.. and through infrared cameras, you can see the pack of hyenas converge upon that lion and collectively devour him to pieces.

I thought of this when I read the following article--

Latest airfare increase fails over weekend  (AP) -- "The airlines' latest effort to broadly raise U.S. fares by $10 per round trip has crumbled as discount carriers like Southwest decided not to raise their prices. After several successful price increases from December through February, two efforts to raise fares this month have died, raising questions about how much consumers are willing to pay for travel."

"United and Continental started the push for another fare increase last week and were joined by Delta, American and US Airways. But low-cost airlines never went along... The price hike began to unravel when Delta and American rolled back the increase on some routes... United and Continental then gave up and canceled the increases on Saturday."

"Domestic price increases will be harder to push through unless they are supported by low-cost airlines -- Southwest, JetBlue, AirTran and Frontier.  Southwest, which carries the most U.S. passengers and plays a key role in setting fares for the industry, might just be biding its time until Easter... Southwest often prefers to raise fares over 3-day weekends to limit press coverage."

~ Airlines want to raise prices of tickets in the worst way..  They want to say its due to higher gas prices or higher this or that..  truth is, they just want to raise ticket prices because they wish to.

But the trick is, in order for the price increase to work, it must be done in unison.

The goal is to 'attack' the customer like a pack of hyenas so anyone who wishes to fly has no choice but to pay higher fares since ALL are doing it...  Without the power of the 'pack', the airlines don't have the courage to raise prices and risk customer backlash.

When you get past happy sappy TV commercials, remember one thing-- businesses pretty much hate the consumer.

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