Strategies and tactics: August 2008 Archives

Is it working? The airlines' survival tactic has been simple: raise fares as much as you can and then cut capacity, assuming that the lowered supply will push up fares. The fare increases as you know are not easy to push through, and even when they're called fuel surcharges, people fight them. So the carriers are relying more on capacity cuts to lead to the natural auction-like effect that takes the supply and demand relationship into reality: fewer seats, people will pay more for what there is. We know capacity is down already, though it's only in the 3%-5% range. The big cuts come next month.

Well, the evidence would seem to be that something is pushing up fares, even as business travellers are trying to get around the trend. The American Express travel unit says that fares are indeed up, with international fares at their highest point in about a decade and domestic fares rising as well. Herve Sedkey, the AmEx global advisory services vice president, says that average domestic business fares are up $24 from a year ago and up $27 from the first quarter of this year, to $260, up almost 12%. International fares paid by business travellers are up to their highest levels since AmEx began tracking fares in 1999, to $1,980, up 11%, he says.

 Source: American Express Business Travel Monitor

They showed off a new underground tram system out at Dulles airport the other day, the first stage of nifty automated pe ople mover that will speed through underground tunnels to get flyers from the main terminus out to the airport's remote or midfield concourses. It's $1.4 billion undertaking, started back in 2002, and the system won't open until the fall of 2009. It's something people at Dulles have waited for for a long time, because right now if you're going international or flying on many flights of the airport's main carrier, United, or anyone else out in the D Terminal, you have to get on a lumbering 1962-era mobile lounge --a diesel truck with a room on top - that takes you out to the gates. The airport has 49 of the old behemoths, but they aren't going anywhere.  

Maybe it's just a symptom, because things between United and its pilots have not been hunky dorey for a long time. The union has issued press releases for a couple of years denouncing United chief executive Glenn Tilton's bonuses and perks, and the airline has played hardball at the bargaining table. Now, the unpleasantness is truly out in the open, with United suing its pilots union chapter, its Air Line Pilots Association, and four pilots (three of them ALPA officers) over an organized or semi-organized campaign to take maximum sick leave and indeed to abuse sick leave. Left Field was on Chicago's NPR affiliate, WBEZ, to talk about the suit and its implications.