True enough, and this in part explains the comparatively higher penetration of train travel in Europe. Still, there is no reason for network carriers to have gouged people through "discriminant pricing" than: 1./ they stumbled across the economic theory, valid enough, but 2./ they never updated 1970's (pre-deregulation) market research into price/demand elasticity, and 3./ they thought their service was un-substitutable and "worth it" (keep that KoolAid coming), and 4./ they thought (hoped) they could get away with it, relying perhaps on PT Barnum's theory of markets "There's a sucker born every minute". Of course, PT Barnum was an optimist. And then came Southwest, the coup de grâce. - Bob Bahadir Acuner wrote: >Yes, >But flying is an essential part of the economy. Distances are much higher >than any other developed country and if you are like me going to clients, >doing projects, etc. etc. there is no alternative to it. > >Currently there is a not single soul in the project that I am working on >that is local to Bay Area. One guy comes from NYC, the other one from PIT, >another one from LAX, me from SEA, PM is from East Coast, etc. etc. > >Tell them to drive and you will lose them.. > >The price elasticity of these people are much different than the folks from >Baltimore going to see uncle Herb in Dallas.. :) > >BAHA >Fan of flying the friendly skies of UAL > >-----Original Message----- >From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On Behalf Of RWM >Sent: Friday, August 19, 2005 2:45 PM >To: AIRLINE@xxxxxxxxxxxxxxxxx >Subject: Re: NW-DL poss bankruptcy > >Gerard M Foley wrote: > > > >>Don't know if I've said this before here. If so, I apologize. >> >>It is quite possible that air passenger transportation in the U.S. may >>go the way of all other forms of public transportation - subsidy or quit. >> >>The automobile is a fierce competitor. Although its actual costs are >>quite high, a major part of the cost is the initial purchase. Once >>the car is bought, it is very difficult to convince the owner not to >>use it. >> >>The result is that the public transportation facility, rail, bus, >>subway, and maybe airline too, finds that there is no fare point at >>which costs can be recovered. Drop the fare and the added volume >>costs more than the added income. Raise the fare and the reduced >>volume won't pay the fixed costs. The public always has two other >>options - drive or stay home. >> >>Gerry >> >> > >Excellent points, Gerry. Indeed, Southwest is fully cognizant that its >pricing affects the modal split between private and public ground transport >and travel by air. This is one of the reasons they only reluctantly raise >fares by $2-4 each-way, when network carriers file for $20 increases. >Fundamentally different views of price elasticity and as a result, >approaches to pricing. > >- Bob Mann > > > -- R.W. Mann & Company, Inc. >> Airline Industry Analysis Port Washington, NY 11050 >> tel 516-944-0900, fax -7280 mailto:info@xxxxxxxxxx >> URL http://www.RWMann.com/ This e-mail is for the designated recipient only and may contain privileged or confidential information. If you have received it in error, please notify the above sender immediately then delete the original e-mail. Any other use of this e-mail is prohibited.