<<Being a profitable airline is really tremendously simple. You sell your airfares for more than your cost. And if your costs go up - for example, due to increased fuel prices - you simply increase your ticket prices. The nation's only consistently profitable airline - Southwest - has given a demonstration on how to do this. They increased all fares earlier this week, being their second increase this year. The small increases - $2 each way for flights under 400 miles, $4 for longer flights, and $10 for walk up fares - are unlikely to discourage people from flying, but will have a big effect on Southwest's bottom line, potentially adding half a billion dollars to their annual profit. >> Week in, week out, this author proves that the less you know, the easier it is to fix a business you don't understand. WN raised fares, sure, alongside a fuel hike. But the economic brilliance does not lay in reactively adjusting prices to costs. Their profitability lies of course in the cost planning that has been in place for years at WN for years -- WN is holding fuel hedges to drool for -- and this price hike is *not* a direct effect of a fuel spike -- it is a smart move that takes into account the public's view of airline costs: it seems reasonable to the flying public. --------------------------------- Yahoo! Mail Use Photomail to share photos without annoying attachments.