Southwest Airlines called on the US Department of Transportation to auction off slots from Delta Air Lines and US Airways at La Guardia Airport and Reagan National Airport to the highest bidder, in place of Delta and US Airways’ plan to award the slots to JetBlue, WestJet, AirTran and Spirit Airlines (Washington Post, 23-Mar-2010). [more - Perspective]
Southwest Airlines calls on DoT to auction off Delta and US Airways slots
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Branded fares: a philosophical shift to preserve premium product pricing for large US airlines
The Basic Economy trend sweeping the US airline market is fostering speculation about the exact results that American, Delta and United hope to achieve by introducing new tiered pricing structures into the market place. On the surface, the pricing structures are tools for those airlines to compete more effectively with ULCCs in the market. But more strategically, new pricing segmentation provides the large three US global airlines an avenue to execute their revenue management more effectively, preventing pricing dilution of their more higher end offerings.
Even the rivals that American, Delta and United are targeting with their bare bones product offerings believe that ultimately their new pricing schemes could create pricing stability in the US market – which appears on a fragile path to recovery. The logic for that conclusion rests on the ability of the Big 3 for product upsales that drive up pricing for all fares in the market.
One challenge the large US airlines face in the expansion and roll out of their new tiered pricing structures is ensuring the correct product attributes are communicated correctly through distribution channels outside their respective websites. Proper execution is key in order for American, Delta and United to realise the billions in potential revenue that they believe exists from the overhaul of their pricing structures.
More nuanced network changes for Spirit Airlines as "basic economy" pricing sets in
For the past year Spirit Airlines has alluded to changes in its network structure to include a larger number of smaller to mid-size markets as competitive dynamics in the US market place have shifted. Few details have emerged other than announcement that smaller markets, including Akron-Canton, Ohio and Hartford, Connecticut would join its network.
Now more clarity about Spirit’s strategy is emerging. The airline has declared its future network composition will still feature a mix of larger and smaller markets, but some changes are occurring in frequencies operated. Spirit has concluded there are opportunities to serve a number of markets less than daily while still preserving its cost advantage. Some of those types of changes are occurring in its existing service from Akron, and from new routes debuting from Pittsburgh and Hartford later in 2017.
New basic economy offerings debuting from American and United have generated a lot of industry buzz, but Spirit maintains a belief the changes in fare structures will ultimately firm up the pricing in North America.