BUDGET
carriers are being met by slashed fares from United Airlines, alarming
other full-service carriers who fear a renewed price war, derailing a recent
recovery in pricing power, reports Bloomberg.
Passenger
revenue for each seat flown a mile, a proxy for airlines' control over fares,
had finally started rising this year after a slump triggered by a 2015 price
war.
Fare
cuts hurt airline profits and the pain is keenly felt by full-service carriers,
which face higher costs having increased wages.
Said
budget
carrier Southwest Airlines revenue chief Andrew Watterson: "There
is definitely a broad-based discounting among certain carriers. If one moves
and you do not, you could lose a lot of volume and you're worse off doing
nothing."
American
Airlines
and United are matching - and sometimes undercutting - the heavy discounts of
super cheap Spirit Airlines, said its CEO Robert Fornaro.
Spirit
Airlines' base ticket covers a seat and a small carry-on, like a purse. Seat
assignments, water and bigger carry-ons cost extra, says Bloomberg.
American
was charging US$25 from Dallas to Denver. A round-trip ticket was $70. The
availability of such fares typically is limited.
Source
: HKSG.
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