A%20Downside%20of%20Cheap%20Fares-%20capacity%20Mgt - A...

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A Downside of Cheap Fares: Flight Cuts Routes Vanish in Low–Fare Cities Oakland International Airport has ridden the wave of rapidly growing discount airlines to a 58% increase in passengers over the past 10 years. And now Oakland is in the vanguard of the next giant trend in aviation. Grounded flights. In November, Oakland will have 28% fewer departing seats than it had a year earlier, the largest decline among the nation's 50 biggest airports, according to OAG Analytical Services, which tracks airline schedules. AMR Corp.'s American Airlines and Continental Airlines Inc. have both decided to pull out completely from Oakland; other carriers are trimming flight schedules. Getty Images As big airlines cut flights, Southwest's market share will likely grow. Cheap fares stimulated tons of travel over the past 20 years, but now airlines are slashing schedules in markets where cheap fares dominate. Communities that have enjoyed fierce airline competition now are paying a price in higher fares and fewer flights, while cities where one airline has a fortress hub are seeing far smaller schedule cuts. Oakland now sometimes finds itself with higher ticket prices than its two Bay-area competing airports, San Francisco and San Jose. For a Nov. 20 departure to New York returning before Thanksgiving, for example, the cheapest flights from Oakland were $420 round-trip, according to Farecompare.com, while San Francisco had tickets starting at $320. U.S. airlines will ground 512 airplanes by the end of the year, according to JP Morgan. That's a fleet about the size of Northwest Airlines Corp. In essence, airlines are taking an entire major carrier out of the skies. The large capacity reduction has broad implications for travelers, from higher fares and less-convenient schedules, to the loss of service completely at some airports. But there are also a few benefits: less-crowded terminals, shorter lines and fewer flight delays. It also may help discount carriers, such as
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This note was uploaded on 01/20/2012 for the course MGT 3200 taught by Professor Moodie during the Spring '08 term at Kennesaw.

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A%20Downside%20of%20Cheap%20Fares-%20capacity%20Mgt - A...

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