Delta CEO defends fare changes.

labbats

Zulu who?
Joined
May 25, 2003
Posts
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What would happen if Home Depot charged extra for paint that wasn't used on Saturday night?" Grinstein said. "On the other hand, that is exactly what we were doing, which was an irritant.


What would happen if Home Depot started lowering employee wages?
 

Dizel8

Douglas metal
Joined
Feb 27, 2003
Posts
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Huh?
It is old, but.............


** Buying paint from an airline **

Customer: Hi, how much is your paint?

Clerk: Well, sir, that all depends.


Customer: Depends on what?

Clerk: Actually a lot of things.

Customer: How about giving me an average price?

Clerk: Wow, that's too hard a question. The lowest price is $9 a
gallon, and we have 150 different prices up to $200 a gallon.

Customer: What's the difference in the paint?

Clerk: Oh, there isn't any difference; it's all the same paint.

Customer: Well, then, I'd like some of that $9 paint.

Clerk: Well, first I need to ask you a few questions. W hen do you
intend to use it?

Customer: I want to paint tomorrow, on my day off.

Clerk: Sir, the paint for tomorrow is the $200 paint.

Customer: What? When would I have to paint in order to get the $9
version?

Clerk: That would be in three weeks, but you will also have to agree
to start painting before Friday of that week and continue painting
until at least Sunday.

Customer: You've got to be kidding!

Clerk: Sir, we don't kid around here. Of course, I'll have to check
to see if we have any of that paint available before I can sell it to
you.

Customer: What do you mean check to see if you can sell it to me? You
have shelves full of that stuff; I can see it right there.

Clerk: Just because you can see it doesn't mean that we have it. It
may be the same paint, but we sell only a certain number of gallons on
any given week. Oh, and by the way, the price just went to $12.

Customer: You mean the price went up while we were talking?

Clerk: Yes, sir. You see, we change prices and rules thousands of
times a day, and since you haven't actually walked out of the store
with your paint yet, we just decided to change. Unless you want the
same thing to happen again, I would suggest that you get on with your
purchase. How many gallons do you want?

Customer: I don't know exactly. Maybe five gallons. Maybe I should
buy six gallons just to make sure I have enough.

Clerk: Oh, no, sir, you can't do that. If you buy the paint and then
don't use it, you will be liable for penalties and possible
confiscation of the paint you already have.

Customer: What?

Clerk: That's right. We can sell you enough paint to do your
kitchen, bathroom, hall, and north bedroom, but if you stop painting
before you do the bedroom, you will violation of our tariffs.

Customer: But what does it mater to your whether I use all the paint?
I already paid for it!

Clerk: Sir, there's no point in getting upset; that's just the way it
is. We make plans upon the idea that you will use all the paint, and
when you don't, it just causes us all kinds of problems.

Customer: This is crazy! I suppose something terrible will happen if
I don't keep painting until after Saturday night!

Clerk: Yes, sir, it will.

Customer: Well, that does it! I'm going somewhere else to buy my
paint.

Clerk: That won't do you any good, sir. We all have the same rules
 

General Lee

Well-known member
Joined
Aug 24, 2002
Posts
20,442
Total Time
A lot
Many corporations in the ATL area have switched to Airtran because they couldn't justify the $1400 walk up fare at Delta when Airtran was charging only $400 or $500. Our cabins were mixed with a few $1400 fares and a lot more $199 fares. This changes it, and will have more $499 or $599 fares, thus supposedly adding more revenue with the mid-level fares and actually reducing the number of $199 fares available, even though there will be some out there. This will affect Airtran in ATL the most, since those corporation travel departments will actually start looking more at Delta, and steer away from Airtran because Delta's product and FF program is better.


Bye Bye---General Lee


Fare cuts to hit low-cost carriers -analyst
Tue Jan 11, 2005 08:58 AM ET
NEW YORK, Jan 11 (Reuters) - Fare cuts in the U.S. airline industry pose a risk to low-cost carriers as they lose the "lowest-fare" incentive to lure passengers, a JP Morgan analyst said, cutting his rating on America West Airlines (AWA.N: Quote, Profile, Research) .


Delta Air Lines's (DAL.N: Quote, Profile, Research) move to slash unrestricted fares by half has been matched by most legacy carriers in the past week. JP Morgan analyst Jamie Baker said AirTran, ATA Airlines (ATAHQ.PK: Quote, Profile, Research) and America West Airlines will be the ones most negatively impacted by the fare cuts.

"When faced with price ubiquity, passengers will make their decision primarily based on schedule, network breadth and frequent flyer benefits," Baker wrote in a research note, adding that as nonstop fares decline, passengers will have no incentive to change planes at low-cost carrier hubs such as Midway, Atlanta or Phoenix.

JetBlue Airways (JBLU.O: Quote, Profile, Research) will be the "least" affected by the fare cuts as connections are not a large part of the carrier's business strategy, Baker said.

Baker, who has an "underweight" rating on JetBlue Airways, Southwest Airlines (LUV.N: Quote, Profile, Research) , AirTran Airways (AAI.N: Quote, Profile, Research) and Frontier Airlines (FRNT.O: Quote, Profile, Research) , on Tuesday cut his ratings on America West to "underweight" from "overweight."

Low-cost carriers, which largely served "overpriced and underserved" markets will now be serving just "underserved" markets, Baker said, and will see lower profit margins than what they had expected.

"As these returns fail to live up to expectations, we expect longer-term low-cost carrier growth rates to moderate, potentially coming in the form of aircraft deferrals or cancellations," Baker said.

Baker also said that while he thinks the reduced fares will erode industry revenue in 2005, shares of larger airlines -- such as American Airlines (AMR.N: Quote, Profile, Research) , Northwest Airlines (NWAC.O: Quote, Profile, Research) and Continental Airlines (CAL.N: Quote, Profile, Research) -- will end the year higher because of potentially slower growth rates at low-cost carriers and a more stable and healthy revenue environment in the industry.
 
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