NEWS: Independence Air Picks on the Big Guys
Low fare carriers do make a difference, even when they a little ones like Independence Air. United Airlines has reduced fares to compete with the new service out of Dulles announced by Independence Air. We're not talking small fare reductions either. Fares on competing flights have fallen as much as 84%. Its not an epic battle in terms of scale but it does encapsulate the basic struggle in the industry...two troubled carriers, one looking to steal market share as a low fare carrier, the other looking to maintain market share by matching fares. Who wins?
There are a few winners here in my opinion.
The first is Dulles Airport. They win no matter what. More low fare competition means more traffic, more traffic means more money for them.
The second is the consumer flying out of Dulles. They get lower airfares to selected destinations served by Independence Air. Not a huge win but better none-the-less. The problems is if United can manage to hang long enough they might shove Independence back out of those markets then airfares will return to their previous levels.
Finally the third and most uncertain winner. Which airline can serve these markets at this price? Independence Air is probably able to make money with the airfares they are charging. Its doubtful United can cover costs at this level. But its not that simple. Independence has to convince the flying public to CHOOSE THEM over United. Not an easy task and one that has killed off more a couple of low cost start ups. All things (like airfares) being equal people tend to choose a brand they recognize...United in this case. They might find a way to peacefully co-exist. United had to learn to tolerate Frontier Airlines in Denver. Maybe the same thing happens here. Too soon to call in my book.
There are a few winners here in my opinion.
The first is Dulles Airport. They win no matter what. More low fare competition means more traffic, more traffic means more money for them.
The second is the consumer flying out of Dulles. They get lower airfares to selected destinations served by Independence Air. Not a huge win but better none-the-less. The problems is if United can manage to hang long enough they might shove Independence back out of those markets then airfares will return to their previous levels.
Finally the third and most uncertain winner. Which airline can serve these markets at this price? Independence Air is probably able to make money with the airfares they are charging. Its doubtful United can cover costs at this level. But its not that simple. Independence has to convince the flying public to CHOOSE THEM over United. Not an easy task and one that has killed off more a couple of low cost start ups. All things (like airfares) being equal people tend to choose a brand they recognize...United in this case. They might find a way to peacefully co-exist. United had to learn to tolerate Frontier Airlines in Denver. Maybe the same thing happens here. Too soon to call in my book.
posted by The ACK at
08:53
