Think that all airlines are losing business during the recession? Not quite. Southwest Airlines and JetBlue Airways saw their traffic jump 9 and 10 percent, respectively, in September, while United’s was down 6 percent. Other airlines suffered traffic declines as well. Could it be that consumers are flocking to airlines known for having better service (e.g., JetBlue’s extra legroom, free snacks, and live TV) and lower fees than most of their competition (Southwest has lower fees across the board where they do charge a fee)? Is one reason the airline industry is in such dire shape because the product has deteriorated to the point where people just don’t want to fly at any price?

A recent reader poll by Consumertraveler.com crowned Southwest as respondents’ favorite airline, with 71 percent saying that service was the reason why. The same poll revealed that “comfortable seating” was the main reason consumers who chose JetBlue as their favorite did so.

Airlines are losing money ($11 billion worldwide this year, according to one estimate), fewer people are flying, and, despite capacity cuts, the average fare paid is going down. Now one would think that if you have fewer seats to sell you’d be able to charge more for those remaining. But while scarcity pricing works in most other industries, it appears not to in air travel. The airlines park planes in the desert, but fares stay the same on most routes or go down (depending on which statistics you believe, average ticketed fares have fallen about 20 percent this year compared to last, far more than prices have dived in most other industries). So why is there insufficient demand for air travel?

Continue reading Why people aren’t flying. (Hint: It’s not just the fares)

Why people aren’t flying. (Hint: It’s not just the fares) originally appeared on Gadling on Fri, 23 Oct 2009 09:00:00 EST. Please see our terms for use of feeds.

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