How is this plan going to work?

I always wonder how Congress comes up with its idea of what motivates people or corporation to do things.  Now that Spirit Airlines is going to charge $45 for carry-on luggage that is stowed in the over head bin, Congress has come up with a solution that I think is pretty stupid.

Airlines currently pay 7.5 cents to the federal government for every dollar they collect in fares, but no tax is imposed on fees collected for nonessential services, the senators said. They said the Treasury Department last January ruled that carry-on bags are not essential for air travel.

“As a result, airlines can impose fees on these bags without paying any tax to the federal government on the revenues they collect,” the senators said. “This creates a tax incentive for airlines to try to bilk consumers in the form of fees rather than by increasing the fares.”

So the airline is not going to impose a fee of $45 now because the lose that extra $3.38 per item put in the overhead bin.  The airline will still gain $41.62 for each item in the bin.  If they drop the charge, which is the concept here, and just roll it into the fare, then everyone will assume they are paying extra if they don’t use the overhead bins.  It would make sense for Spirit to still collect the fee minus the $3.38 tax, because if they raised fares by $45, they would still have to pay that $3.38 tax.

The reality is that Congress should look to a smarter remedy to solve the problem of the fee happy airlines, legislate one free carry on in the overhead bin and one free checked bag.


What is that called…..collusion??

Over at the Huffingtonpost there is an article on even more possible airline fees that may be forced onto passengers.  But this parargraph made me take notice,

Ideas for fees don’t come out of thin air. Last month in Miami most of the big U.S. carriers and many overseas airlines attended a conference devoted to a-la-carte pricing and fees. (Motto, next to a cartoon of an airliner: “Discovering the flying store.”)

So does that sound like this definition of collusion from wiki?

In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit

And this is what we have from the US Department of Justice,

The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States Department of Justice.

So I think they need to examine this “meeting” for possible collusion.


Southwest and WestJet to code share

What does this mean?  I think it really depends on two things, does Southwest add Canadian destinations or does WestJet add more northern US destinations?

Right now WestJet flies into these cities in the US:

  • Fort Lauderdale, FL – Toronto.  Seasonal city – Montreal
  • Fort Myers, FL – Toronto
  • Honolulu, HI – Vancouver
  • Kona, HI – Vancouver (seasonal only)
  • Las Vegas, NV – Toronto, Vancouver, Edmonton, Calgary, Winnipeg.  Seasonal cities – Victoria, Kelowna, Saskatoon, Regina
  • Los Angeles, CA – Toronto, Calgary.  Seasonal city – Edmonton
  • Maui, HI – Vancouver
  • Newark, NJ (NYC) – Calgary (seasonal only)
  • Orlando – Toronto.  Seasonal cities – Montreal, Calgary, Ottawa, Halifax, London, Hamilton
  • Palm Springs, CA – all seasonal cities – Vancouver, Edmonton, Calgary
  • Phoenix, AZ – all seasonal cities – Calgary, Edmonton, Winnipeg
  • Tampa, FL – Toronto.  Seasonal city – Ottawa

So right now all the flights but the seasonal flight from Calgary to Newark are to Sunbelt states or Hawaii.  Las Vegas has the most routes to Canadian cities, but while Las Vegas is a big hub for Southwest, its real draw is as a destination, not a layover, same for Orlando which is another big Southwest hub.

What I expect to happen is that either WestJet and/or Southwest will open some Canada to northern US city routes that are huge hubs for Southwest.  I bet a Toronto to Chicago Midway and Toronto to Baltimore will show up first.  I would also expect to see a Vancouver to Chicago Midway route too.  I suspect that WestJet would actually fly the routes since they already fly to the US.

On the Caribbean front, if a partnership with Spirit Airlines happens, then Fort Lauderdale becomes a more prominent city as that is their entry hub (kind of like San Juan, PR for American Airlines).  If it is Air Tran, well from what I can see they don’t go to more than two cities in the Caribbean, San Juan, PR and Cancun, MX, so that doesn’t make sense for an entry into the Caribbean market.

On the Mexico front, there are bigger issues as I don’t see Southwest or Volaris Airlines crossing the border right now.  I bet that Houston will be an entry city into Mexico as it is a strong hub for Southwest.  I also wonder if some the Volaris flights to Tijuana, a huge hub, will shift to San Diego, Los Angeles, or Las Vegas.

On the Hawaii front, they mention Alaska Airlines and Hawaiian Airlines.  Alaska gives you Alaska, a lot of the west coast of the US, and west coast of Mexico.  Unfortunately for their route map, Anchorage and Seattle appear to be the only cities that fly to the islands.  While Hawaii doesn’t give you much more than Hawaii and some Pacific locations, it does give you more west coast of the US access with Seattle, Portland, Sacramento, Oakland, San Francisco, San Jose, Los Angeles, San Diego, Phoenix, and Las Vegas all flying to Honolulu.  Using routes on WestJet through Vancouver is quite a hassle as I think you would have to pass through customs to enter Canada, and depart Canada.  Not the best use of my time unless I get dirt cheap airfare.

With my hometown legacy airline, Northwest, now part of Delta, and Southwest finally entering the Minneapolis/St Paul market, things sure are getting interesting out there.