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Airlines seemingly all over the map on revenue strategy

V Australia is offering cheaper one-way fares from LAX, Southwest and AirTran raise their round-trip fares, and five major carriers including Delta and United raise their checked baggage fees (again).

July 25, 2009|Hugo Martin

In this tough economy, does it make more sense for airlines to lower fares to draw in budget-conscious travelers or to raise rates and fees to boost revenues?

There seems to be no consensus, judging by the airline news of the last week or so.

V Australia, the international airline that launched last year, is offering one-way fares from Los Angeles to Sydney or Brisbane starting at $359, plus security fees, taxes and other charges.

Even with the extra fees, they are up to 80% cheaper than the rates of some competitors. (The bargain fare comes with some restrictions.)

Meanwhile, carriers such as Southwest Airlines and AirTran Airways raised round-trip domestic fares in the last week by $10 to $20. And Northwest Airlines, Delta Air Lines, Continental Airlines, United Airlines and US Airways increased their checked baggage fees by $5 to $20 for the first bag and $30 for the second, according to discount travel website

If such tactics sound like the acts of a desperate industry, it's for good reason.

Passenger revenue for the U.S. airline industry fell 26% in June 2009 compared with the same month in 2008 -- the eighth consecutive month of falling passenger revenue, according to the Air Transport Assn. of America, the industry trade organization for major U.S. airlines.

The number of passengers traveling on U.S. airlines in June dropped 6.5% and the average price to fly fell 20.7%, a plunge that surpassed even the steep price declines during the 2001 recession and post-9/11 terrorist attacks, the trade group said.

Such gloomy numbers have hit the airlines hard.

Continental announced plans this week to eliminate 1,700 jobs, and Southwest said 1,400 employees took voluntary buyouts, while United said it would cut international flights by 7%.

Hard Rock hotel upbeat on 2010

It used to be that if you were staying at the Hard Rock Hotel & Casino in Las Vegas, you were there to party.

No more.

As part of a $750-million expansion that was completed in January, the Hard Rock added 60,000 square feet of meeting space, including the technology to simulcast from The Joint, the hotel's 4,000-seat entertainment venue.

Don't worry, the meeting rooms will still have that edgy rock-and-roll decor. The Hard Rock says it can spice up any business retreat with a list of available services that include dancers, models, cover bands and tattoo artists.

But with most businesses cutting back on travel spending, is now the best time to unveil a massive hotel meeting space?

"It's not all roses," admits Yale Rowe, senior vice president and general manager of operations for the hotel. Despite a slow summer, he said the pace of bookings for the meeting space for 2010 has been positive.

"2010 is going to be gangbusters," he said.

Southwest flies to USC-OSU game

Are airlines so desperate that they would exploit a football rivalry to sell airline tickets?


Southwest Airlines announced last week that it was adding an extra nonstop flight in September from Los Angeles International Airport to Columbus, Ohio, to get fans to the Ohio State University campus in time for the Sept. 12 game between bitter rivals USC and OSU.

The flight leaves the night before the Saturday game and returns Sunday morning. Rates start at about $360 per person for a round-trip fare.

If USC loses, that will be a long, depressing flight back to LAX. If the Trojans win, that plane will be rocking.

Standing-room flights coming?

If you are willing to stand on a bus, a trolley and a subway, why not on an airplane?

A survey by Ryanair Holdings, Europe's largest discount airline, found that two-thirds of the 120,000 passengers surveyed said they would be willing to stand during a short flight if the fare was free.

The passengers were not so keen on the idea of standing if it meant paying a discounted rate.

)Only 42% of the passengers surveyed said they would stand for a half-price fare, according to the airline.

Ryanair executives have been discussing the idea of adding standing-room flights as a way to fit more passengers per plane. This comes from the same airline that recently proposed charging passengers to use the bathrooms in the airplanes.

A spokesman for the Air Transport Assn. of America said no major U.S. carrier has expressed interest in either of those money-making ideas.

The loo fee probably would not go over well in America, anyway, particularly during one of those notoriously long flight delays on the tarmac.


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