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Up, up, and away.
May. 18th, 2005 01:29 pmThere have been plenty of articles about how increased gas prices are hitting the airlines very hard. But I just read a second piece in a short time on how attractive fractional jet ownership is if one has the money, and how the last year or two has been very good for business jet companies. (This new article is in The New York Times.)
Where the dots aren't being connected: Business and First Class, while obviously a small percentage of tickets sold, are also believed to be a large percentage of any given airline's profits. Therefore only a small exodus at all would have a hugely disproportionate hit on an airline's bottom line. Combine this migration from the top with the migration from below to low-cost airlines like Southwest and JetBlue, and you can see just how the old large airlines are getting squeezed -- before fuel costs come into play.
What's also interesting here is the rebuke to people who think price is the only game in town. Even the fractional jet executive quoted in the Times piece concedes he largely flies on regular commercial flights, because it's so much cheaper. But to the actual customers the added price clearly delivers value. As the writer of the earlier piece pointed out (which I can't remember who or where it was, sorry), the appeal of being able to just get in the jet, skip the lines, skip luggage check in, skip security, and the engines rev once the door is closed behind you and only you is huge.
Where the dots aren't being connected: Business and First Class, while obviously a small percentage of tickets sold, are also believed to be a large percentage of any given airline's profits. Therefore only a small exodus at all would have a hugely disproportionate hit on an airline's bottom line. Combine this migration from the top with the migration from below to low-cost airlines like Southwest and JetBlue, and you can see just how the old large airlines are getting squeezed -- before fuel costs come into play.
What's also interesting here is the rebuke to people who think price is the only game in town. Even the fractional jet executive quoted in the Times piece concedes he largely flies on regular commercial flights, because it's so much cheaper. But to the actual customers the added price clearly delivers value. As the writer of the earlier piece pointed out (which I can't remember who or where it was, sorry), the appeal of being able to just get in the jet, skip the lines, skip luggage check in, skip security, and the engines rev once the door is closed behind you and only you is huge.
