I have to fly to LA on short notice (from SFO). I need to leave on Wednesday. UA fares RT are now $400+, but if I take Southwest, the price is $135.00 round trip. I don't understand that reasoning as to why UA could not come up with some fare structure similar to Southwest?

The first portion on SW is about $89, but the return is $35 due to the fact that the return is priced as an advanced purchase, where the outbound is priced as a last minute fare.

Can some one explain why UA thinks they can get away with pricing like this? And/or what benefit they get? especially if there ARE seats on the flight. I am aware that UA is from SF and SW is from OAK, but it doesn't really matter to me which airport I depart from.

>>>I don't understand that reasoning as to why UA could not come up with some fare structure similar to Southwest?

Most simply stated, it's because UA doesn't a COST structure that allows it...

UA needs all the cash they can get right now. Southwest isn't as desperate at the time. Southwest has prospered over their entire life because they used simplicity as their operating foundation- single aircraft family fleet (maintenance easier)- tries to keep their timetable- offers lower fares because they value customers more than money- not many complications.

UA has been jumping around with fares- people fly Southwest because they know they'll get a rock bottom fare. UA therefore suffers, and needs to raise prices per passenger, since they aren't getting as many, to pay for operations. But keep in mind their market is different than Southwest's- Southwest flies in the US. UA doesn't.

There are many factors...

Cost is a big part of the reason. Another part of it is that UA, like almost all airlines, prices its fares so that trips purchased several weeks in advance get a discount. The fares closer to date of trip are higher. Southwest does this also, but their cost structure allows them to have lower fares closer to flight date.

Another thing is, UA is required by the deregulation act to fly to cities that had service under regulation. UA can't drop a lot of its unprofitable routes because of this. WN has no such requirement. So UA has higher fares closer to flight date basically to subsidize those unprofitable routes. If you buy the UA ticket, you're subsidizing flights to Dodge City. If you buy WN, you're just buying the flight you're on.

At least, that's the theory.

Ellwood, UA nor anyone else is required to fly anywhere....I think you are thinking of EAS cities (essential air service) and airlines get moola from Uncle Sugar in the form of subisdy to go there.

Not many cities like that left, and trust me...I can't think of any that have mainline service.

Cost is the issue, but the problem is not labor costs...even though everybody thinks it is.

The entire hub-and-spoke network carrier concept is flawed, and the internet has sparked a revolution in the way people choose to travel. Things have been exacerbated by a soft economy.

Folks all talk like the liquidation of a major carrier will fix the problem. Right now, I don't think airlines....with 70% plus load factors....could really carry any more people (the old rule of thumb is that if your LF > 67%, you are losing traffic).

I think that UA is set up as a big hungry machine that needs much more $ to feed it. Southwest is leaner and spends a LOT less on labor. Many experts are also now saying that a "spoke" system, like what Southwest uses, is much more cost effective than the "hub" that most major airlines use.

One more reason UA can't do what Southwest can is because UA has such a broad and varied fleet. This leads to much cheaper maintenance and pilot training for Southwest.

No major airline will ever be able to match the costs of Southwest or JetBlue. The costs associated with multiple aircraft types are huge. It goes beyond training pilots and maintenance costs. A lot of it has to do with scheduling crews. UAL will never be able to get the same productivity as Southwest. The hub and spoke model also adds costs by making it more difficult to keep the airplanes in the air as much as Southwest, and again making it more difficult to make crews productive.

Southwest has two advantages over United.
First, financial. They have lower operating costs and a lower debt burden (relatively speaking). There have been years where Southwest was more profitable than the rest of the industry combined.
Second, corporate culture. One thing that most people ignore is Southwest's corporate culture. People are not micromanaged, they are allowed to make and implement decisions that affect their work areas, they are allowed (even encouraged) to have fun, and they have a profit sharing plan that provides them with a regular check each year because of all of the above.
Southwest tries very hard to hire people who will fit in with their way of running an airline. Several years ago, only 5% of all applicants were hired.

The answer may be far simpler than all this analysis. Segment pricing is very dynamic and determined by software reading a variety of parameters. When UA (or any other major) has the capacity and wants to fill it, they will match any price. If UA is charging 2X or 3X the price of Southwest, then chances are, on that route, that date and that time, they do not need your biz.

As someone indicate above, it's also a question of behavior modification. UA wants customers that plan ahead and buy early. It's good for cashflow!

TxAgKuwait said

The entire hub-and-spoke network carrier concept is flawed.
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This is a common myth regarding low-cost airline travel.

If the hub-spoke model is the problem, the lo-co's would be in as much trouble as the majors. Southwest is the only lo-co that does NOToperate a hub-spoke route structure. JetBlue and Airtran operate hub-spoke structures and are doing well. Even Southwest tends to concentrate its traffic in a few major stations (BWI, MDW, LUV, etc.).

Here is how it works, IMHO...

ON THE REVENUE SIDE.....

What Aeri seems to be complaining about is not as much the cost of flying on a major. It is their complex and illogical fare structure. Customers want things to be simple and easy to understand. Southwest's fare structure is MUCH simpler, more easy to understand, and logical than that of the majors.

Experienced consumers know that if a company's pricing and terms are overly complex - it means they are trying to screw you. Such a company (or industry) does not believe they can make a profit off of market prices - so they try to confuse/trick/force you to pay higher than market rates. You often see these kind of policies in highly competitive, high fixed cost, or formerly regulated industries like long distance phone service and air-travel. This does not mean that they work, however. Sooner or later someone comes up with a way to evade the whole system and then consumers flee - causing the offenders to go bankrupt. This is happening in the long-distance phone industry with pre-paid calling cards, internet calls, etc. And it is happening to the airlines as people choose to fly a lo-co or simply drive.

It sometimes takes the big boys a long time to understand this because they have been spoiled by monopoly or regulated markets. They hate competition and think the only way of making a profit is avoiding it somehow. So they try to drive competitors out of business, they use complicated pricing structures to screw consumers, etc. If you think this will work in the long term I've got a $3000 last minute ticket to New York I'd like to sell you.....

ON THE COST SIDE...

Again, SIMPLICITY is the key. As has been mentioned before, having one aircraft type helps. Having fewer, larger stations helps also - Southwest tries to keep at least 11-12 flights a day at each station. This is not to say that Southwest doesn't fly to smaller markets. Many of their markets WERE small until they started flying there. As Southwest attracts more people to airtravel - what used to be a small market often grows into a medium-sized or even a large one. As mentioned before, no one forces the majors to fly anywhere.

And there is more...

No one forces them to cover a city with only a few planes a day - leaving the staff at that station idle for much of the day. No one forces them to use banked flights at their hubs. No one forces them to lie and cheat in their dealings with their unions, causing their workers to demand and get the crazy work rules that are misguided attempts to deal with this kind of behavior. No one forces them to squander money pandering to "elites" who pay the same fares as everyone else. No one forces them to play all sorts of complicated and expensive games with alliances and mergers.

However - Southwest IS forced by its Unions to pay rates competitive with other airlines. Southwest IS forced by the government to pay/charge segment taxes that were designed by industry lobbyists to discriminate against them. Southwest HAS been forced to deal with many challenges to its existence brought about by the established airline's dominance of the legal/political structure as well as by predatory fare wars. Southwest is winning fair and square.