Thanks for the explanation! I really think that calling it a subsidy is a crappy choice of words. If companies guarantee AA
a certain amount of traffic a year, it is guaranteeing business so that AA
will not turn around and cancel the flight for the winter because of loads. A subsidy is when the government or a private entity gives a company money outright. This case is money being traded for seats. They aren't buying empty seats, they are using them because the NEED the seats.
"That being said, it is true that the RDU
flights are subsidized by several companies in the Triangle.. beins dubsidized by guaranteeing that a certain number of seats will be sold."
As I stated, the companies don't just give up money to AA
. They give them projections as to how many seats they will be buying over the year. With this information, AA
knows that they can make money year round! They are not buying seats just so AA
can have the revenue, they are paying for the seats because they need to move people. Whether they choose to pay higher fares rather than discounted fares is a different story but it isn't a subsidy.
"Therefore, I believe that the continuous notion that the RDU
flight is simply a "subsidized" flight should be dropped. The flight does well on its own and is a definite profitable route. I hate to think that people on A.net were trying to sell RDU
short just because we have high business traffic."
Yes!!! The notion that this is a subsidized flight should be dropped because it is not. People on a.net are trying to sell AA
and America short claiming there are sudsidies. When governments and or private entities buy service for their usage because they NEED it, it isn't a subsidy. Just like people claim the US government subsidies Boeing through the military contracts. They buy Boeing because Boeing has the best product and they need that product. Just like the companies like Glaxo, they need the product and the best is the AA
N/S flight! Not a subsidy!
makes a lot of money outside the Business travelers because of the O&D traffic and the passengers who can connect into RDU
which used to be a hub.