Does elite status work for or against you when it comes to paying less?
According to many of the travel news outlets that I read, fares are on the rise. On some routes this is true, but certainly not across the board, whether the category is airline, class of service, or destination.
Premium airfares are a special case. They fluctuate usually for one or more of three reasons: A carrier has excess First Class seats; it is trying to retain passenger loyalty after a merger; or it’s trying to establish loyalty in a hub city.
Excess First Class Supply Dumped
One example: It cost $702 to fly Business Class on Delta’s Atlanta-Boston route in 2007. In 2008 the fare was $816 and in 2009, $902. This month that ticket costs $716 (on the other major airlines it is more than $1,100). This is only the beginning: Delta is dumping seats on routes all across America, at rates 30 to 60% less than its competitors, leaving pricing parity a thing of the past. See chart below for more great samples of new First Class fares.
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Fight for Loyalty Retention Nets First Class Deals
In 2007, it cost $952 to fly Minneapolis-New York; in 2008, $1,130; and in 2009, $1,606. Today the ticket price is $792 on Delta (Northwest’s merger partner), about $150 lower than in 2007. The three other airlines offering non-stop on this route, American, Continental, and United, charge $1,588. The price difference should keep old Northwest mileage program members loyal to Delta.
Hub Takeover Nets First Class Deals
How do you get traction in a hub city, where you’re the new guy? Easy: By offering unbelievable First Class Fares compared to the other airlines there.
This is the case with Delta and its New York hub. Delta is just not top-of-mind when it comes to buying a ticket from here to Chicago, Dallas, Houston, or Phoenix, routes that are dominated by American, Continental, United, and US Airways. But as you can see from the chart on page 3, tunnel vision can cost you.
Let’s take New YorkChicago as an example. Delta charges $580 round-trip for a First Class ticket, whereas American and United charge $1,644, triple the cost.
[aside headline="New York and Delta" alignment="alignright" width="half" headline_size="default"]When Delta bought United’s New York-London route in 2006, it not only gained an important international gateway, but it also bolstered Delta’s domestic presence in the Big Apple. Since then, Delta has been very busy molding the city into a major hub. It took a key step last June when it added hourly non-stop service from NY to Chicago.[/aside]
Why Other Carriers Have not Matched
Because from major hubs, they rely on the tunnel vision imparted by our elite-status investment—we automatically go to our preferred airline or, if we do canvass the market, retaining elite status ends up trumping the lower fare. On a few routes, some airlines have occasionally matched a low fare for a few days, so if you were lucky enough to find the fare during the booking window, you have the best of both worlds.
Samples of the Lowest Business Class Fares to Europe from Atlanta:
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Fare Comparison Shop
Where the misconception comes from, that “domestic fares are all the same”, I’ll never know. Beware of “airline-website-shopping only” industry issues.