June 25, 2024

Airlines, Now Flush, Fear a Downturn

But with the economy slowing down again, the stock market sputtering and high oil prices cutting into household budgets, the airlines may be harder pressed to keep their fares up and planes packed, at least without resorting to significant cuts in capacity when the summer vacation season is over.

Some warning signs are already there. The airlines have failed to raise fares in six of their seven efforts since March, suggesting that some passengers may be balking at the higher ticket prices. “Airlines have overreached,” said George Hobica, the founder of AirFareWatchdog.com.

Still, the airlines’ aggressive pricing strategy has worked well for them. Every major airline has managed to squeeze more revenue out of its passengers this year, thanks not just to higher fares but also to a growing multitude of fees. In May, for instance, United Continental Holdings reported that its estimated revenue per passenger was 14 to 15 percent higher than a year ago, while Southwest Airlines said that measure had risen 11 to 12 percent.

It has not hurt that mergers have left fewer airlines and that they have taken a more disciplined approach to controlling capacity.

For the summer, traditionally the busiest air travel season of the year, demand for airline seats remains strong. The Air Transport Association, the airline trade group, expects 206 million people will fly in June through August, an increase of 1.5 percent over last year. The association even expects the number of passengers on international flights this summer to break last year’s record.

Fares, meanwhile, are at the highest seen since their peak in the third quarter of 2008, when the financial crisis hit, according to statistics compiled by the Department of Transportation.

While fares change daily, the cheapest nonstop round-trip flight from New York to Las Vegas for the July 4 weekend was selling on Friday for $597. The cheapest flight from San Francisco to Boston and back, operated by United Airlines, was selling for $664, but that included one stop. Southwest Airlines was charging $703.80 for the trip, and that was with a stop in both directions. A week in Paris is also expensive — with round-trip fares for nonstop flights starting at $1,442 on American Airlines out of New York.

And these figures do not count the extra fees the airlines now charge, for everything from checked bags to priority boarding to reservation changes or fuel surcharges in international flights.

“It’s getting ridiculously expensive,” said Kevin Currie, a representative with the Teamsters union, who said he might soon curtail visits to relatives in Florida if ticket prices kept rising. “There are more people flying right now, so shouldn’t their prices go down?”

Of course, the airlines do not think that way. Since more passengers are vying for every available seat, they can keep raising fares and still fill their planes.

But there are cheaper fares to be had. Mr. Hobica, of AirFareWatchdog.com, noted that travelers could still buy a $280 round-trip fare between Newark and Los Angeles between July 3 and July 11, for example. “If you are willing to be flexible, there are deals.”

Steven Tilston, the senior director for analysis at Expedia, an online travel agent, agreed. “Flights are getting a little more expensive but that is not happening uniformly.”

Given the steeper fares, some travelers may be tempted to drive instead, despite the rise in gasoline prices. One Web site, BeFrugal.com, developed an online application that helps travelers compute the total cost of flying versus the time needed to drive between any cities.

The Web site calculates that it would take four hours and 50 minutes to get from a specific location in Salt Lake City to downtown Los Angeles by air, and cost $762, including cab fares along the way. The same trip could be made by driving about 11 hours for a total round-trip cost of $292.

This certainly has not been an easy year for the airlines. While air travel has recovered from the recession, fuel prices have surged this year. In addition, the earthquake and tsunami in Japan and the instability in the Middle East cut travel to those places. As a result, the International Air Transport Association slashed its forecast for the global industry’s profitability this week. The global trade group said it expected airline profits to fall sharply this year. Profits for North American carriers will drop to $1.2 billion this year, from $4.1 billion last year, the group said.

This article has been revised to reflect the following correction:

Correction: June 10, 2011

An earlier version of this article referred incorrectly to the airline offering a $664 round-trip fare between San Francisco and Boston. It is United Airlines, not Airways.

Article source: http://feeds.nytimes.com/click.phdo?i=67b1b97fe2ff3331507ba58cd6828d7e

You’re the Boss: So Far, Our New Pricing Strategy Is Working

Mussels kimchi.Chris Koszyk Mussels kimchi.
Start-Up Chronicle

When Colicchio Sons switched to a prix fixe only one month after opening in January, I had to smile. Excellent timing. For me, if not them. We were entertaining the same change during our hiatus at Southfork Kitchen. (Restaurant definition of hiatus: stop serving, start debating.)

When Tom Colicchio said that only one out of 300 diners protested the change, it was encouraging: an owner institutes a new policy, guests adapt and accept readily, and everyone comes out ahead. Mr. Colicchio’s decision informed our decision; it was as if he cast the tie-breaking vote, like a virtual vice president in actual absentia.

We went to a $55 three-course prix fixe when we reopened in March. The few random complaints were rescinded by evening’s end when guests realized they were receiving good value. Or, if they were not desirous of a full meal, they ate very well at the large bar, à la carte. We will never know how many potential diners avoided us because of the prix fixe, or how many were displeased but too civilized or bashful to say something. All in all, check averages increased and traffic remained steady.

Everything about the prix fixe has been positive. It helps the restaurant run smoothly because every guest at every table is ordering the same course at the same time, sharing expectations and rhythms.

Block Island squid a la plancha.Chris Koszyk Block Island squid a la plancha.

And maybe food: we don’t charge for sharing; in fact, we commend it. Part of our mission, if I may step onto a low soapbox for a moment, is to coax people to taste food they are squeamish about or unaccustomed to; we’d like to dispel falsehoods about mackerel and shad roe, rabbit and duck foie gras. The relationship between canned sardines and the genuine article from the ocean is the difference between high school Sondheim and Broadway. Sardines are highly sustainable, tasty and healthful, and they can hit high notes.

It used to be that a table of four would have one guest ordering two appetizers, another ordering the chicken with no appetizer, and two others ordering the full monty. If you don’t order an appetizer, the chicken is a long time coming. It is cooked to order and cannot be rushed. Now, everyone gets bread and butter and honey, three amuse bouches, an appetizer, an entrée, a dessert, and petit fours. If you don’t have room for dessert, we make them to travel neatly — a cookie assortment, a cheese plate.

This does wonders for the kitchen. When one order comes in, the amuse bouches go out — a thank you from the chef as well as a preview. The appetizer will arrive at the table 10 or 12 minutes later. The runners or servers keep an eye on the table and let the kitchen know when the guests are halfway through their appetizers, and then the entrees are fired. Depending on how talkative or unhurried a table is, entrees should arrive between 20 and 30 minutes after the appetizers are done. No one is pushing anyone. Some tables are languid; others are fidgety and clock-watching. We take a measure of leisureliness.

The prix fixe has also aided food sourcing and buying; since guests are less concerned with price point — no longer tilting toward appetizers, pasta and poultry — they can be more adventurous or whimsical. We sell more of everything, and waste less. Sustainability involves using every inch of an animal, so the amuse bouches can incorporate the fish that is shaved from the filet or the extra oysters. When people were ordering an array of appetizers, mussels might disappear early one night and clam strips the next. Trout could fly or just lie there like a lox. We could never tell. Patterns were weird. Now, everything is moving at comparable and predictable speeds.

I know: this is all sounds like the prix fixe stacks the cards in our favor, with wanton disregard for the guests. That is not totally untrue. We do want to guide the passengers and steer the ship, gently and wisely, in as friendly a manner as possible. We have a reduced prix fixe pour les enfants. We avoid supplemental fees like $8 extra for lobster, $10 for caviar, stuff like that. We do not skimp on any portions. Rather than seeing a prix fixe as a trap or a strait jacket, guests can peer into their future: They know the final bill before they order — before they even arrive at the restaurant.

Everything was going so smoothly with us that I was gobsmacked to read that Colicchio Sons had unfixed their prices. “People were not happy with paying prix fixe,” said Tom Colicchio, owner of 24 restaurants and innumerable awards. “We listen to what customers are telling us. I’m not going to be stubborn. When we call to confirm a reservation, and make sure they know about the prix fixe, they often say no, they don’t want to do that.” They didn’t want dessert. They didn’t want to spend $78. They didn’t want to be pushed around. Not even by the charming generalissimo of Top Chef.

What happened to the 300-to-one vote in favor of the prix switch? What happened to Mr. Colicchio’s problems with dish-sharing and under-ordering? What prompted the second change? Mr. Colicchio assured that it was not a disappointing review as much as the slumping economy — but the economy had not slumped since his opening. “We’re not afraid to make changes,” he said.

That’s what he had said before the last change. First à la carte was a mistake. Now prix fixe was a mistake. Are there any other options? How often can a stable, reliable restaurant change its policy in a month? I called Mr. Colicchio several times hoping to discuss his thinking, but I never heard back.

In the meantime, our prix fixe is fixed. I sure hope I don’t have to eat my words. I wouldn’t know if I should charge myself per word or for the whole sentence.

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

Article source: http://feeds.nytimes.com/click.phdo?i=030bb0dd52f0345b7453741fd5ec71c3