How American Airlines’ use of Econ 101 will tick you off

0
331

The Story

American Airlines (now merged with US Airways) posted record profits last quarter, thanks to super low gas prices. It’s good for them — but sorry, not for you, our dear traveler.

The Facts

– American raked in a $597 million profit in the fourth quarter, way up from its $1.9 billion loss a year ago.

– It largely credits the super cheap fuel costs we’re all enjoying at the pump these days.

– But when CEO Doug Parker was asked if this meant lower fares in the future, his answer came right out of an econ textbook: As long as demand at the current prices is high, the prices won’t lower.

american-airlines-doug-parker-charlotte

– “Pricing is tied to demand, and demand remains strong. When demand is strong, you see pricing move accordingly.” – Parker

– Parker adds that not all the money is going to the bottom line. It’s also going to:

  • Retire old planes and buy new, energy-efficient planes
  • Add fancy seats to first class
  • Pay shareholders
  • Give employees raises

Yes, you can whine

https://twitter.com/biztrends/status/560175695230275584

C5’s Take

At least we’re going to get lie-flat seats in first class. Not that we can afford first class.

Photos: Tony Gutierrez / AP & John Simmons / Charlotte Observer

LEAVE A REPLY

Please enter your comment!
Please enter your name here