This analysis from McKinsey is worth a read: http://www.iata.org/whatwedo/Documents/economics/Profitabili...
The cost of flying and operating an airline is so expensive that airlines also optimize on costs and prices.
Virgin stands out as trying to change, that, but otherwise for everything economy class it's a race to the bottom.
Looking at prices you'd think we value things we need lower than things we want.
When United and Continental merged and began adding E+ to the Continental fleet, most aircraft were completed pretty quickly since that change can be made during overnight maintenance at the hubs.
I was looking into flights to Japan, and the Premium Economy tickets are literally double the regular economy tickets.
Many domestic flights have Premium Economy for less than double the price, but it's still expensive enough and the benefits not great enough (generally only a couple of inches of legroom--no change in seat width, no better service, etc) to generally not be worth it unless you are flying cross country.
There is, sort of. It's easy to look at the interior of, say, a 737 and conclude there are only two or three "classes" (economy and first, and possibly some sort of premium-rate economy with extra legroom), but fare-wise there's enormous variation.
On -- to take an example legacy carrier -- United, the "economy" cabin is actually made up of fourteen different fare classes. Deciding how many seats to offer in each fare class on a given instance of a given flight on a given day is a stupendously complex task which largely gets hidden from the customer (for completeness' sake, "first class" and "business class", on planes which have them, have three additional fare classes each).
A big part of it is that there's more to it than just the seat, which is obvious since all those different "economy" fare classes end up in the same or very similar physical things-to-sit-on. The number of factors, though, is frighteningly large.
For example, your origin and ultimate destination factor into the fare, as do whether it's one-way or round-trip, and how far in advance you booked, and whether you wanted a refundable ticket, and whether it was booked by a corporate travel department on your behalf, and whether it was a seat offered to third-party travel-booking and search sites, and what day of week and time of day the flight is operating, and whether it's a seasonal offer to a popular vacation destination, and... that's the tip of the iceberg.
1: http://www.dailymail.co.uk/news/article-2329405/Virgin-Ameri... 2: http://www.bizjournals.com/sanfrancisco/news/2013/08/07/eyei...
I haven't given this much thought but a lot of it isn't necessary at all.
1. Vacations abroad - vacation in your own country or take a boat
2. Business - a lot of business can now be conducted online which previously required air travel
I'm sure those two things alone make up a vast portion of the consumer air travel market.
That has been repeatedly established, and there are very strong reasons why people with very limited time still travel a lot of hours to conduct their business.
Not everyone is the same, but it is the norm rather than the exception.
http://www.iacconline.org/content/files/WhyFace-to-FaceBusin...
From the paper: "From a psychological perspective there are a number of positive features about faceto-face meetings that cannot always be achieved as well via other forms of communication.
Face-to-face meetings allow members to engage in and observe verbal and nonverbal behavioral styles not captured in most computer mediated communication devises. There are nuances associated with hand gestures, voice quality and volume, facial expressions, and so forth that are simply not captured in email discussion, chat rooms, and the like. Even videoconferencing does not capture all of the dynamics of group members (e.g. the expression of others while one member is talking, etc.).
A further advantage of face-to-face meetings is that they occur in “real time” as opposed to non-synchronized time. Computer mediated communications often are delayed because of a variety of reasons, not always received, and sometimes disrupted because of technical problems.
Another feature is simply the fact that face-to-face business meetings provide human contact among members. Human contact is a primitive need among human beings.
We are social creatures and isolation is harmful. A recent article in the New Yorker magazine8 discussed the impact of social isolation and concluded that “simply to exist as a normal human being requires interaction with other people” (p. 36). There is much psychological research affirming this proposition—that individuals need personal contact with others to satisfy deep primitive psychological needs. Face-toface business meetings help meet these needs. Emailing and even teleconferences are not as likely to meet these needs, notwithstanding the enormous popularity of Facebook which basically provides electronic connections between social “friends”. However, the popularity of this website suggests that people might be even hungrier for social friends than can be satisfied in their present day-to-day work and personal lives.
Similarly, business meetings allow participants opportunities to develop important exchange relationships among themselves. These exchanges can be in the form of business negotiations, personal favors, promises, understandings, etc. that cannot often be achieved via other forms of communication because of their personal and informal nature. One psychological theory that emphasizes this notion is “social exchange theory” where human relations are viewed as an exchange of rewards among individuals or achieving equity between “what you put in” compared to “what you get out” of relationships."
http://www.forbes.com/forbesinsights/Business_Meetings_FaceT...
It would be interesting to do an experiment:isolate someone for a period of time, but let him have full contact with family and friends via the best electronic means we have , and measure the impact of his mood and well-being.
No amount of telephone calls, chats, Facebook or Skyping can compare to in-person interaction. I have a photo of a recent Christmas, with 3 screens with Skype calls to family in Canada and Europe on each screen, and while it helps to "be" there more than just a phone call, it's still nowhere near the same.
It is of course anecdotal, but that was my experience.
I didn't have a full-wall videoscreen with HD, maybe for a limited environment like a meeting it can be a very reasonable simulation... but at least in Latin countries like mine, "real" negotiations and bonding/trust building occur over a shared meal or other shared experiences, which cannot be currently simulated.
Going back to the original topic: business air travel isn't dying soon.
Maybe some inmersive 3-d environment will finally kill it (and we'll see Second Life as an innovation before its time, much like the Apple Newton?)
And we know from the "uncanny valley" that humans are very very sensitive to little things in human/human communication.
So it might just be that telepresence offers a altogether different quality of experience.
And regarding the topic - currently , maybe business air travel isn't dying(thought in 2009 there was a lot of talk about disruption from telepresence). But assuming we'll find the formula for remote face to face communications, and assuming there's enough bandwidth, the pace of change could be rapid(unless people will keep sticking with tradition, which might be the thing now that slows the process).
Anyway, i would be really interested to see major deployment of telepresence quality systems deployed in homes, and how that would affect culture.
I don't want to move from Uruguay, but a person with similar qualifications in the U.S. makes at least twice as I do.
If telepresence makes it easier for me to work remotely, it would be huge for me.
The telepresence robots are cute and maybe a step in the right direction.
Even if we take 150 as our guiding figure, if we assume direct fiber optic connection between sites, the maximum distance would be 45000 kilometers, which can basically connect any 2 points on earth.
So theoretically at least, it's possible. Achieving good latencies in real life is much harder though :)
[1]http://www.cisco.com/en/US/docs/solutions/Enterprise/Video/t...
As an example consider the trouble for businesses if they could not mail legal documents or critical parts overnight. Consider Disney World vacations if everyone had to drive across the country to get there. Consider all the cities in the country that would wilt because no one wants to drive all the way there. Consider people not wanting to drive 18 hours to attend the Super Bowl.
A lot of money moves around the country on those planes one way or another.
[1] http://www.nytimes.com/2013/09/08/business/at-virgin-america...
Further to that, their profits are always being affected by fuel prices. If you read an airline's annual financial report it will talk about buying fuel futures to minimise the risk but they are still vulerable: http://www.transtats.bts.gov/fuel.asp?pn=0&display=chart1
Just look at the posted chart: http://centreforaviation.com/images/stories/2013/jul/05/ROIC....
What's at the bottom? Airlines, electrical utilities, paper, metals, construction materials, and trucking. These are all products that are highly standardized and fungible. You're never going to sell trucking services for 10x cost by making it a "lifestyle brand" the way Ralph Lauren sells jeans for huge margins.
You can also use branding-slash-marketing to make your fungible product seem less fungible. Witness, for instance, how cattle ranchers used marketing campaigns to turn "Angus beef" into a premium, name-brand product (http://bbq.about.com/od/beef/a/Angus-Beef.htm) that customers don't believe is directly substitutable with unbranded beef.
Except when it is not. Soft red, soft white, hard red, etc. Grading, protein content, etc. All can change who is willing to buy the product, and more importantly, how much they are willing to pay.
Emirates gets huge subsidies because its a goal of Dubai to become a world air hub. It certainly makes sense for them given their geographical position but I don't see how US carriers are supposed to compete with that.
Perhaps the UAE(/European/applicable foreign) governments should start charging US carriers an extra fee to combat the subsidies when they land abroad.
I'm sure no-one would complain about that or attempt to use the US government's muscle to fight it...