Chapter 1894

"For more than three consecutive years since 2012, the average one-way ticket price between Detroit and Philadelphia has never been less than $308. Sometimes, the price of one-way flights between the two places is even more expensive, with the highest price ever. Reached $385.

However, airfares suddenly began to fall in early 2016, and by the end of 2016, the average price of a one-way flight between Detroit and Philadelphia had dropped to $183.

What's causing the drop in air ticket prices? "

Yang Cheng spread his hands, "Gas price!"

Tyrell shook his head, "No, that's just one aspect, there is a more important reason~"

Yang Cheng frowned and asked, "What's the reason?"

"The most important factor is the emergence of a low-cost airline - Spirit Airlines!"

"Spirit Airlines?" Yang Cheng muttered the name.

“Yes, last April they launched a route from Philadelphia International Airport to Detroit.

At some point, one-way fares on Spirit Airlines were less than $100. Can you imagine the concept?

It is precisely because of the entry of Spirit Airlines that all airlines that opened routes from Philadelphia to Detroit had to lower their average fares, including your company Delta Air Lines and American Airlines, which dominates seats at Philadelphia Airport.

After Spirit Airlines launched round-trip service between Detroit and Philadelphia, the average price of a one-way ticket on the route dropped by more than half.

If it weren't for these low-cost airlines, Philadelphia International Airport would have seen a significant decline in passenger traffic. "

Yang Cheng suddenly understood what Tyrrell meant. Although the monopoly of the four major airlines directly pushed up ticket prices, it also indirectly affected the number of passengers. It rose and fell. As the currency depreciated, in fact, from the airport's perspective, It is said that they are in a state of negative growth.

“Actually, there is another low-cost airline, Frontier Airlines, that also operates flights from Philadelphia.

If it were not for low-cost airlines, consumers would definitely face a completely different air ticket pricing situation than now. If air tickets continue to rise, many travelers may cancel their travel plans. "

Yang Cheng thought thoughtfully: After the wave of mergers and acquisitions, the number of large airlines in the United States has been reduced to four.

This significantly reduces competition in the aviation sector.

If it weren't for the intervention of low-cost airlines, which play the role of lowering fares to maintain market vitality, I'm afraid the quagmire Tyrrell mentioned would have formed faster, right?

Moreover, today’s low-cost airlines are different from those in the past. Don’t think that calling them cheap means they are really cheap.

In fact, low-cost airlines will provide the same basic services to passengers. Of course, they also provide "luxury services", such as extra luggage or more space, but the prices are very expensive.

It is precisely by relying on this strategy that low-cost airlines have successfully seized the market with low fares, stimulating new consumption needs of many temporary travelers. Low-cost airlines have even succeeded in stealing some customers from large airlines.

In fact, the success of low-cost airlines is nothing new.

As early as 1993, researchers at the Department of Transportation named a similar trend the "Southwest Effect," a name derived from Southwest Airlines, which grew rapidly in the 1990s by providing basic low-cost flights. Studies have shown that , when Southwest Airlines provides consumers with direct flights, the average one-way fare between the two places will be $45 lower than before. A living catfish is thrown into the stagnant water and turns the stagnant water into living water. This is the Southwest Effect.

Now, there is more than one catfish in the market, and other low-cost airlines will also play a role in lowering fares.

Looking at Tyrell again, his eyes changed. Yang Cheng asked directly, "Mr. Tyrell, do you want Delta Airlines to speed up its penetration of Philadelphia Airport?"

Tyrell perked up. This was exactly what he wanted to say. Unexpectedly, Yang Cheng brought it up first, which was exactly what he wanted.

"Yes, as one of the ten busiest international airports in the world, doesn't Delta want a piece of the pie?"

Yang Cheng spread his hands, "Of course I do, but you have to know that once Delta Air Lines does this, it will start a war with American Airlines. Once the two of us go to war, the global aviation market will be affected, and I can't control the consequences. I’m afraid I can’t afford predictions.”

"This is not an idea that a good entrepreneur should have. You need courage, Mr. Yang~" Tyrell said bluntly.

Yang Cheng suddenly found it interesting that no one had talked to him like this for a long time, "It's interesting. I have courage and never lack it, but that doesn't mean I will act rashly.

Your position is too low and you may not be able to understand my thoughts. "

Tyrell didn't care about Yang Cheng's evaluation of himself, and instead said, "If I were a Delta employee, I would definitely consider it from a global perspective. Unfortunately, I am not. I can only focus on the Philadelphia Airport~"

Yang Cheng added, "You know what? If I were to make a list of the ten worst airports in the United States, Philadelphia International Airport would definitely be on the list.

Busy inbound and outbound flights, crowded crowds, chaotic management, and troublesome security. I think you should solve your own management problems first, and then consider introducing Delta Airlines to compete. Otherwise, it will only make the airport more chaotic. "

What he said is true. The chaos at Philadelphia Airport is recognized and cannot be made up.

This is also the reason why Delta Air Lines is unwilling to invest too much energy in Philadelphia. First, grabbing food from American Airlines is laborious and costly. If you have this time, you would rather dig a new airport from scratch.

And in accordance with its established strategy, Delta Air Lines will next spend billions of dollars to upgrade its existing terminals, technology, aircraft and flight experiences to help solidify its relationship with its 2 passengers per year.

It can be said that with the intervention of Yang Cheng, Delta's strategy has slowly transitioned from an airline to a trustworthy brand.

Just like when people first think of Apple when buying a mobile phone, Delta’s ultimate goal is to make passengers think of Delta Air Lines when they choose to travel!

In order to achieve this goal, Yang Cheng has reached an agreement with the board of directors and approved an allocation of US$12 billion in the next three years to update and upgrade service facilities.

For example, one of the initiatives is to launch high-speed WiFi on airplanes. Most Delta Air Lines aircraft now have this kind of Wi-Fi, but the price in North America is $16 per day, or $599.99 for an annual pass, but The next thing Delta needs to do is make Wi-Fi free and high-speed, which will take one to two years to slowly improve.

Of course, there are also many measures including updating aircraft. In addition, the company has realized that redeeming airline reward points may be troublesome, so it is preparing to make it easier for passengers to use points to upgrade their seats. The implementation of this feature will make business travelers more sticky Higher because their employer only pays for a basic economy class ticket.

Of course, Delta passengers also have the option to purchase tickets using points or cash.

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