Case Study United Airlines

477 Words2 Pages
United Airlines On the surface the Wall Street Journal (WSJ) report sounds very impressive. As if the homework done and the facts and figures provided show they know more about the airline and their business than possibly the airline itself knows. I think the WSJ may have a few good points about the cost of the flights from San Francisco to Washington, D.C. But they can not possibly know everything that goes into how and why and airline provides flights to certain segment of customers. For an airline to simply apply a percentage or portion of the costs of airport fees, baggage handlers, ticket agents and building charges to each flight to cover the costs of sunk or overhead costs would most likely eliminate 60 to 70 percent of the flights they provide. In every industry they have their “cash cows” if you will, that cover these sunk costs. So, providing additional fights to areas that are not as high demand can still be a valuable demand to be met provided they can at least cover the crew and fuel costs. If every airline did as the WSJ suggest in applying a percentage of the overhead or sunk costs of running the airline to each flight, many smaller regions would have very few flights in and out of those areas. Making travel to these areas much more expensive than what is really necessary. Quite possibly making the cost to these areas for travelers so much more expensive than most would be willing to pay. This could just be a ploy for the airline to stop this flight service from San Francisco to Washington, D.C. because they are in fact not making enough to cover the fuel and crew costs for these flights. Rather than announce the cancellation of this service themselves, they could be feeding information to the WSJ to help get the word out that they plan to stop this service in the near future. And this article is helping them to plant that seed. Typically

More about Case Study United Airlines

Open Document