Reply #60: Here's an article that should suggest what this is really about: [View All]

[AP]

But here's where the off-message low-fare/low-cost point becomes relevant. Let's take Siegel at his word and say that US Airways runs at 10 cents per mile and Southwest runs at 6 cents per mile. Then why are US Airways' fares so offensively high? When it launches in May, Southwest will charge $140 for a refundable, one-way, walk-up ticket between Philadelphia and Chicago's Midway Airport. Fly between Philadelphia and Chicago/O'Hare tomorrow on US Airways and you'll pay $419.10 for a nonrefundable walk-up ticket. That's three times more. A flight between Philadelphia and Chicago is 677 miles. Siegel claims that US Airways operates at a 4-cent-per-mile disadvantage against Southwest, so that's $27.08 of added cost between Philadelphia and Chicago. Yet Southwest is charging $140 and US Airways expects flyers to pay $280 more!

As Siegel blathers on, let's try one more fare/cost comparison. Operating at 6 cents per mile, Southwest will charge $168 for a refundable walk-up ticket between Philadelphia and Tampa. Fly Philadelphia-Tampa tomorrow on US Airways and you'll pay a refundable fare of $475.11. At 922 miles of flying on that route, US Airways' 4-cent-per-mile operating disadvantage works out to $36.88. Yet it charges $307 more than Southwest will be asking. That's a markup of more than 800 percent on its higher operating costs.

Now pay careful attention when Siegel turns apocalyptic. Southwest and its chairman, Herb Kelleher, are trying to kill US Airways, he claims. "They're the enemy," he says repeatedly. "They're coming to kill us. Herb Kelleher...wants our customers...wants your jobs." C'mon, folks, does anyone in business respond to this jingoist crap anymore? Besides, all last year Siegel claimed that it was Delta Air Lines that was trying to kill US Airways. Even in the last 30 days Siegel told a Washington business group that Delta's goal was to "drive us out of business." Is Siegel a fool? In denial? A really bad snake-oil salesman? Or an honest-to-goodness paranoid?


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