WDW during a Recession / Economic Downturn

monothingie

monothingie

The Most Positive Member on the Forum ™
Premium Member
Eric Graham said:
the market has been volatile because of market conditions....
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The volatility lies in that business travel has recovered more slowly post covid. Business travelers provided a steady base of revenue for airlines, however leisure travel now accounts for a higher percentage of airline revenue making it more susceptible to economic machinations.

Leisure travelers represent a very challenging revenue stream for airlines, and you've seen LCC (South West and Jet Blue)and ULCC (Spirit, Frontier, Aliegent) struggle based on the majority of their customers being very price sensitive. Legacy carriers like UAL, Delta, and AA have managed to hedge this via their premium cabin offerings which have much higher margins and generally are geared to customers who are less price sensitive.

I don't think Disney is representative of the typical family vacation anymore (sad). Their pricing strategy has led their own problems. If everything were good, they wouldn't be fire saying rooms at 2005 prices. If they wanted a good pump and dump for the earnings call, they're certainly masters of illusion on pulling that off. We'll see in later this year how they actually did.
 
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Eric Graham

Well-Known Member
monothingie said:
The volatility lies in that business travel has recovered more slowly post covid. Business travelers provided a steady base of revenue for airlines, however leisure travel now accounts for a higher percentage of airline revenue making it more susceptible to economic machinations.

Leisure travelers represent a very challenging revenue stream for airlines, and you've seen LCC (South West and Jet Blue)and ULCC (Spirit, Frontier, Aliegent) struggle based on the majority of their customers being very price sensitive. Legacy carriers like UAL, Delta, and AA have managed to hedge this via their premium cabin offerings which have much higher margins and generally are geared to customers who are less price sensitive.

I don't think Disney is representative of the typical family vacation anymore (sad). Their pricing strategy has led their own problems. If everything were good, they wouldn't be fire saying rooms at 2005 prices. If they wanted a good pump and dump for the earnings call, they're certainly masters of illusion on pulling that off. We'll see in later this year how they actually did.
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we have had many quarters of positive growth before the GDP last dropped this first quarter...
 
monothingie

monothingie

The Most Positive Member on the Forum ™
Premium Member
Eric Graham said:
we had many quarters of positive growth before the GDP last dropped this first quarter...
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Not sure what you mean, from 2023-2025 you've seen airlines struggle significantly.

Jetblue, Southwest and Spirit were decimated in 2024. Alaska managed to avoid disaster by combining with Hawaiian.

The big three legacy carriers were buoyed by premium cabin sales, cobranded credit cards, and fleet efficiencies.
 
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Eric Graham

Well-Known Member
monothingie said:
Not sure what you mean, from 2023-2025 you've seen airlines struggle significantly.

Jetblue, Southwest and Spirit were decimated in 2024. Alaska managed to avoid disaster by combining with Hawaiian.

The big three legacy carriers were buoyed by premium cabin sales, cobranded credit cards, and fleet efficiencies.
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sorry I meant the GDP for the US economy...
 
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Ayla

Ayla

Well-Known Member
monothingie said:
Not sure what you mean, from 2023-2025 you've seen airlines struggle significantly.

Jetblue, Southwest and Spirit were decimated in 2024. Alaska managed to avoid disaster by combining with Hawaiian.

The big three legacy carriers were buoyed by premium cabin sales, cobranded credit cards, and fleet efficiencies.
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Southwest was decimated in 2024 due to an activist private equity shareholder that is killing it and will soon be selling it for parts.
 
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Eric Graham

Well-Known Member
Andrew C

Andrew C

You know what's funny?
Eric Graham said:
You're Right...Forbes and Reuters make things up all the time...
www.forbes.com

Major Airlines Cut Forecasts—Citing Shaky Economy

Four major U.S. carriers—Delta, American, Southwest and JetBlue—have dimmed their outlooks for early 2025, acknowledging softer demand and lower consumer confidence.
www.forbes.com www.forbes.com
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The uncertainty from March is slowly starting to get sorted. Should be even clearer by August.
 
Ayla

Ayla

Well-Known Member
Eric Graham said:
You're Right...Forbes and Reuters make things up all the time...
www.forbes.com

Major Airlines Cut Forecasts—Citing Shaky Economy

Four major U.S. carriers—Delta, American, Southwest and JetBlue—have dimmed their outlooks for early 2025, acknowledging softer demand and lower consumer confidence.
www.forbes.com www.forbes.com
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Doesn't mean prices are dropping. We flew first class on United from ORD to CZM in February for $50 more than what our flight this week on SW (SOUTHWEST AIRLINES!!) would have cost if we would have paid out of pocket (MKE to CHS). We wanted to use up our points, so the cost was immaterial, but if we would have been paying out of pocket, SW wouldn't have even been a consideration.

Southwest's fares in particular are outrageously high.
 
monothingie

monothingie

The Most Positive Member on the Forum ™
Premium Member
Ayla said:
Southwest was decimated in 2024 due to an activist private equity shareholder that is killing it and will soon be selling it for parts.
Click to expand...
Southwest's model, while very customer friendly was unsustainable. With increased operational costs and competitive pressure it needed to change in order to maintain its viability as a LCC. I don't think it will be carved up and sold, but there certainly will be adjustments for customers as it brings it product offerings inline with industry standards. (Charging for checked bags, premium seating, assigned seating, overnight flights, etc.)

Jet Blue is a cautionary tale of how these competitive pressures can almost bankrupt an airline.
 
Ayla

Ayla

Well-Known Member
monothingie said:
Southwest's model, while very customer friendly was unsustainable. With increased operational costs and competitive pressure it needed to change in order to maintain its viability as a LCC. I don't think it will be carved up and sold, but there certainly will be adjustments for customers as it brings it product offerings inline with industry standards. (Charging for checked bags, premium seating, assigned seating, overnight flights, etc.)

Jet Blue is a cautionary tale of how these competitive pressures can almost bankrupt an airline.
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It's been sustainable for the last 50+ years. The only reason those ridiculous changes are being made is because of the private equity company. I predict SW will no longer exist in the next 5 years. Their loyal customer base is EXTREMELY unhappy and are leaving in droves.
 
Z

Ztonyg

Member
Ayla said:
It's been sustainable for the last 50+ years. The only reason those ridiculous changes are being made is because of the private equity company. I predict SW will no longer exist in the next 5 years. Their loyal customer base is EXTREMELY unhappy and are leaving in droves.
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SW will continue to exist in the next 5 years. They have too many valuable assets and dominate so many mid-tier markets that their total demise is highly unlikely.

What they will lose are the loyal infrequent travelers that essentially only go to southwest.com or their app to book travel and don't compare SW to other airlines. Due to SW having the same "perks" or lack of perks as other airlines, these fliers will begin to evaluate their other options. Having worked at an airport for the last 9 years and with SW customers, this is a very significant portion of their base. I am a member of this base and I live at an airport where AA also has a significant presence and I plan to switch most of my flying from SW to AA.

SW will have to make up for this loss of customers by offering more competitive pricing.
 
Kamikaze

Kamikaze

Well-Known Member
Eric Graham said:
You're Right...Forbes and Reuters make things up all the time...
www.forbes.com

Major Airlines Cut Forecasts—Citing Shaky Economy

Four major U.S. carriers—Delta, American, Southwest and JetBlue—have dimmed their outlooks for early 2025, acknowledging softer demand and lower consumer confidence.
www.forbes.com www.forbes.com
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You specifically said prices are dropping, that isn't true.

Flights might be more empty, but prices haven't gone down.
 
UNCgolf

UNCgolf

Well-Known Member
There's probably not much reason for airlines to drop prices. While airline travel isn't cheap, it's usually only a fraction of any overall travel budget -- I don't think there are very many people who aren't going on a trip solely because of airfare.

My guess is lowering prices would not cause any significant increase in travelers; they'd just get less money from the people who were going to travel anyways.

Now if they were suddenly selling round trip ticket to major destinations for $75 they'd likely see an uptick, but selling 4 tickets at $75 vs. 1 at $500 isn't helpful.
 
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Sirwalterraleigh

Sirwalterraleigh

Premium Member
Chi84 said:
This was what I was asking about earlier but it’s from another thread.
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If you follow that thread, after he quoted what they were saying…which may not be a “lie” by the textbook but certainly can be intentionally misleading…

…I asked Len if their proclamations match what he’s seeing in Orlando?

“No” was the short version of his response
 

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