Air Travel Still Bargain

braunpilot

What day is it?
http://www.tulsaworld.com/business/...rticleid=20110910_45_E1_CUTLIN750123&allcom=1

By: D.R. STEWART

Despite recent fare hikes due to fuel price increases, air travel remains a bargain, industry executives and analysts say.





Over the past 10 years, the average roundtrip domestic airfare, including taxes, has increased 4.5 percent, from $352.92 in 2000 to $368.92 in 2010, said the Air Transport Association, the trade group representing major U.S. airlines.

During the same 10-year period, the U.S. Consumer Price Index - inflation - rose 27 percent, government statistics show.

"Fares haven't even kept up with inflation," said American Airlines spokesman Tim Smith. "It's cheaper (to fly) today, when adjusted for inflation, than it was in 2000."

Intense competition and the transparency of airline fares through the Internet and global distribution systems have kept fares low.

But airfare bargains have come at a steep price to the airline industry, analysts say.

Robert Herbst, founder of AirlineFinancials.com, said U.S. airlines used to be the best in the world.

"But now they are among the worst," Herbst said. "There is tremendous pressure to make airline tickets cheaper, rather than making the airline experience better. There is no incentive anymore to make the airline experience better."
The drop in travel after the 9/11 terrorist attacks was compounded by recessions that produced 39 airline bankruptcy filings and an urgency by survivors to cut costs, industry officials say.

"The industry has lost, collectively, (a net) $55 billion and 160,000 U.S. jobs over 10 years," Nicholas E. Calio, president and CEO of the Air Transport Association, told an industry summit last month. "And they're good jobs - jobs that were averaging between $50,000 and $120,000 annually.

"The industry cannot continue to lose money and jobs and fly people from point A to point B for less than it costs to get them there and be able to sustain themselves as a business model."

To survive economically, airlines have unbundled services and instituted fees for checked baggage, reservation changes, onboard meals and other services.

"To be able to offer extremely low fares is absolutely essential in today's environment and has led us to let customers pick and choose what they want," said American's Smith. "Revenues today mean both fares and service charges, and in the most recent reporting periods, they haven't covered operating costs sufficiently to make regular profits."

Herbst and Michael Boyd, president of Boyd Group International Inc., an industry consultant, said the airlines might be able to chart a path to recovery if they weren't bucking headwinds from politicians and regulators in Washington.

Boyd said ancillary fees are a "clumsy" way to increase revenue from passengers, but consumers have accepted them.

Politicians, however, propose to tax the airline fees - in addition to more than 15 percent taxes and fees on airline tickets - as part of a long-term deficit-reduction plan, Boyd said.

"Fuel and labor are way down the list," Boyd said. "The biggest threat is these clowns in Washington who are proposing to tax (ancillary) revenue streams. How much travel would there be if you took 15 to 18 percent off the ticket price?"

The remedy?

"Get the politicians out of there," Herbst said. "If the airlines want to charge money for baggage, let them. Airlines are constantly being driven by new rules - baggage reporting, the three-hour tarmac (delay) rule. They say the industry has been deregulated, but it's more regulated today than ever."

The airlines, which have been called the physical Internet for their ability to connect passengers, businesses and cargo around the world, should be allowed to run their businesses, said Calio of the Air Transport Association.

"...(A)irlines are underappreciated, they are overtaxed, they are overregulated and most importantly, they could be a resource to drive economic growth and job growth if the right policies are in place," Calio said. "That, of course, is the trick."

U.S. airlines operating highlights, 2000 vs. 2010.

Fleet: 19 percent - or 840-aircraft - decrease in 100-seat or larger aircraft.

Jobs: From peak of 544,400 full-time equivalent employees in 2001 to 379,700 in 2010, a 30 percent decrease.

Capacity: U.S. domestic seating capacity dropped 4.1 percent; U.S. international capacity rose 18.5 percent.

Losses: U.S. carriers reported cumulative net losses of $63 billion.

Bankruptcies: 39 U.S. airline bankruptcies.

Safety: From 1990 to 1999, U.S. airlines' fatal accident rate was 0.2802 per million aircraft departures; from 2000 to 2009, it was 0.1237, a 56 percent improvement; in 2010, it was 0.0.

Sources: Air Transport Association, Federal Aviation Administration, Bureau of Transportation Statistics, National Transportation Safety Board.

Original Print Headline: Bargain travel






 
It's stoopid cheap to fly!
Heck I just did a three day, one-way, road trip and flying would have been half price.
Not only cheaper but it would have turned those three days of travel into a little over a morning of travel.

That is very interesting to know that it only raised 4% in the last decade.
 
Over the past 10 years, the average roundtrip domestic airfare, including taxes, has increased 4.5 percent, from $352.92 in 2000 to $368.92 in 2010, said the Air Transport Association, the trade group representing major U.S. airlines.

This doesn't include the extra fees airlines are now charging for checked bags, extra legroom, priority boarding, food, and IFE. Some of these things can add in upwards of $100 to the "ticket price". But overall I agree, air travel is more of a bargain now then ever. Ticket prices need to go up. Fuel prices have more then doubled and that being the airlines primary expense it would make sense for ticket prices to increase more then 4%. Haven't the economists been saying that these mergers will lead to reduced competition, increased ticket prices and more profits? What happened to that?
 
The last paragraph says it all: Airlines are underappreciated, overtaxed, and over regulated.

The same can pretty much be said for just about any american industry you care to name.
 
The "overtaxed and overregulated" mantra is hysterically funny. The tax rate for business is purely irrelevant, as most large and medium size businesses in the U.S. actually pay little or no tax. A business which pays at the specific tax rate is employing incompetent managers and accountants. Overregulated? In 18 years in a highly regulated industry I made enough money to retire and enjoy our families G550. Once again, businesses that whine about overregulation are feeling frustrated that the extant regulations somehow constrain their ability to rape consumers. Sheesh.
 
The "overtaxed and overregulated" mantra is hysterically funny. The tax rate for business is purely irrelevant, as most large and medium size businesses in the U.S. actually pay little or no tax. A business which pays at the specific tax rate is employing incompetent managers and accountants. Overregulated? In 18 years in a highly regulated industry I made enough money to retire and enjoy our families G550. Once again, businesses that whine about overregulation are feeling frustrated that the extant regulations somehow constrain their ability to rape consumers. Sheesh.
Wanna adopt a 30 year old?
 
The tax rate for business is purely irrelevant, as most large and medium size businesses in the U.S. actually pay little or no tax.

It's stunning to me that most middle and lower class Americans have no idea about this. The effective tax rate for large businesses is near (or at) zero. When people talk of "economic stimulus" in the form of "tax breaks", they're really talking about handing out of money in the hopes that "business" will be nice and hand some of it back to them in "exchange" for their now-free labor. Did I mention "stunning"?
 
Back
Top