Tag Archives for airfare.
Markets began tanking this morning on a higher than expected 8.2% increase in the Consumer Price Index. Food and energy costs are drivers of this, but so is airfare.
Here’s why fares are going up, and why the airlines – through their conscious decisions – have caused a piece of inflation that’s driving down markets.
The strange thing is that American Airlines had bundled fares a decade ago – and US Airways management eliminated the idea after taking over the airline. Now they’re bringing it back.
United Airlines CEO Scott Kirby blames high fuel prices for unprecedented increases in airfares. That’s a new tune for Kirby who argued for a doubling of airfares even in 2018.
Airfares increased 18% in April, the biggest increase for a month since the government began tracking this nearly 60 years ago. Fuel prices, though, aren’t the reason why.
When American Airlines announced the end of the ‘Shuttle’ product in November they shared that they would turn over New York LaGuardia – Boston flying to JetBlue and introduce Shuttle-like fares to several markets.
New “Main Select” fares would be refundable, bundling priority boarding and check-in, free seat assignments for any coach seat (including extra legroom) and free same-day confirmed changes. According to a spokesperson these fares are now available on several routes:
The most expensive airfares in the country are at Washington Dulles airport, followed by San Francisco, Detroit, Portland and New York JFK. That’s according to Department of Transportation data for 2021. They tend to be either expensive airports with limited competition (New York JFK is slot-controlled) or dominated by a single airline without as much ultra low cost competition as those on the other end of the list.
The reasons I’ve seen pundits give for why airfares are so high are usually wrong. Travel hasn’t fully returned to 2019 levels, so why have prices risen so much? Fuel prices can limit which flights operate profitably, but fuel isn’t the current binding constraint on supply. And it’s not just a desire of airlines to make back the money they lost during the pandemic.
Instead it’s something far more nefarious.
Fuel prices are at record levels, and that’s bad for airlines. It’s also bad for transportation to and from the airport and hotel It’s bad for heating (which means it’s bad for hotels in chilly weather). It means higher prices for travel, but let’s look at airfare first.
Emirates started selling ‘basic business class’ fares last year. Qatar Airways came out with this, restricting access to lounges and to advance seat selection on the cheapest business class tickets. And the latest entrant into this game is Finnair, and their restrictions are absolutely brutal.
What’s really interesting here is whether airlines can make Basic Business Class work as a way to generate more revenue. While Basic Economy has caught on and had mixed results, it’s going to be a lot harder to do with Business Class and that strategy will probably cost an airline more than it’ll generate in incremental revenue. Your cable television bill helps explain why.
Lending Tree is pitching a report that begins with some anodyne claims about customer behavior towards frequent flyer miles and jumps to the unsupported conclusion that mileage redemptions this year are going to crowd out paying customers, who won’t be able to find seats for sale. This is literally insane.
There’s a fare war to Tokyo going on from a variety of U.S. cities, and roundtrip fares start at just $198 roundtrip for Cleveland – Tokyo. Other great fares in the $200 – $250 range are available from Fort Lauderdale and Miami; St. Louis; Raleigh; Washington D.C.; Philadelphia; Dallas Fort-Worth; Charlotte; and Phoenix – and probably others. These fares aren’t going to last long.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
