Tag Archives for airfare.
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.
Air France KLM just announced that they plan to move to ‘continuous pricing’ rather than filing fares and managing availability on specific flights. They think that, on average, they can charge consumers about 10% more for tickets than they do today.
Several other airlines are working on the same thing. Here’s how it works.
Kayak.com publishes daily data on consumer flight searches and this has been a reliable early indicator of future load factors, though of course people do book tickets and cancel more often now given the uncertainty in the world and greater flexible change policies that airlines have offered.
Something strange happened yesterday. On July 21 people searched for international travel 15% more than last year. What in the world is going on?
There’s likely to be greater variance in what happens to fares than we’re used to, because airlines build their schedules guessing what demand patterns are going to look like and those may be more volatile than we’re used to – airline revenue management tools are more likely to “guess wrong” than in the past because they’re dealing with new situations they haven’t encountered before.
Hotels are a different story. While hotels can leave entire floors closed to save on cleaning and heating and air conditioning costs during periods of low demand, it’s harder to mothball capacity.
Major U.S. airlines have waived change fees for new ticket purchases, to encourage customers to spend money in a world of uncertainty. You won’t be penalized for changing plans if you buy a new ticket now and need to change it later – you’ll retain a travel credit for future purchases with the airline.
They’ve been extending the policy little-by-little, ostensibly because it might only be necessary for a short time. It won’t be. These change fee waivers on ticket purchases are going to need to continue for many months, perhaps through the end of the year. That’s not just for the convenience of passengers, but so that people will be willing to buy tickets at all.
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 »
