Go Back   FlyerTalk Forums > Travel&Dining > Travel News
Sign in using an external account

Reply
 
Thread Tools Search this Thread
Old Jul 12, 11, 12:25 am   #1
 
Join Date: Jun 2005
Posts: 8,527
Why, despite much higher taxes, is it cheaper to fly in Europe than in the US?

In a word: COMPETITION.

The EU today has a much more competitive and better functioning market than the US.

People can choose from multiple airlines, often at multiple airports serving the same city and are spoiled for choice with a wide range of competiting and substitute transportation modes ranging from high speed trains to hydrofoil ferries. All of this requires airlines to really be competitive -- even as many are wildly profitable.

Failing airlines, even big names like Swiss were allowed to fail and disappear from the market. Successful airlines were still allowed to be bought up by foreign companies in order to keep management teams sharp and to gain economies of scale. Multiple, new, nimble, innovative, sustainably business modeled, low cost competitors sprang into existence.

Compare this to the US where most legacy airlines are the zombie ghosts of failed, bankrupt companies that were propped up with Ch. 11 enabled government subsidies and taxpayer, creditor and employee-exploiting bailouts like Delta.

Quote:
Europe’s low-fare carriers may be best known in America for outrageous proposals to charge for bathroom access or offer stand-up seating, both ideas floated by Ryanair that were never adopted.

But travelers who have flown within Europe lately often took away a different impression — that airline tickets were surprisingly inexpensive, especially compared with prices to fly within the United States...

“Even after taxes, you see a better fare per mile in the European Union than you do in the United States,” said Mark Milke, a director at the Fraser Institute, a public policy research group in Calgary, Alberta, who published a paper last year comparing the lowest fares available on a sample set of routes.
http://www.nytimes.com/2011/07/12/bu...gewanted=print

Competition doesn't seem to work very well for very long in the US today, whether looking at the airline industry, the banks, health insurance, etc. Maturing industries are allowed to consolidate into unregulated, highly inefficient oligopoly structures and often de facto cartels and local market monopolists: in some states one insurance company has 87% of the market and in many cities there is only one airport, one airline, and no trains or intercity buses. With predictable results on the exploitation of trapped consumers with no freedom of choice, poor service and high prices resemblant of the previous USSR -- but without the government protections that Soviet citizens had.

What do you think needs to happen for the US to be able to enjoy the freedom of choice and lower prices from a better functioning market that Europeans enjoy today?

Last edited by Klm is Dead - Long Live KLM; Jul 12, 11 at 12:30 am.
Klm is Dead - Long Live KLM is offline   Reply With Quote
Old Jul 12, 11, 9:52 am   #2
In Memoriam
 
Join Date: Feb 2000
Location: Easton, CT, USA
Programs: ua prem exec, Former hilton diamond
Posts: 31,819
Quote:
Originally Posted by Klm is Dead - Long Live KLM View Post
in many cities there is only one airport, one airline, and no trains or intercity buses.
Which cities would those be? The ones served only by one airport, with only one airline, without any train service and no bus service?
__________________
Mike Cordelli mike@cordelli.com
cordelli is offline   Reply With Quote
Old Jul 12, 11, 10:53 am   #3
FlyerTalk Evangelist
 
Join Date: Jan 2000
Posts: 12,727
Ughhh, most cities have one airport, whether they are in Europe or the US, certain larger ones have two, occasionally a third. That is unless you partake in a Ryanair like subterfuge where airports up to 200 km away from a city are labelled as that cities airport? These types of airports exist in North America as well, but no one has ever tried to say that other southern Californian airports are in fact Los Angeles, nor that Newburgh is New York City, etc.

As far as the premise of the article goes, I don't know. If I just happen to need to commute between London and Torp, things have never been better/cheaper than they are now. Not so great if I need to get between London and Istanbul for example. Furthermore just looking at the cheapest possible fares is a bit ridiculous no matter which side you look from, and some sort of median fare would have to be examined which also took into account add-ons and fees across the board.

Lastly KLM, and we have discussed this several times, we all know how much you love to bash US "zombie" airlines (as you put it), and you talk with great pride at how Swissair was allowed to collapse (but you then of course ignore the fact that the Swiss government put a gun to everyone's head to financially support a successor, to throw all the good assets into Crossair, name is SWISS and even when that failed make a political decision to let LH have it for a Euro. SN Brussels is almost the same story, and we can speak about in the last decade alone Aer Lingus, Iberia, Olympic and Alitalia multiple times as well as others, and I am not even delving into the 90's where AF alone received more subsidy than all US carriers received for 9/11 alone.
hfly is offline   Reply With Quote
Old Jul 12, 11, 2:52 pm   #4
 
Join Date: Jul 2006
Location: LAX
Programs: AA EXP 1.5MM, Asiana Club Silver, KE Morning Calm, Hyatt Platinum, Amtrak Select
Posts: 7,088
In Europe, there's also an industry-wide competition to air travel: the fast intercity trains. Over there, short intercity distances like Paris to Brussels or Berlin to Prague can be done on frequent, high-speed trains. If the airlines screw you over in the EU, you can say "screw this, I'm taking the train."

In contrast, the airlines have lobbied heavily in the US to have complete monopoly in travel including short-range intercity distances like Portland to Seattle or LA to San Francisco. As such the airlines here have all the power to say "if you don't like it, take Greyhound mwahahaha."

And don't get me started what a joke Amtrak is. Other than the NE Corridor or the Pacific Surfliner route between LA and San Diego, Amtrak makes no money. I fail to understand the need to have Emeryville (SF) to Chicago service which planes handles best, when that same train set can be used to run more short intercity Chicago-St. Louis service or so which the train handles better.
__________________
Wishing the US had more high-speed rail...

Last edited by kebosabi; Jul 12, 11 at 3:01 pm.
kebosabi is offline   Reply With Quote
Old Jul 13, 11, 7:06 am   #5
 
Join Date: Nov 2006
Programs: DL Silver, US, MR Gold
Posts: 6,030
This really is comparing apples to oranges. Some reasons:
  1. The US is BIG. There are considerably more connections that a major airline needs to have available, which is why all the majors have several hubs. That is not the case in Europe. LH has both MUC and FRA, but that's about it.
  2. Airlines come from different backgrounds. In EU every country had a national airline and in the US there have always been just a few really big airlines.
  3. Taxes are different. Europe has HUGE airport taxes and other funny "surcharges". That seriously discourages connections and mileage runs and convoluted itineraries. Try pricing a fare on KL between two cities in Eastern Europe - they clearly want NO part of that. You HAVE to fly an airline based i Eastern Europe.
  4. The customers are VERY different. Tourists within Europe go from anywhere to anywhere (there are some hot spots like Paris, but people are generally curious about a lot of places in Europe). Tourists within US are concentrated on a few places (e.g. Florida, Seattle for the cruise season, Hawai'i, the Caribbean, some ski destinations and that's about it). OTOH, there are a LOT more business travelers within the US. Businesses within Europe are considerably stingier when it comes to travel, always pressing for the cheapest everything, travel ONLY when strictly necessary, etc. There are very, very few consultants who leave every Sunday/Monday and return every Thursday/Friday.

Making a comparison between the two is just silly.

On the train topic, bear in mind that you can travel within Western Europe by train, but that's about it. You can't realistically go from Portugal to Poland by train, or from Italy to Denmark.

There is considerably more competition in Europe but they're working on that... AF/KL/AZ is one giant, LH/LX/OS is another and BA/IB is a third one in the making (although very stupidly located way out in the West end of Europe). A lot of the others are too small to make a big difference (e.g. Turkish, LOT, etc).

Having said that, I am hesitant to believe that prices in the EU are that much lower. It's all about the actual market. Popular markets are cheap, non-popular ones can be VERY expensive, just like in the US.
__________________
I'm in the vicinity of an area adjacent to a location.
florin is offline   Reply With Quote
Old Jul 13, 11, 7:12 am   #6
A FlyerTalk Posting Legend
 
Join Date: Jul 2001
Programs: Just Say No to Fleecing
Posts: 72,565
My travel costs on a per mile flown basis are significantly higher in Europe than it is in the US. While that is only personal anecdotal experience, where's the empirical evidence that shows my anecdotal experience to be an anomaly? I would certainly love to see it.
__________________
Like TSA, DL SkyMiles management treats airline customers as if they are the enemy or sheep to be fleeced and it shows.
GUWonder is offline   Reply With Quote
Old Jul 13, 11, 7:33 am   #7
FlyerTalk Evangelist
 
Join Date: Jan 2000
Posts: 12,727
GU you are totally correct and that is one of the reasons I questioned above a study based on the absolute lowest fares available between markets as being unfair and unrealistic. Not only that but as alluded to above, distances and scales are far different in the US. The longest possible "european" flights are LHR-IST, LHR-SVO (yes we could put in REY or SNN, but there are not too may are there) are only the equivalent of 2/3 of the flight distance of the longest lower 48 flights in the US (I am not going to include Alaska and Hawaii here), and the US has real frequencies. I know of no intra-European route pair that has a frequency of more than 16 flights a day across all carriers (even within one country only MAD-BCN really had a huge amount of flights which has dropped with the introduction of the AVE), I know of at least 10 US city pairs which have over 50 flights per day across all carriers, and on such high frquency and at every level I can say that the US examples are far cheaper across the board.
hfly is offline   Reply With Quote
Old Jul 13, 11, 8:02 am   #8
 
Join Date: Sep 2002
Location: Orlando, FL, US
Programs: DL-Dirt Medallion;US-Cast Iron Preferred; HH-Gold; Avis First
Posts: 3,358
Comparing Ryan Air and EasyJet to all US airlines does not equate to flying in Europe being generally cheaper.
__________________
"It's alright to lose your heart, but never lose your head."
djk7 is offline   Reply With Quote
Old Jul 13, 11, 2:22 pm   #9
 
Join Date: Jul 2006
Location: LAX
Programs: AA EXP 1.5MM, Asiana Club Silver, KE Morning Calm, Hyatt Platinum, Amtrak Select
Posts: 7,088
Quote:
Originally Posted by florin View Post
The US is BIG.
"The US is big" argument doesn't work. So is Europe, in fact, Europe is larger. If counting only the lower 48, we're smaller than China.

Europe: 3,930,000 sq mi
China: 3,704,427 sq mi

US: 3,794,101 sq mi (includes AK and HI)
US counting only the lower 48: 3,119,884 sq mi
__________________
Wishing the US had more high-speed rail...
kebosabi is offline   Reply With Quote
Old Jul 13, 11, 3:12 pm   #10
 
Join Date: Aug 2006
Location: Across the bay from TPA
Programs: DSM, USDM, BAEC, AAAdvan
Posts: 269
Quote:
"The US is big" argument doesn't work.
Oh really?

Here are a few facts:

The UK (93, 800 sm) is slightly smaller than Michigan (96,716 sm)

Germany (137,882 sm) is smaller than Montana (147, 042 sm)

Italy (116,346 sm) is larger than Arizona (113,998 sm) and smaller than New Mexico (121, 589 sm)

Austria (32,383 sm) is just a bit larger than South Carolina (32,020 sm)

Switzerland (15,937 sm) is just a bit less than half the size of South Carolina

France (260,558 sm) is smaller than Texas (268,580 sm)
ExitRowOrElse is offline   Reply With Quote
Old Jul 13, 11, 5:43 pm   #11
FlyerTalk Evangelist
 
Join Date: Jan 2000
Posts: 12,727
kebosabi, perhaps, but there really isn;t that much traffic to Kazan or Ekaterinberg is there? If you want to play it that way, then let's include Alaska and for good measure the distance to Hawaii? As I stated above, LHR-IST or LHR-SVO(DME) is pretty much the furthest you get in flights and they are significantly shorter than JFK-LAX (and SFO) for example, and NYC to all LA area airports has exponentially more traffic than all London airports to all Moscow airports and all London airports to all Istanbul airports.
hfly is offline   Reply With Quote
Old Jul 13, 11, 5:58 pm   #12
 
Join Date: Jul 2006
Location: LAX
Programs: AA EXP 1.5MM, Asiana Club Silver, KE Morning Calm, Hyatt Platinum, Amtrak Select
Posts: 7,088
Quote:
Originally Posted by ExitRowOrElse View Post
Oh really?

Here are a few facts:

The UK (93, 800 sm) is slightly smaller than Michigan (96,716 sm)

Germany (137,882 sm) is smaller than Montana (147, 042 sm)

Italy (116,346 sm) is larger than Arizona (113,998 sm) and smaller than New Mexico (121, 589 sm)

Austria (32,383 sm) is just a bit larger than South Carolina (32,020 sm)

Switzerland (15,937 sm) is just a bit less than half the size of South Carolina

France (260,558 sm) is smaller than Texas (268,580 sm)
And a flea is smaller than a dinosaur

I fail to see your logic. EU nations are just like US states, and if you put all of them together, Europe is much "bigger." So what's your point?

The title of the thread was "fly in Europe versus flying in the US," not comparing flying within each individual European country versus the US.


Quote:
Originally Posted by hfly View Post
kebosabi, perhaps, but there really isn;t that much traffic to Kazan or Ekaterinberg is there?
So there's no traffic between London and Athens or Madrid to Moscow too?
__________________
Wishing the US had more high-speed rail...

Last edited by kebosabi; Jul 13, 11 at 6:05 pm.
kebosabi is offline   Reply With Quote
Old Jul 13, 11, 8:20 pm   #13
FlyerTalk Evangelist
 
Join Date: Jan 2000
Posts: 12,727
uh, no, do you actually read complete posts before you respond, or are you so wrapped up in your logic that you ignore it? I have cited Moscow several times in fact as well as IST (which is "further" than ATH). There are a grand total of 8 or 9 flights from all Moscow Airports to all London airports per day, exclusively on narrow body aircraft on 3 carriers (not including codeshares). There are 32 flights a day between NYC airports and Los Angeles area airports operated by 6 airlines (not including codeshares), perhaps a dozen of these are widebody aircraft. So we are talking about 5-8 times the capacity on twice as many carriers on a distance 33% greater. You want me to compare SFO to IST or ATH? IST now has 9 flights a day from all London airports this season (including the EZ flight from LTN and the TK from STN to SAW) seasonally 7 or 8 in the winter (and as recently as two years ago there were never more than 5). Two are on widebody a/c and that is an alltime high, there are about 24 flights a day from NYC airports to SFO. That is 3 carriers to IST and 5 to SFO. The distance to IST is 1520 miles, the distance to SFO is about 2400 miles. There are 7 flights a day LON-ATH (including EZ, etc), they are operated by 3 airlines including EZ, hell 4 of the 5 from LHR are operated by BA and the other one is a joint codeshare between Olympic AND Aegean. There are 14 flights a day from NYC to Denver which is the same distance operated by 5 airlines. BTW I should add that when talking about NYC airports I am only speaking about JFK, EWR and LGA, I am not including Newburgh or Islip which while far would be in the same cachement area as Stanstead or Luton if an equivalence was truly made. You want to continue?

Madrid to Moscow? A whopping four flights a day operated by two carriers. you really want that comparison? ATL-LAX also two carriers, but SIXTEEN flights a day, mostly on widebodies, as opposed to the Moscow flights that are narrow bodies.

We can go on with this exercise all day, and I doubt you will find any route pairs to support whatever your thesis is, neither in distance, neither in competitors, neither in capacity.
hfly is offline   Reply With Quote
Old Jul 14, 11, 3:08 am   #14
 
Join Date: Nov 2006
Programs: DL Silver, US, MR Gold
Posts: 6,030
Another point: a lot of the US population is concentrated on the coasts. There is a lot of travel to/from the coasts and very little travel between the sparsely populated central states. Europe is VERY different in this respect. hfly also pointed out that between the large cities that are farthest apart, there are very few flights compared to NYC-SEA, LAX-BOS and the like.
__________________
I'm in the vicinity of an area adjacent to a location.
florin is offline   Reply With Quote
Old Jul 14, 11, 3:30 am   #15
 
Join Date: Jun 2005
Posts: 8,527
Quote:
Originally Posted by GUWonder View Post
My travel costs on a per mile flown basis are significantly higher in Europe than it is in the US. While that is only personal anecdotal experience, where's the empirical evidence that shows my anecdotal experience to be an anomaly? I would certainly love to see it.
I believe it is safe to say that GUWonder and his or her flying habits are indeed most certainly an anomaly compared to 99% of the flying public both in United States and Europe. And, I mean this as both a compliment and an indication that your anecdotal experience is not representative.

Your flying is organized by rather extreme expert knowledge and experience on how to game the sales and distribution systems.
In general the US systems are trivial to game compared to the European ones.
Therefore, it stands to reason that your US flying costs would be lower where for a representative customer this would not necessarily be the case.

Last edited by Klm is Dead - Long Live KLM; Jul 14, 11 at 3:36 am.
Klm is Dead - Long Live KLM is offline   Reply With Quote
 
 
Reply

Bookmarks


Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off
Forum Jump


All times are GMT -6. The time now is 8:17 pm.