Cloudship

It is a temporary, albeit long temporary, thing. The airlines of course are all excited - they are making lots of money! But they are pretty short sighted, and aren't thinking about the long term effects.

The problem with air travel is that it is not a true commodity. People don't decide on, or need, a trip and then simply take whatever lowest price they can find. That's how the low price argument works, but the fact is that the cost of the airfare plays a part, and in many cases, a huge part, of the decision of whether or not to take that trip in the first place. And for how long, and how much focus you are going to put on the value of the dollar you are spending to fly.

What is going to happen is that a huge chunk of leisure travel is going to fall off. At first this will sound good - those passengers don't make money, right? But soon the airlines are going to realize they cant just not pay for that part of the plane flying - they will have new capacity issues, lower loads, and thus end up going back down the discount pricing route like they always do. A vicious cycle.

Unfortunately airlines have yet to figure out they have to build business. Get more people flying. Think about it - you are giving people a smaller seat than a bus, with luggage restrictions, restrictions on when you can even get out of your seat, little windows, and lots of security measures. In the end it really inst a great value if you factor in all the little inconveniences.

pinniped

What about net worth?

When I think about the 1% (although it's really the 0.01% that are particularly interesting), I think about net worth - not income.

That's where I think of the 8 or 9 digits...

AA_EXP09

Why is this important?
There are some assets in my possession that I would not want to sell to pay for a holiday (such as my flat-even though my properties are worth 6 digits, I would not use the equity.)
I have some liquid assets but I mainly use these for investments which I also do not at this time want to sell.

iahphx

Well, I do own airline stock: AAL (American) mostly. It's really US Airways stock and, even more precisely, America West stock. It's been a fantastic investment. If you've followed the industry for a number of years, you could have predicted what was going to happen. It all started after 9/11 when Doug Parker became hell bent on consolidating the industry and making it a "real business." Of course, that's almost 13 years ago, with plenty of ups and downs. It's certainly not for the casual investor. Buying any individual stock -- much less airline stocks -- is quite risky.

But I wear two hats: my investor hat and my traveler hat. The ironic thing now is that the more money I make from my airline stocks, the worse my lifestyle becomes! Oh, sure, I could afford that $600 transcon for the weekend, but am I going to pay that? Not yet, at least. There's better things to do with that money.

Yup, that's the problem. Airfare has been an incredible bargain. It doesn't look like it's going to be such a bargain any more. Remember when gas was less than a buck a gallon (late '90s). It was practically free. Folks were doing "crazy" things like buying gas-guzzling Hummers. Now that gas is $3.50, there are no more Hummers. We actually care about the gas mileage when we buy a car. Same thing is now happening with airfare. Not every leisure trip you'd like to take will be "worth it." It sucks. Take steps to adjust. I got myself 2 WN credit cards for the companion ticket, and stocked up on Avios points. Not perfect solutions, but good options to preserve as much of the "lifestyle" that I can.

pinniped

My hedges have included Avios, any hotel card that generates Free Night certificates (enabling me to keep the hotel points for bigger awards like the MR Travel Packages), the airline cards (DL and US) that generate companion passes, and other basic strategies like maintaining some miles and low-elite statuses (and quasi-statuses, like DL Amex) in different alliances some I'm not captive to a single one.

Alas, none are perfect...

iahphx

Yeah, that's true about those companion passes from the airline cards. I just got my new certs from US yesterday. I've had several US Barclay's cards before, but I've never used their companion certs. I think I will this time! Can you use them on any domestic fare over $250 (I assume that includes the tax) on non-blackout days (of which there are several) -- or do I have to avoid the cheapest fare buckets?

BTW, I think I got my first US credit card many years ago, and the companion pass still had the $250 minimum. I remember thinking: jeez, I'm not going to buy a fare THAT expensive!

Cloudship

Actually, what I think is happening is that people are slowly realizing it really isn't so much of a bargain. There are a lot of comparisons out there, but they usually compare a jumbo jet flying a long distance, and compare that to a cost of an average car. What they fail to factor in is how many people that car can hold, what an equivalent car experience would be to that jet (hint: by comparison you should be using something like a Honda Fit, NOT a Ford Explorer), the costs of getting to and from the airport, and how much you are going to spend on luggage. With a country as large as ours, of course time becomes a huge factor. In other parts of the world Rail travel has taken up that slack. In the US we don't have that option, so there is still a push for "middle service" air travel - i.e. not Ryan Air, but also not Singapore First Class.

This could be real bad - tourism plays a huge part in our economy. Business will also suffer - as prices go up businesses look at their bottom line. Sure some will splurge on their CEO or someone else they can bill, but your average tech or few times a year convention traffic, that ill get cut back. Maybe that is a good thing, though - bring back a local level of tourism, the old car and motel thing, locally oriented businesses, and regionally focused conferences.

pinniped

The fare has to be over $250 base - in other words, about a $290 total fare. As for fare buckets, I've had no problem asking the phone agent to put me in the "right" bucket - e.g., the one that generates a fare as close to $250 without being under. There are no phone fees if you're using a companion cert.

There are no excluded fare buckets that I'm aware of...at least not among the typical revenue buckets USAirways.com would sell you. I don't have the cert in front of me, but it does have blackouts and I believe requires some degree of advance purchase, 14 or 21 days. You have to physically snail-mail the paper cert to US Airways right after you book the flights via phone. (Yeah, the whole thing is a bit time-warpy.)

In other words, two people can fly for about $420 total with all the taxes. Three people can fly for $550-ish. I think of the cert as being worth about $200 to $300, although the more expensive the underlying ticket is, the greater your "savings" will appear on paper. (Not sure if that's a good thing or a bad thing!! ) I value it enough that I renew the CC every year even though I rarely use it.

All seats are eligible for miles and upgrades, although I seem to recall there are some PNR-gymnastics you have to do to make 2 people on a 3-person itin eligible for a normal Preferred upgrade. The US board has a long thread about this.

I've used the certs to small Northeast cities that are never cheap from MCI: ITH, BTV, SYR, etc.

GUWonder

That status in the 7 digits range too. In the millions of dollars is where it starts for net assets. It's approaching 8, but that's largely because of housing stock valuation and the wealthy being less likely to have huge educational debts in their past.

I have a fair amount of 1% friends and relatives but even this group in the main use miles.

iahphx

OK, thanks for that thorough explanation. I'm remembering now why I didn't have much use for these when fares were cheaper (especially because of the extensive blackout dates).

Unless fares go even higher, it seems like the utility of this for flyertalkers (aka very savvy travelers) is still somewhat limited. Small (expensive) markets and transcons would be the obvious places to deploy it.

warakorn

I was reading these kinds of threads quite frequently - usually once each year.
Those threads are usually started by people, who do need monitor air fare frequently.

iahphx

Um, OK, so do you think airfares are not rising now in the USA?

If you actually think that, I would submit that you are living in an alternative universe.

I mean, just look at the chart from this week's Wall St. Journal article focused on how rapidly WN has increased its fares in recent years. Since WN basically sets the minimum fare in the markets it serves, it gives you a good snapshot into what's happened to domestic fares in the past few years. What the story doesn't cover, though, is what's happening now. And I'm 100% certain that it's much worse than the substantial increases we've already seen.
http://online.wsj.com/news/articles/...375588678.html

BTW, I've got a solid 30-years of experience playing the "airfare game." I think I know just a little something about it.

blueonions

what's even more shocking to me is that Amtrak and even Greyhound fares are pretty close to airline fares. (on trips around 600 miles into and out of NYC)

iahphx

Amtrak I could believe. But Greyhound? I put somebody on a "Northeast Corridor" Greyhound bus late last year around Thanksgiving because Amtrak was crazy expensive. But Greyhound seemed darn cheap -- like $20 to go 150 miles on a peak travel day. Not sure what happens if you leave the I-95 corridor, though.

pinniped

We rode Megabus from Philly to Manhattan on the Wednesday before Thanksgiving last year...it was around $25 per person, and knowing their pricing model we were probably the more profitable pax on the bus. A one-way rental car would have been about the same total cost for us (5 people), but the bus was downtown Philly nonstop to a few blocks from our NYC hotel. No hassles with tolls, finding a gas station in New York, picking up/dropping off the car, etc. I thought it was pretty good value.

Clientele was almost entirely college students, plus a few families. Pleasant group overall.

Trains would have been similar in cost...not Amtrak tickets, but smaller regional trains connecting in Trenton or somewhere. Contemplated doing that for greater comfort than bus seats, but in the end we decided to go with convenience.