Go Back  FlyerTalk Forums > Travel&Dining > TravelBuzz
Reload this Page >

Why are airfare prices so high, despite low oil prices?

Community
Wiki Posts
Search

Why are airfare prices so high, despite low oil prices?

Thread Tools
 
Search this Thread
 
Old May 9, 2015, 12:25 am
  #16  
 
Join Date: Jan 2006
Location: lax
Posts: 3,887
Very inexspensive, all condsidering.
skylady is offline  
Old May 9, 2015, 2:23 am
  #17  
 
Join Date: Jun 2007
Posts: 413
i actually think in the scheme of things air fares are quite reasonable.

They haven't seem to have gone up much in price

I actually paid a few hundred dollars less for my round the world ticket for later this year than i did in 2008
Peterpack is offline  
Old May 9, 2015, 9:03 am
  #18  
FlyerTalk Evangelist
 
Join Date: Jul 1999
Location: ORD/MDW
Programs: BA/AA/AS/B6/WN/ UA/HH/MR and more like 'em but most felicitously & importantly MUCCI
Posts: 19,719
Originally Posted by Peterpack
I actually paid a few hundred dollars less for my round the world ticket for later this year than i did in 2008
Good for you, but most people aren't flying around the world. They are flying from Ft. Lauderdale to Little Rock (or whatever). And prices for domestic routes with little competition / choice have been steadily rising. (This is looking beyond the OP's BQN-JFK focus, for which $410 all in per person does not seem bad.)

People look at NYC-LAX and say, wow, six or seven airlines duking it out, no problem there, it's only $450 if I time it right. True, but that's not most peoples' use case. Most people are flying to or from a second-tier city, probably via a hub, and for them the effect of mergers, consolidation, and capacity constraints has been very negative. This is data-demonstrable and has been since 2011 or so. You can easily pay more to fly from Grand Forks to Chicago than from Chicago to London. Many second- and third-tier cities are down to one or two network carriers, plus two or three flights a week to Vegas on Allegiant. Alternatives: Megabus, drive, or stay home.

If you are pleased with what the US airline industry has become, send a thank-you note to the US Department of Justice.
BearX220 is offline  
Old May 11, 2015, 12:35 am
  #19  
 
Join Date: Dec 2006
Location: NRT / HND
Programs: AA EXP, NH Plat, Former UA 1K
Posts: 5,665
Originally Posted by BearX220
Good for you, but most people aren't flying around the world. They are flying from Ft. Lauderdale to Little Rock (or whatever). And prices for domestic routes with little competition / choice have been steadily rising. (This is looking beyond the OP's BQN-JFK focus, for which $410 all in per person does not seem bad.)

People look at NYC-LAX and say, wow, six or seven airlines duking it out, no problem there, it's only $450 if I time it right. True, but that's not most peoples' use case. Most people are flying to or from a second-tier city, probably via a hub, and for them the effect of mergers, consolidation, and capacity constraints has been very negative. This is data-demonstrable and has been since 2011 or so. You can easily pay more to fly from Grand Forks to Chicago than from Chicago to London. Many second- and third-tier cities are down to one or two network carriers, plus two or three flights a week to Vegas on Allegiant. Alternatives: Megabus, drive, or stay home.

If you are pleased with what the US airline industry has become, send a thank-you note to the US Department of Justice.
You couldn't have said this better. Back around 2006/2007 I used to regularly pay $200 round trip for midwest (usually MCI but not always) to west coast and $100-150 round trip for midwest to other midwest/Texas/east coast. These days it's in the $300-500 range for the same city pairs so has doubled at best for the cities relevant to me, plus to add insult to injury from the hub to my destination (usually STL or CMH these days) I'm stuck with a single cabin RJ where I used to have two cabin mainline jets and upgrades to F.

I miss the days when AA, CO, DL, NW, UA, US (even TW when I first moved there) had to compete with each other. Then there was SW, F9, and FL offering lower prices to keep the legacies in line. Back then B6 was irrelevant for people in secondary cities, VX wasn't in the picture yet, NK and G4 were both around but relatively unknown in most parts of the country, but there were so many choices from any given city pair that you'd never pay remotely close to what you have to today. I have absolutely no love for the DOJ for allowing the 4 recent mega mergers. I think the AA & TW merger before that was irrelevant because I believe unfortunately TW would have just collapsed if AA hadn't bought it.

Having said that, the market is probably in a better state now to support start up airlines and LCCs than it was in the late 90's and 2000's when legacy airlines were cheap and still full service, so many new entrants tried and quickly failed. I can easily see space for another with a model like SW or B6.
dvs7310 is offline  
Old May 12, 2015, 8:50 am
  #20  
FlyerTalk Evangelist
 
Join Date: Jul 1999
Location: ORD/MDW
Programs: BA/AA/AS/B6/WN/ UA/HH/MR and more like 'em but most felicitously & importantly MUCCI
Posts: 19,719
Originally Posted by dvs7310
...the market is probably in a better state now to support start up airlines and LCCs than it was in the late 90's and 2000's when legacy airlines were cheap and still full service, so many new entrants tried and quickly failed. I can easily see space for another with a model like SW or B6.
The one thing that keeps an observer from total despair is that the legacies run such an egregious, anti-customer cartel, there is hope and opportunity for more second-tier entrants. The case for new blood is aided by the majors' helpfully wrecking their own frequent-flyer programs, so fewer and fewer customers suffer irrational loyalty impulses any more.

But the barriers to entry remain high, both capital-wise (airlines are notorious destroyers of capital) and structurally -- it's still hard to elbow one's way into major markets. VX has been operating since 2007 but still serves only 18 US airports, many co-terminals for the same metroplex (DCA + IAD, JFK + LGA - EWR, etc.) and ignores big markets like ATL, MIA, MSP, DTW, DEN, CLE, CVG, PHL, etc. So VX is a great operation but a fringe factor. It's totally useless / irrelevant to most people, barely growing, and still struggling.

As the cartel continues to force bad and limited service plus high prices on a weary and resentful public, someone will figure out how to crack the nut and give them a run for their money. I hope. Hasn't happened yet. An insurgent either gets sucked into the cartel (WN) or remains a limited threat on the outside looking in.
BearX220 is offline  
Old May 16, 2015, 11:40 am
  #21  
Original Poster
 
Join Date: Apr 2015
Posts: 7
Thank you everybody!
hutat is offline  
Old May 18, 2015, 7:51 am
  #22  
A FlyerTalk Posting Legend
 
Join Date: Jul 2002
Location: MCI
Programs: AA Gold 1MM, AS MVP, UA Silver, WN A-List, Marriott LT Titanium, HH Diamond
Posts: 52,567
$400 for P.R. to NYC R/T in the summer sounds about right. Planes are full. It's supply/demand, and these days nearly all of the supply is controlled by very few airlines.

If you seek to stay in a Manhattan hotel, you might want to get quotes on that before you book the flight. You'll get your 2nd great example of supply and demand at work...
pinniped is online now  
Old May 18, 2015, 10:49 am
  #23  
Suspended
 
Join Date: May 2014
Posts: 3,445
Originally Posted by Mauibaby2008
$400 round trip from PR to NYC is too expensive? I think it could be much worse imho
That's not so bad. The same airfare from San Diego to Santa Barbara is a little more ridiculous
lhgreengrd1 is offline  
Old May 18, 2015, 2:21 pm
  #24  
FlyerTalk Evangelist
 
Join Date: Nov 2009
Location: SEA (the REAL Washington); occasionally in the other Washington (DCA area)
Programs: DL PM 1.57MM; AS MVPG 100K
Posts: 21,368
Originally Posted by BearX220
... airlines are notorious destroyers of capital ...

I recall an observation made about 8-10 years ago that the best way to make $1 million in the airline business is to start with $100 million
jrl767 is online now  
Old May 18, 2015, 6:36 pm
  #25  
FlyerTalk Evangelist
 
Join Date: Nov 2006
Location: Bangkok or San Francisco
Programs: United 1k, Marriott Lifetime PE, Former DL Gold, Former SQ Solitaire, HH Gold
Posts: 11,886
Originally Posted by BearX220
Good for you, but most people aren't flying around the world. They are flying from Ft. Lauderdale to Little Rock (or whatever). And prices for domestic routes with little competition / choice have been steadily rising. (This is looking beyond the OP's BQN-JFK focus, for which $410 all in per person does not seem bad.)

People look at NYC-LAX and say, wow, six or seven airlines duking it out, no problem there, it's only $450 if I time it right.
Pure competition. Where you have competition, prices go down. Airlines make it up on the routes with little competition. Don't blame the DOT. Blame the Free Market.

IMO, if the airlines weren't permitted to compete like this it would not result in a lowering of costs for flights to non-competitive cities. It would result in a higher cost on the NYC-LAX type routes.
Tchiowa is offline  
Old May 19, 2015, 9:06 am
  #26  
FlyerTalk Evangelist
 
Join Date: Jul 1999
Location: ORD/MDW
Programs: BA/AA/AS/B6/WN/ UA/HH/MR and more like 'em but most felicitously & importantly MUCCI
Posts: 19,719
Originally Posted by Tchiowa
Where you have competition, prices go down. Airlines make it up on the routes with little competition. Don't blame the DOT. Blame the Free Market.

IMO, if the airlines weren't permitted to compete like this it would not result in a lowering of costs for flights to non-competitive cities. It would result in a higher cost on the NYC-LAX type routes.
You misread me -- and the market environment. I know how free-market pricing works and I'm not arguing for price regulation. I am making the obvious argument that government-endorsed consolidation of pricing power in too few airlines hurts consumers. It would take a Bizarro view of the universe to claim US commercial aviation now suffers from too much competition.
BearX220 is offline  
Old May 22, 2015, 11:46 am
  #27  
 
Join Date: Jul 2014
Programs: AA Gold, Delta DM Hilton Diamond SPG Gold, and Foodland premium.
Posts: 824
Welcome to the world of consolidation. The big three can now jack up fares as much as they want. The competition is minimal.
Esltroy is offline  
Old May 22, 2015, 12:05 pm
  #28  
Moderator: American AAdvantage
 
Join Date: May 2000
Location: NorCal - SMF area
Programs: AA LT Plat; HH LT Diamond, Maître-plongeur des Muccis
Posts: 62,948
Airline cartelization. They didn't lower prices when fuel prices dropped because they've reduced capacity and didn't have to.
JDiver is offline  
Old May 22, 2015, 1:08 pm
  #29  
Used to be 'Scooter'
 
Join Date: Mar 1999
Location: SAN
Programs: Free Agent
Posts: 398
All things considered, air travel is relatively cheap considering the technology and time savings involved. I'll be curious to see what high-speed rail ticket prices will be like here in the US (if it even happens in my lifetime). But at least in Japan, Shinkansen prices are on par with the airlines, so I'm not sure that will much of a cost savings either.
SANspotter is offline  
Old May 23, 2015, 2:56 am
  #30  
FlyerTalk Evangelist
 
Join Date: Nov 2008
Programs: AA EXP/LTP, BA GGL/CCR/GfL, HH D/LTD, SPG/MR Plat/LTP
Posts: 10,075
Originally Posted by SANspotter
All things considered, air travel is relatively cheap considering the technology and time savings involved. I'll be curious to see what high-speed rail ticket prices will be like here in the US (if it even happens in my lifetime). But at least in Japan, Shinkansen prices are on par with the airlines, so I'm not sure that will much of a cost savings either.
Fair point. Although high-speed rail both departs and arrives in city centers, so a considerable amount of money (and time) is saved on the ground transport.

For the OP, a connection with high-speed rail from PR to mainland US seems less than unrealistic
onobond is offline  


Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.