How much longer can U.S. carriers justify insane domestic prices?
 

Perhaps a silly question, but we're at a point now where most trans-Atlantic trips from major U.S. cities -- purchased with a bit of foresight -- are under $500 RT. You can even fly from crazy places like Providence to Edinburgh, Scotland one-way for $109 with little advance planning.

At the same time, U.S. carriers still charge insane last-minute fares from say NYC to Atlanta, let alone NYC to LAX or SFO.

I guess my question: given how cheap international travel is (even with the extra fees and taxes added into the equation), how much longer can U.S. carriers justify their insane domestic pricing? At what point will they have to cut prices nearly in half to bring them closer to intra-EU/Schengen flights?

The last minute fares are not for every seat on the aircraft. Some will have been sold at much lower fares in the weeks/months before.
This applies to USA domestic, international and EU/Schengen flights.
Comparing USA domestic and EU/Schengen is not valid, given the size-distance. NYC-LAX 2463 miles. LHR-FCO is 899 miles. Most EU flights are a lot less than LHR-FCO.
http://gc.kls2.com/cgi-bin/gc?PATH=N...avy&MAP-STYLE=

You're comparing one fare purchased well in a advance ("with a bit of foresight") to another fare that's last-minute. That's what term "comparing apples to oranges" was created for.

Also, as someone who lives on the West Coast, I disagree with your assertion that these low fares to Europe are from "most American cities". No, only from cities fairly close to Europe (like your Providence and NYC examples). Meanwhile, you picked about as far-away a domestic city to NYC as you could. Again, apples to oranges.

The first seat sold on the plane almost always costs significantly less than the last seat sold on the plane, no matter what the route. (The exceptions are when the airline thinks the route is going to sell well but for some reason it doesn't. And the other exceptions can be in premium cabins, where there's very few seats comparatively to begin with and it's expected to mostly be bought by business travelers, not leisure travelers like with far-in-advance economy fares.)

Meanwhile, given the size of Europe compared to the size of the US, the equivalent of intra-Europe would be more like intra-Texas, rather than trans-USA. And intra-Texas is how Southwest Airlines got started (and it flew nothing but intra-Texas for many of its early years).

This is probably more appropriate in TravelBuzz than Info Desk, so I'll relocate this thread to TB.

chgoeditor
co-moderator, Info Desk

One thing to note is that intra-Europe flights might be cheaper due to the availability of hgih speed rail, which places downward pressure on airfares. In the US, ground transport options are lacking so the short-haul travel market is less competitive.

Most of the cheapest US-Europe economy class tickets I've seen this year booked for same-week travel and for next quarter travel have been from California to Northern Europe; comparably-timed NY/Boston/Washington to Europe tickets have been more expensive than the West Coast-Europe tickets.

Intra-Europe flights aren't all that cheap, but having more than just 4-6 legacy carriers in the competitive picture make for a different market outcome than in the US. Consider the profit picture of the stock market-listed major airlines and it becomes clearer that the competitive landscape conditions aren't all that comparable for intra-continental travel.

Intra-Europe rail doesn't do much of anything to lower international, intra-Europe airline ticket pricing even on short haul trips. With some market exceptions.

Long story short - airline pricing does not work the way you think. FWIW - international flights have certain benefits that are not ordinarily available in domestic flights, such as local subsidies, cargo, etc.

This will continue to exist.

I'm curious as to just WHY the OP thinks there is ANY relationship between domestic US fares and Intra-Europe fares, let alone a relationship so close as to mandate similar fares....
Fares are "justified" by ...selling. If domestic US fares sell for more than comparable European ones then that is simply the market at work...

There's also Ryanair and other ULCCs helping to push down prices for intra-EU travel. A possibly better comparison here would be between Spirit/Frontier and said European ULCCs.

Only competition makes the fares lower. On routes where there's an oligopoly there are high prices. On routes with competition, it's cheap. Just look at the NY to LA and SF markets right now. Super cheap because 5 airlines fly those routes. I have seen it in TLV as well - on routes with only two (national) carriers, fares are insane. On competitive routes, prices are more reasonable. Even on intra-Europe it's super cheap where there are LCCs - I flew Cologne to Dublin on Ryanair for less than the cost of the taxi from Dublin airport to my hotel. Where it's just the national carriers vs. each other it's expensive.

Distance is a factor but not a big one imo. Domestic US and Canadian flights are just much much more expensive than in Europe even for comparable distances. I say this having moved from Europe to Vancouver, Canada. I don't think I've ever seen flights between Vancouver and Seattle (a mere 127 miles) for less than $230 US round trip, no matter how far in advance you book. Usually it is $300+. Same for most other city pairings although I think the Canadian airfare market is even worse than the US one.

In Europe a similar distance between two major cities would be often available for $100-$150 R/T on legacy carriers, and as much as half that on low cast carriers.

Ultimately the biggest difference - as others have said - is competition. Low cost carriers like Frontier and Spirit are not ubiquitous in North America like low cost carriers are in Europe. There is a long way to go before the number of routes flown by LCCs can match the number of routes flown by legacy carriers.

Interestingly Mexico seems to be the most competitive North American market for air travel where 2-3 hour flights e.g. MEX-LAS or MEX-CUN are often available for less than $100 R/T. They have lots of low cost carriers with large route networks.

Mexican carriers have a different market reality than US carriers. The average income level of those who are realistically in the market to travel by air within Mexico is considerably lower than for those who are in the market to fly in the US. In the US, the US3/4 carriers know that there is a large enough market of people with enough payment/borrowing ability and interest to fly that having milk-the-consumer prices won't sink the market and their viability as a going concern.

Within much of Europe there is so much capacity and competition given the legacy carriers, the LCCs/upstarts, tourist charter service providers for intra-Europe trips that pricing power for the carriers isn't as strong as extensively as it is for the legacy majors in the intra-US and intra-Canada market.

As long as people pay them.

When buying an intra-EU ticket allows you to fly between points in the US.

Not really. Cabotage restrictions being lifted won't do that.

The simple answer to OP's question is that carriers don't "justify" anything. Carriers set price based on demand. If the price is too high, aircraft will go out empty and carriers will do some combination of cut fares, cut frequencies & routes, and go bankrupt.

Contrary to OP's assertion which is not based on any reasonable analysis, fares are lower today than in 1985, when adjusted for the cost of living.

OP's fundamental problem is that it is my guess that someone is paying that "insane" price and whether that person is "insane" is irrelevant unless dangerous, in which case he should not be traveling.

As an alternative, if price rather than destination is your sole determinant, why not fly to EDI rather than SFO?