AEIdeas

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Discussion: (49 comments)

  1. I’d like to see a chart of miles per dollar.

    1. See updated post.

  2. There is a new wave of low cost airlines that could drop prices further. When I lived in Dallas I would fly Spirit Air to San Diego – absolutely no frills but at an average of $200 per round trip – it averaged $120 less than the mainstream airlines (including Southwest) of course I only had one small carry on so didn’t pay their carry on or baggage fees.

    1. John Dewey

      marque2,

      Spirit is cheaper than Southwest for those passengers who have no bags. But consider these fees for bags:

      Carry on bags
      Spirit – $30 to $45
      Southwest – Free

      1st checked bag
      Spirit – $28 to $38
      Southwest – free

      2nd checked bag
      Spirit – $35 to $45
      Southwest – free

      Spirit’s bag fees vary according to how the passenger registers them (internet, phone, airport, gate).

      Although I just retired from Southwest, I believe it is a mistake for them to charge passengers the same regardless of the baggage they bring with them. All weight on the aircraft has a hefty price, which must be recovered through fares. So Southwest passengers without baggage are subsidizing those who have one or more bags.

      1. John

        I wish to travel one way, with no baggage, and I will pay cash for my ticket. I guess Spirit would be my best choice, no? :)

        1. John Dewey

          Ron H,

          I’ve never flown on Spirit, so I cannot offer an opinion on the quality of the travel experience. If price is your only criterion, then Spirit is probably the better choice for you.

        2. Considering I have done that – sure. Those FBI warnings are garbage. I remember working in a mailroom in my yout’ when the Ted Kazinski bombings were occcuring – and the FBI gave us warnings to look for poorly wrapped packages possibly with oil stains and wires showing through. When the finally caught the Unibomber as he was called it was revealed the guy made meticulously neat packages with hand made boxes of high quality. The return address always had the word “wood” in it. It was exactly opposite of what the FBI told us to watch for.

      2. Spirit with one bag is still cheaper than southwest. $220 + $30 for a checked bag ($35 for second cary on) is $250 vs $330 for Southwest.

        Who flies with 2 luggage bags?

        1. Another bonus – Southwest is not allowed to fly non stop to San Diego (at least until the end of the year) but Spirit does fly direct

        2. John Dewey

          Marque2: Who flies with two luggage bags?

          Probably not too many, but my wife and I almost always take 2 golf bags and 2 luggage bags on our trips.

          1. morganovich

            marque-

            Who flies with two luggage bags?

            people going on long trips or to multiple destinations.

            skiers, bikers, surfers, golfers, business travelers bringing equipment and or samples, women who will attend a formal event while traveling.

            i just had two female friends come out to visit for sundance. each checked at least 2 bags.

            i don’t think it’s that uncommon.

            large bags have also gotten really expensive.

            it used to be $50 to take a bike case, now it’s more like $250-300. (though delta is notorious for gouging there and other airlines might be a bit better)

          2. morganovich

            it used to be $50 to take a bike case, now it’s more like $250-300. (though delta is notorious for gouging there and other airlines might be a bit better)”

            I know it wouldn’t work for you, but for someone who just wanted a cheap bike to ride at their destination, it sounds like they could buy one cheaper than checking one on the plane.

            Hmm. Perhaps a “Markets in Everything”. Bicycle rentals for air travelers.

  3. morganovich

    also:

    it seems like we might want to apply some quality adjustments here as “ticket + 2 checked bags” is not the same as “ticket with no checked bags” and free meals and movies etc would seem to matter as well (though likely not a ton).

    to be sure, many people may not have checked 2 bags on every flight, but they still had the right to, and options have value.

    a move to more a la carte pricing might well be a benefit to consumers (assuming the aggregate prices stay the same) but clearly, some people do still check bags and it might well amount to 5% or so of the ticket price, but this may not capture the full optionality value as people may choose not to check a bag and thereby take less with them on a trip than they would prefer to avoid charges.

    i also wonder, what has happened to fees to change tickets? it seems to me that they may have risen, but i have no real data to back that up, but delta, who i fly frequently, zings you for $150 to change an itinerary.

    again, such optionality would seem to have significant value and this can be readily seen in the difference in prices between refundable/changeable tickets and those that are non refundable and that incur change fees.

    i’m not sure how apples to apples this is.

    1. OK 2 checked bags and one carry on is still cheaper on Spirit than Southwest.

      Admittedly Spirit is a no frills airline – but it definitely gives more options to people to fly.

      I can go on about some of the bad things about the airline but the good was – because of the low fare I was able to fly home once a month where if I chose American or US air I would have to fly home every other month (Southwest was out of the question because of the no direct flights – except for a small handful of cities, for Southwest out of Love field law. (Yes that law has been in place some 25 years to protect American Airlines – it is due to expire in October)

      1. John Dewey

        marque2: “Yes that law has been in place some 25 years to protect American Airlines – it is due to expire in October”

        The law has been used to protect American Airlines, but that’s only part of the story.

        The federal government has been restricting flights out of Dallas Love Field and Fort Worth Meacham field for 40 years, ever since DFW Airport opened. It was the federal government which initially refused to provide air traffic controllers and customs agents which would have continued interstate and international flights at those airports. The large carriers were forced by government to leave Love Field.

        Southwest Airlines challenged the Love Field restriction on scheduled passenger service in a case which went all the way to the Supreme Court.

        For the past 35 years, after airline travel was deregulated, Love Field flights were still subject to restrictions of the Wright Amendment. The Wright Amendment in its first decade protected not just American but also Braniff, Delta, and Eastern from Love Field competition.

    2. By the way – you one percent – sheesh – you guys should try to live like the rest of us once in awhile with maybe one carry on bag.

      1. Citizen Buddy

        You have bag envy and I…

        leg room envy.

      2. morganovich

        actually, unless i am bringing skis or a bike, i almost never check a bag, even though it is generally free with my tickets.

        it’s more of a convenience thing and a time saver.

        i like to just walk in with my ticket on my phone, not bother interacting with the airline at all, and heading right to the gate then right out without waiting around.

        where i have found the real killer to be in terms of prices is itinerary changes.

        delta will zing you for $150 if you do.

        that used to be more like 25 or 50.

        just what level of price to put on that optionality would be difficult to figure out mathematically, but fortunately, we do not have to.

        the market can tell us.

        a full fare y class ticket is often twice the price of a highly restricted an non refundable e class ticket. it often costs more than an e class first class ticket. southwest is similar.

        this would seem to imply that a great deal of value is placed upon changeability and refundability.

        that said, i have no idea to what extent the mix of rights sold with tickets has changed.

        my sense is that they have become more restrictive, but i have no data to back that up.

  4. I’d like to see city/airport granularity as well. I fly frequently and flights to/from certain cities are relatively flat over the last 5 years (generally larger cities w multiple airports/carriers) while others (generally mid sized cities w lesser competition) have jumped sharply. I can’t recall any “dropping” in price.

    Moreover, the vast majority of your “decline” was from over 10 years ago. That chart looks flat to positive to me over the last 5-10 years. Tack on new “bag fees” of 5-15% of the flight cost and I think your 5-10 year trend clearly slopes positive.

  5. John Dewey

    I expect many U.S. routes to see price increases over the next few years. The Delta-Northwest merger and the Southwest-AirTran merger already reduced capacity across the nation. The American-U.S. Airways merger will reduce capacity even more. Prices should have risen faster, but were held down since 2008 because of the recession and the relatively slow recovery.

    Dallas routes should not increase any time soon. In October, Southwest’s Dallas Love Field restrictions will finally be lifted. The 35 year federal interference on competition – the Wright Amendment – will be history. Southwest will be providing stiff competition to American on flights to New York, Chicago, Las Vegas, Washington, and a few Florida destinations.

    1. John Dewey

      Oh, I forgot one more factor which is impacting capacity: the new FAA rule requiring a scheduled airline pilot to have 1500 flight hours – an increase from the previous 300 hours. U.S. airlines cannot find enough new pilots to take over those who are retiring, and many low profit direct routes are being cancelled. For those smaller cities, passengers will face higher fares on one-stop routes.

      1. Benjamin Cole

        John Dewey:

        What a stupid rule. Have we seen pilot error crashes? When?

        Most likely something the pilots dreamed up. Like the lawyers–limit the supply.

        As to the competition-reducing airline mergers, yes, but there can always be newer and more-eager start-ups, if our government allows them.

        The domestic airline industry looks ripe for total deregulation…

        1. Well it may well be that this rule makes the current economic model of the small airlines die. They pay pilots about 21k a year. But the rule says you have to get 1500 hours of experience to take the job. At $100 plus an hour for the experience, that means physician sized debts. I have read that some airlines have had to cut service because they don’t have the pilots. But IMHO you really really have to love flying and hope to eventually get on with the larger carriers soon to make that kind of investment. After all 150k will buy a house in many parts of the country.

        2. There has only been one fatal crash in the USA in the last 10 years and that was with foreign pilots. The death / injury rate WS so low already that this training will do only 2 things. 1: Cost people and airlines more for statistically insignificant safety improvements – if any are provided at all and 2: encourage airlines to hire foreign pilots who were certified under less stringent conditions.

          1. morganovich

            marque-

            i fear it may be aimed at doing a third thing:

            protecting high paying union jobs and preventing competition while creating artificial scarcity.

            this is a classic guild move.

            for those already in the door, it’s fantastic job security.

          2. John Dewey

            marque2: “There has only been one fatal crash in the USA in the last 10 years and that was with foreign pilots. ”

            You are mistaken. Here are the three fatal crashes in the U.S. in the past 10 years which were piloted by U.S. pilots:

            12/8/2005 – Southwest Flt 1248 , Chicago, IL, 1 fatality

            8/27/2006 – Comair Flt 5191 , Lexington, KY, 49 fatalities

            2/12/2009 – Colgan Air Flt 3407, Clarence, NY, 50 fatalities

            The 2009 Colgan crash caused families of the victims to successfully lobby Congress in passage of the Airline Safety and Federal Aviation Administrative Extension Act of 2010. That was the legislation which resulted in the new pilot rules I mentioned above.

          3. John Dewey

            morganovich: “i fear it may be aimed at doing a third thing: protecting high paying union jobs and preventing competition while creating artificial scarcity.”

            It is true that pilots assisted in the lobbying of Congress to pass the Airline Safety and Federal Aviation Administrative Extension Act of 2010. Their goal in doing so was not to change the experience rules but rather to reduce pilot fatigue, addressed by a different part of that act.

            I do not understand the logic behind your assertion. The new experience rules could reduce the number of dues-paying pilots in the pilot unions. Scheduled airlines will be forced to leave lower profit markets when feeder airlines cannot find pilots to serve those smaller cities. This reduction of unionized flights is already happening at Cleveland.

            http://online.wsj.com/news/articles/SB10001424052702304851104579361320202756500

          4. morganovich

            john-

            my logic is as follows:

            most, if not all the pilots currently captaining planes already have this experience and or will be grandfathered in.

            but the new law makes it more difficult to others to reach such status.

            this will reduce the supply of available pilots and therefore tend to increase the demand for those that are credentialed and thereby increase their bargaining power for salaries.

            unions have generally tended toward pushing for higher salaries and more protection for existing members as their votes are driven by the desires of those members.

          5. John Dewey

            morganovich: “unions have generally tended toward pushing for higher salaries and more protection for existing members as their votes are driven by the desires of those members.”

            Unions and the pilots gain when the number of paid pilot positions are increased. Unions, in particular, will lose heavily after airlines are forced to drop flights due to pilot shortage. As the linked article I provided shows, that scenario is already happening in Cleveland.

            There is no way that the majority of airline pilots would favor a policy which risks a curtailment of flights. Young pilots all desire to eventually move into the captain seat, which pays considerably more than the first officer seat. When the total number of flights goes down, the number of captain positions also goes down.

            I agree that over the very long term, a restraint on the supply of pilots should result in an increase in the salary of those pilots fortunate enough to have a job. But the demand for pilots would definitely decline, and the union is not going to support a policy which would suddenly reduce the number of dues-paying pilots.

          6. John Dewey

            morganovich,

            I was wrong. The pilot’s union, ALPA, did support the 1500 hour rule. Apparently they believe that the short term losses in pilot jobs will be offset by higher pilot wages. Or else they did not believe the 1500 hour rule would lead to reductions in major airline flights. In either case, I think they were mistaken.

          7. John Dewey

            ALPA may ultimately lose after supporting a policy which reduces the total number of flights. The union may now have direct competition. Republic Airlines this week reached a tentative agreement with the Teamsters Union which would cover the 2200 Republic pilots.

            In the same week, ALPA rejected an agreement with American Eagle which would have reduced pay increases in exchange for a guarantee of more flights (and more jobs) for Eagle pilots. As both American Eagle and Republic are connection partners with American Airlines, it is clear that the two regional carriers are competing for the limited number of regional jets which can be flown. American has announced that the 60 regional jets which would have gone to American Eagle and its ALPA pilots will have to be placed elsewhere – presumably to its other regional jet connection. That would be Republic, soon to be represented by the Teamsters.

            Industry news articles have consistently pointed out that the 1500 hour rule is forcing limits on regional jet flying. I’m sure that ALPA did not believe those limits would result in the union losing pilot dues to the Teamsters.

      2. you’ve never been able to get an ATP ticket with 300 pic hrs try more like it has been 1500 hrs for 20 yrs

        1. It appears that at least for regional turboprops you only needed a commerical license here is a link to an article about the change: http://www.executivetravelmagazine.com/articles/regional-airlines-bill-boosts-pilot-training.
          It should be noted that the Buffalo crash due to improper pilot handling of an iceing situation lead to the changes.
          As one would expect the higher standards result in a lower supply. Now another article mentioned what will happen is either signing bonuses and the like to get folks in. It should be noted that the number of pilots coming from the military is way down also.

          1. a commercial license has only allowed you to take paying passengers on “sightseeing” flights taking off and landing at the same airport or skydivers… it’s also been known as a dog and cat license for 30+ yrs as they are not paying passengers… then you would go to a part 135 ticket… it seems like they were mostly talking abot first officers who were trying to build hours so they could qualify for an ATP as most people simply cannot fork over $1/2 million to get the required hours so they need to be built up somewhere

          2. John Dewey

            Lyle: “It should be noted that the Buffalo crash due to improper pilot handling of an iceing situation lead to the changes.”

            Where did you get this information, Lyle? I read in the WSJ that icing was not the problem:

            “In its latest update on the investigation, the National Transportation Safety Board said ice “had a minimal impact” on the performance or handling of the twin engine turboprop.”

            http://online.wsj.com/news/articles/SB123799985067139939?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB123799985067139939.html

  6. John Anderson

    I think the first chart could make its point better if the Y axis started at zero. Then the relative heights of the points on the line would better show just how stable the price has been over time. As it is above, the visual comparison between the relative heights of the points make it seem like fluctuates wildly between the mins and max of the visible chart.

    1. See updated post.

  7. Even 35 years ago.

  8. chuck martel

    There was a page of the Fairbanks News-Miner from 1927 hanging on the wall of a Wien Air Alaska terminal back in the ’80s. In it was advertised a scheduled flight from Fairbanks to Nome, 522 air miles, for $750 one-way. According to the US census the average income in that year was $1500.

  9. I just ran 8 flights I take on a regular basis against your “cost per mile” and only 1 even came close (NY to Houston). That 10 to 12 cents/per doesn’t pass the sniff test.

    1. Guess you don’t know what the word average means. If you fly regularly, are you flying for business, hence at peak times, which means higher prices?

      A quick look at the last three flights I took were round trip

      1) $0.12/mile costing $377 for 3120 miles

      2) $0.20/mile for business class costing 1480 for 7244 miles ($0.10/mile if I had flown coach with a cost around $750)

      3) $0.15/mile costing $313 for 2116 miles.

      Not sure why you’re over paying for your flights.

      1. morganovich

        i think you get a lot of variation depending on where you fly from and what time of year it is.

        eg.

        the price from slc to jfk right now for a non red eye is $740 for 3454 miles, or 21c a mile.

        in the summer (non ski season for park city) it will be considerably cheaper.

        a flight on a key and heavily contested route (like sfo to jfk) is REALLY cheap.

        $298 for 4490 miles = 6.6c per mile.

        it really depends a great deal on how competitive the route you fly is and how much of a hamemrlock individual airlines have on your airport.

        a flight from slc to jfk costs $150% as much as one from sfo despite being a considerably shorter flight.

        that 12c number seems pretty plausible to me.

        1. John Dewey

          morganovich: “i think you get a lot of variation depending on where you fly from and what time of year it is.”

          Of course you are correct. But the variation in fares is much more pervasive than just across seasons and destinations.

          All the large airlines utilize sophisticated revenue management techniques to optimize revenue on individual flights. The fares paid by two passengers sitting adjacent to each other on the same flight can vary by hundreds of dollars. That’s because airlines adjust fares in real time – sometimes hourly – as they receive feedback on actual bookings versus their forecast bookings and feedback on the actions of their competitors.

          In general, the earlier one books a seat, the lower the fare he can obtain. But that’s not always the case. If the airline realizes that bookings for an individual flight are running behind projections, they may lower the fare even more.

          It’s also important to remember that the published fares available to everyone are not the only fares. Large corporations negotiate very favorable rates even for last minute bookings. So any research which an individual may do about fares would be incomplete, as the large corporate discounts are confidential, but are included in the DOT and Airlines for America data Mark posted above.

      2. Oh you’re right–I’ve no clue what average means. Clown.

        I wish we could all fly cross country or intl like you but some people book trips for 700 to 900 miles (w plenty of notice) and those flights are nothing close to the 10 to 12 cent number.

        Lack of competition drives rates for most non metro airports.

        1. John Dewey

          MMMBBB: “Oh you’re right–I’ve no clue what average means”

          I’m sure you realize that the statistic shown above is a weighted average – weighted by the length of trip and by the number of passengers for each market. So the fare per mile on a highly competitive and lengthy route, such as New York to Miami, is going to get much more weight than a route such as Cleveland to Indianapolis .

          MMMBBB: “some people book trips for 700 to 900 miles (w plenty of notice) and those flights are nothing close to the 10 to 12 cent number. ”

          Did you notice that the 12 cents per mile in the chart above is in Year 2000 dollars? The link Mark provided above for the Airlines for America provides both current dollar and real dollar data. The current dollar cost per mile (excluding fees) for domestic travel in 2012 was 15.1 cents per mile.

          I’m not sure if you consider 15 cents to be “nothing close to the 10 to 12 cent number”, but that is the real number. I worked with DOT fare per mile data for a number of years and found the values to be accurate.

  10. “Inflation Adjusted”, “Real Cost”.

    It always makes me laugh.

    Maybe we could use this same delusion to describe other similar phenomena? For example, ‘Global temperatures are rising, adjusted for rent seeking interest’ or ‘Real sea levels are rising’ or maybe ‘Election adjusted unemployment rates’.

  11. I’d like to see how they did their adjustment for inflation as the normal inflation numbers do not include fuel and avaition is strongly tied to fuel prices… would be even cheaper than it is now but is probably why they need to
    add all these fees, decrease seat pitch, etc. to stay profitable

    1. John Dewey

      Wayne: “I’d like to see how they did their adjustment for inflation”

      Did you try clicking on the link Mark provided above for Airlines For America? If you really want to know, they provide that information at that link.

      1. Ouch! That’s gotta sting.

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