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FUN WITH FARES
By Joe Brancatelli
June 12, 2013 --Where's the worst place in America to be a business traveler? If you go strictly by the cost of flying, it's Huntsville, Ala.

The average round-trip domestic fare during last year's fourth quarter at Huntsville International Airport was $544, the highest in the nation. That was 12.9 percent higher than the cost of flying from Huntsville in the fourth quarter of 2011 and a distressing 31 percent more than the nation's "average" fare of $374.

The bad news for Alabama business fliers is part of an otherwise wonderful data dump offered by the Bureau of Transportation Statistics (BTS), the research wonks at the U.S. Department of Transportation. Each year since 1995, the BTS has been serving up easy-to-read, easy-to-digest fare information that helps the inquiring business travelers make some sense of the nation's infuriating and mostly opaque airline-pricing system.

Of course, Huntsville isn't exactly a lynchpin of the nation's commercial air-travel network. The northern Alabama city only handles about a million passengers a year and the airport only has nonstop service to nine other airports. In fact, Huntsville is the very model of a tertiary "spoke airport." All nine destinations you can reach nonstop are hubs such as Atlanta, Charlotte or Dallas/Fort Worth, which means Huntsville business travelers not only pay the highest average fare in the nation, they must also change planes somewhere else to get where they are actually headed.

Still, the state of airfares at Huntsville is indicative of how warped the airline pricing system is. As you read the BTS list of 15 most expensive markets, you see a bizarre mix of airports. After Huntsville, the next four priciest cities are airline hubs: Cincinnati, dominated by Delta Air Lines (NYSE: DAL), is No. 2 with an average fare of $518. The third to fifth slots are filled by Houston/Bush Intercontinental, Washington/Dulles and Newark, all hubs of United Airines (NYSE: UAL). But other cities in the Top 15 are far smaller spoke markets: Madison, Wis. (Number 7 at $470); Knoxville, Tenn. (Number 8 at $463) and places like Grand Rapids, Mich.; Harrisburg, Pa; and Tulsa, Okla.

"It shows you we are equal-opportunity pricing idiots," one airline executive told me with a laugh last week when I read him the BTS data. "There are so many factors that go into our fare decisions that the logic is inexplicable to outsiders. In fact, we don't understand it ourselves."

In other words, don't ask airlines why the average fare is nearly 15 percent higher in Memphis ($480) than Los Angeles ($409), but Delta announced last week that it was "de-hubbing" and reducing service in Memphis while airlines continue to pour resources into Los Angeles. For that matter, it probably isn't wise to try to figure out why United Airlines continues to struggle financially even though four of the ten most expensive airports in the country (Houston/Bush, Washington/Dulles, Newark and Cleveland) are so-called "fortress" hubs of the world's largest carrier.

Instead, let's just have some fun with the fare figures the BTS has so helpfully provided. After all, we business travelers are the ones paying for the airfares so we might as well get some fun along with our cramped coach seat.

Choose your airport carefully
With an average domestic fare of $501 in the fourth quarter, the aforementioned Houston/Bush is the third-most expensive airport market in the United States. But its crosstown rival, Houston Hobby Airport, is No. 79, with an average fare of $336. Dallas/Fort Worth Airport is No. 24 at $407, but closer-to-downtown Dallas Love Field is No. 94 at $283. O'Hare Airport in the north Chicago suburbs ranks No. 42 at $388, but the average fare at in-town Midway Airport is $304, putting it at No. 90 on the BTS list. What explains the discrepancy? Southwest Airlines (NYSE: LUV) dominates the three cheaper airports, while legacy carriers such as United and American Airlines (OTC: AAMRQ) control the higher-cost facilities.

Introducing the 'JetBlue Effect'
There's an industry moniker for the likelihood that fares are lower at airports dominated by Southwest Airlines. It's called, prosaically enough, the Southwest Effect. We may now want to add the JetBlue Effect to the lexicon. At New York's Kennedy Airport, where JetBlue Airways (NASDAQ) is the dominant domestic carrier, the average fare is $404. That's nearly 17 percent less than at Newark ($484) across the Hudson River. At Boston's Logan Airport, where JetBlue now controls more traffic than any other airline, the average airfare is $371, which means it is No. 51 on the BTS' list of 100 major airports. And at Fort Lauderdale, Fla., where JetBlue is building its third "focus" city, the average airfare is just $267, which makes it No. 98 on the list.

After the hubbing is gone
A common mantra among airline watchers is that fares decrease sharply after an airport loses hub status. Put-upon fliers in Memphis certainly hope that will be the net effect after Delta downsizes there after Labor Day. And there is precedent in the BTS fare numbers. Seven airports that have lost hub status in the last few decades are now ranked in the bottom 50 BTS fare slots. That includes Nashville, Tenn., Raleigh-Durham, N.C., St Louis and San Jose, Calif. (all formerly hubs for American Airlines) and Pittsburgh, once the largest hub of US Airways.

The joys of competition
Denver International is only one airport in the country that hosts the hubs of three carriers: United, Southwest and Frontier Airlines, a division of Republic Airways Holdings (NASDAQ: RJET). According to the BTS statistics, Denver's average fare was $320 in the fourth quarter of 2012, down 4.2 percent from the fourth quarter of 2011. That made it No. 84 on the fare list even though it is in the Top 5 for passenger boardings.

The bottom line
Of course, it must be said that all of these numbers are literally academic because no business traveler in the nation pays the "average fare." Still, consider this: The BTS says the average domestic airfare nationwide in the fourth quarter of 2012 was $374. That was actually a dollar less than the average fare in the fourth quarter of 2011. Moreover, adjusted for inflation, last year's $374 fare was down 16.7 percent from the $449 average fare in the fourth quarter of 2000.

That should make you feel better about the cost of your next flight. But I'm pretty sure it won't.

ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.

THE FINE PRINT This column is Copyright 2013 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright 2013 by Joe Brancatelli. All rights reserved.