TRUTHS ABOUT FARES YOU WON'T BELIEVE
By Joe Brancatelli
February 6, 2014 --This week's post is all about airfares, and it's all based on the latest from the Bureau of Transportation Statistics (BTS), governmental guardian of the nation's travel purse. But I know that you're not going to believe a word of it.
Regardless of whether the BTS says fares have gone up or down or sideways, you only believe what you paid for your last flight. Business travelers are selfish that way. The "average" fares that the government can track are meaningless because you only care about whether you paid more or less than before for any recent flight.
I get that. I'm not too many years removed from my father yelling at me because he believed he should never pay more than $69 for his annual "snow bird" jaunts to Florida. I still shake my head in amazement when February brings "fare sales" to London of $876 roundtrip when $198 roundtrip was common not too many Februarys ago. And how can it cost $460 one-way in coach for the 332-mile flight between Atlanta and Memphis on Friday? Since when is $1.38 a mile a fair fare?
So with the caveat that nothing is true about airfares if it hasn't happened to you, let's look at where we are collectively in the airline price-a-rama.
Fares are up. According to the BTS survey released last week, the average domestic airfare in the third quarter of 2013 was $390. That's up 5.1 percent from the average fare of $371 reported in the third-quarter of 2012. Worse, fares adjusted for inflation were higher in last year's third quarter than at any time since 2003.
Fares are down. In the three-year period between the third quarters of 2010 and 2013, average fares dropped 1.9 percent. The $390 third-quarter fare was down 14 percent in constant dollars from the average fare of $453 in 2000. That 14 percent fare decline compared to a 34.8 percent increase in overall consumer prices.
Fares aren't everything. Airlines are jacking up fees much faster than base airfares. The BTS says fares accounted for only 71.5 percent of the 2013 third-quarter revenue that airlines collected from passengers. That's down from 87.6 percent of revenue that the airlines collected in fare dollars from passengers in 1990. But the revenue-fee ratio is beginning to turn again. In 2012, fares accounted for just 70.3 percent of airline revenue from passengers.
United Airlines charges the most. Of the five airports with the highest average fares in the nation, three are hubs controlled by United Airlines. The fare at Newark was $491, $506 at Washington's Dulles Airport and $507 at Houston's Bush Intercontinental. But the priciest airport in the country continues to be Huntsville, Alabama. Travelers there pay an average of $559. The reason? AirTran Airways, a subsidiary of Southwest Airlines, left Huntsville in August, 2012.
Delta does Atlanta. A separate BTS report shows that Delta Air Lines controls 68.3 percent of the traffic at Atlanta Hartsfield-Jackson, the nation's busiest airport. Atlantans are paying for that dubious privilege. Year-over-year fares rose faster in Atlanta than anywhere else in the country. In the third quarter of 2013, the average Atlanta fare was $432, up 22.6 percent from $352 in the third quarter of 2012. Other airports where fares are rising quickly are Colorado Springs (up 20.4 percent); White Plains in the New York suburbs (15.8 percent); and Fort Myers, Florida (15.1 percent).
Low roller. The airport with the nation's lowest average airfare? Atlantic City, New Jersey's struggling seaside gambling town. The average fare in the third quarter of 2013 was $157. But that was up 16.5 percent year over year, making Atlantic City the airport with the third highest price increase in the nation.
Let's get small. The airports with the five largest average fare decreases are all in smaller cities. Prices in Bellingham, Washington declined by 16.4 percent. They were down 8.1 percent in Charleston, South Carolina; 6.7 percent in Providence, Rhode Island; 5.2 percent in Burlington, Vermont; and 3.2 percent in Manchester, New Hampshire. The price drop in Charleston can largely be credited last year's arrival of JetBlue Airlines. Three lower-fare carriers (Allegiant, Frontier and Sun Country) serve Bellingham. Southwest dominates Manchester (nearly 60 percent of traffic) and Providence (nearly 50 percent). Tiny Burlington's busiest route is to New York's Kennedy Airport via JetBlue.
Our place in fare history. Airfares remain fairly low compared to prices in the last 20 years. When the BTS started compiling price data in 1995, it pegged the average fare at $439. So we're down 11.2 percent with the current average fare of $390. During the same time, the general inflation rate was 52.8 percent, according to the BTS' reading of the Consumer Price Index.
The takeaway. Can it really be that fares are down while the national inflation rate soared? Sure, especially when you consider that the "average" fare includes all those leisure travelers like my late father who still occasionally score $69 fares to Florida. But be warned: comparing 1995 to 2013 fares is something of an apples-and-oranges thing.
Back in 1995, the fare you paid included two or three checked bags; seat assignments and by-your-row boarding privileges. Today, however, most airlines charge for checked bags. Meals are gone in coach. You'll pay (or pay more) for the seat of your choice and for the privilege of boarding the aircraft early. The fee to change a nonrefundable ticket has soared to $200 on most domestic flights. And chances are that the coach seat you're buying today is narrower with less legroom and located on a much smaller and less comfortable aircraft than in 1995.
In other words, believe what you want. It's what you were going to do anyway.
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 © 2014 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2014 by Joe Brancatelli. All rights reserved.