Price of air travel- who's picking up the tab??

[DanWEC]

I haven't exhaustively researched this, maybe I'm wrong, but I'm throwing this out here to hear some opinions.

http://www.statcan.gc.ca/pub/51-004-x/2 ... 02-eng.htm

This is a link to historical tickets back to 2006. NOT even adjusted for inflation, the gross amount for a domestic ticket is actually cheaper now than almost 10 years ago!

Do you remember prices of some things ten years ago? Food was about 30% cheaper. Booze, about 20%. Housing, well depends on where you live but safe to say it's dramatically more expensive now in major cities.

As a business, you push prices up until the market (the consumer) can't take it, it's the breaking point.

It's always the consumer that dictates the breaking point. You bitch a bit about the price of a burger, but you will pay it if you want it, bottom line. If it's finally too much, you don't order, management reevaluates before lost market share, and drops the price. Stabilization.
Another example is real estate in TO or Van. No shortage of bidding wars despite prices through the roof. You don't see builders or realtor's taking poverty wages to try and lower the prices for the buyers lined up around the block.

My question is, in a market that can clearly support, and has a necessity for air travel, why is it the employees that have taken all the concessions for cheaper air travel, when the price of a ticket hasn't even kept up with inflation?

[Liquid Charlie]

Short answer ------ "ït's complicated" and I'm sure there is no simple or even logical answer but load factor is a large part of it -- you will notice new players like westjet never hang around on marginal routes. The other obvious thing is that traditional airlines all had to adapt to the new low cost model or disappear -- worldwide there is a long list of those who didn't -- salaries are lower etc -- the list goes on --

[photofly]

Another example is real estate in TO or Van.

That's a terrible example. Real estate prices go up because there's only a limited amount of land. There's essentially no limit on the number of aircraft seats that can be created going from airport A to airport B.

My question is, in a market that can clearly support, and has a necessity for air travel, why is it the employees that have taken all the concessions for cheaper air travel, when the price of a ticket hasn't even kept up with inflation?

Because there's a limitless number of people who want to be pilots and flight attendants. You don't need to look any further than that.

[sstaurus]

Maybe part of the blame could be placed on the abundance of travel websites that can search a hundred airlines (and likewise hotels) at once. Then people will pick whatever random airline is 10cents cheaper.

The commoditization of air travel has lead to people spending as much time selecting a way to zoom through the air at 500kts as they do picking a loaf of bread at the grocery store.

[sanjet]

Maybe part of the blame could be placed on the abundance of travel websites that can search a hundred airlines (and likewise hotels) at once. Then people will pick whatever random airline is 10cents cheaper.

The commoditization of air travel has lead to people spending as much time selecting a way to zoom through the air at 500kts as they do picking a loaf of bread at the grocery store.

With advance of technology and evolving industry its normal. Yes the price of airline tickets have gone down, you should consider that a blessing for your careers. It allowed a lot more of the population segment to use the service, means a lot of aircraft are flying today to accommodate that market than just the few that would fly if it were reserved for the "rich and wealthy".

[DanWEC]

I don't think many people stopped driving when the price of gas went up over the last decade. The market will take it, as proven by the fact that oil is still stable at 50 bucks a barrel yet prices have gradually risen 20% again in the last 3 months after their initial plunge. (Of course, gas pricing has just as much to do with the withering loonie, but I'm pointing more towards the consumers continued patronage and not the economics behind it).

[xsbank]

You and your crew are the only negotiable part of the operation. Try cutting what you pay to the fuel guy, or the part supplier?

Not that complicated. Your operating costs are largely fixed, your wages aren't.

[pianokeys]

I tried to google and find it, but I gave up.

Anyways, USA Today a few years ago had an article where the CEO of US Airways stated that airline ticket prices in 2010 were the same as they were in the 70s...

And its true, I've seen old ads of ticket fares in Canada and the US from the 70s and 80s and they're prices are roughly the same as they are now. So with that lack of adjustment due to inflation, no wonder why passengers don't get meals, blankets, pillows or whatever else anymore. Somethings gotta give.

[xysn]

My question is, in a market that can clearly support, and has a necessity for air travel, why is it the employees that have taken all the concessions for cheaper air travel, when the price of a ticket hasn't even kept up with inflation?

Considering the number of North American airlines which have gone through restructuring, mergers, acquisitions, or just outright bankruptcies, I don't think it's fair to say that employees have taken all the concessions. And I wouldn't overstate the necessity of air travel. Once the price gets too high people vote with their wallets and travel some other way.

I don't think many people stopped driving when the price of gas went up over the last decade.

Can't really compare air travel and driving. Driving (at least in North America) is not really a discretionary activity (i.e. Demand is relatively inelastic). As you've said, no matter what the gas price is, people are going to pay because there aren't really any other good options. One might buy a smaller car or try to carpool or something but they are not immediate responses to price changes. You might put off the family road trip but you still have to drive to work every day.

In comparison, air travel is fairly discretionary. If plane tickets are too expensive people will take the train, or not go anywhere at all, or do a road trip instead. According to this relatively old data at least half of air transport is for leisure, so when ticket prices go up, people stop flying, and demand drops fast.