Late last week, a friend of mine asked me why airfares were so expensive. Of course, I asked her where she was trying to go. She said she wanted to head up to San Francisco at the last minute, and the fare was a horribly high $200. $200?!?! I’d say that’s more than fair for a last minute trip up north.
For some reason, people hold on to the notion that air travel should always be insanely cheap. It should be $200 roundtrip to fly coast to coast every time. How absurd that they would have the audacity to raise fares?! Here is my public service announcement. (Cue “The More You Know” Theme Music, old image copyright of NBC)
Fares HAVE to go up. Stop complaining and pay up.
I know, I could have at least added some cherry flavor to that medicine, but I find it has more impact this way. Oil is now above $110 a barrel. For most airlines, this is the number one cost, above labor.
And for all those airline employees who have suffered through wage cuts, that is barely making a dent in the overall cost structure. I’ll let Jamie Baker of JPMorgan (via PlaneBuzz) explain it for you.
It’s Just Math. Industry fuel likely to be some $25 billion higher than 2002, overwhelming the $7 billion in labor savings wrought by the Ch.11 cycle.
Fares have to continue to rise. More than one airline CEO has said that with the prospect of high fuel prices continuing, they’re going to be looking at big changes. That probably means fewer flights because they just can’t make money at these cost levels.
So, next time your ticket is priced higher than you expected, don’t complain. Just realize that it’s the way it has to be.