UALPHLCS
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Fares And Fuel Prices

Thu Apr 13, 2006 1:11 am

Ok, so the price of Oil is still very fluctuating but trending upwards. My question is is that while consumers seem sanguine about paying more at the pump to fill thier cars. Why are cumsumers unwilling to pay for airline tickets?

Facts are that while gasoline is considered a nessesity and rising prices are a cross we have to bear.

Airline tickets are still a luxury, and people will avoid paying the higher costs.
But I think people have been so conditioned to expect low fares that the airlines have done themselves a disservice when fuel cost do rise. Breaking that cycle needs to be a priorty.

Thoughts? Comments?
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dispatchguy
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 1:18 am

Truer words were never spoken.

A mid-grade gas here is $3.09/gal; in small-town in Northern Indiana (well, not that small)

For the airlines, flights may be full, but no one is going to make a dime. When I ship a letter on UPS to Chicago (from South Bend), it now costs about a few bucks additional just for a fuel surcharge.

Imagine that - costs to produce go up, and they increase the cost to the consumer. Only in the passenger airline biz do they have the mindest to lower the prices to the consumer; after all, they can just take the shortfall out of the employees hide.

"Airport management, the FAA and the airlines. They're all cheats and liars" Capt Rex Kramer, Airplane!  Smile

Sad, nothing has really changed in 26 years; well, nothing for the better.
Nobody screws you better than an airline job!
 
bond007
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 2:12 am

Quoting UALPHLCS (Thread starter):
Why are cumsumers unwilling to pay for airline tickets?

Who say they aren't?

It's not so much that consumers aren't willing to pay - it's that airlines don't charge what they need to make a profit...or even break-even!


Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
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lightsaber
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 10:48 am

According to this article Jet-A is back above $2/gal

http://yahoo.reuters.com/news/articl...8&pageNumber=1&imageid=&cap=&sz=13

Quote:
On Wednesday, jet fuel prices on spot markets averaged between $2.06 and $2.10 per gallon -- again exceeding levels of more than $2 per gallon seen for the first time after Hurricane Katrina.

Damn... This is going to hurt.

I worry that fuel has finally broken through a barrier high enough to slow the economy.  Sad Do I have any proof? No. But as I've posted before, that is something we'll know about after the fact.

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
HPRamper
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 11:31 am

Fuel prices would drop if we stopped hard-talking Iran about attacks and such. Plain fact that is making traders very nervous...that's why oil prices have shot up even just over the last two weeks.
 
airwave
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 1:28 pm

Quoting UALPHLCS (Thread starter):
My question is is that while consumers seem sanguine about paying more at the pump to fill thier cars. Why are cumsumers unwilling to pay for airline tickets?

Because even though an airline seat has become a commodity, most people on the street still view it as a luxury good and that's partly why they'll still balk--that and...

Quoting UALPHLCS (Thread starter):
But I think people have been so conditioned to expect low fares that the airlines have done themselves a disservice when fuel cost do rise. Breaking that cycle needs to be a priorty.

 checkmark 

Quoting Dispatchguy (Reply 1):
Imagine that - costs to produce go up, and they increase the cost to the consumer. Only in the passenger airline biz do they have the mindest to lower the prices to the consumer; after all, they can just take the shortfall out of the employees hide.

 checkmark 

Quoting Bond007 (Reply 2):
It's not so much that consumers aren't willing to pay - it's that airlines don't charge what they need to make a profit...or even break-even!

 checkmark 

Quoting Lightsaber (Reply 3):
I worry that fuel has finally broken through a barrier high enough to slow the economy.

Well, personally, I do hope the economy slows down a bit. Maybe then inflation will curb, prices of gold and now silver will come back down to acceptable levels, and housing markets stabilize. Oil in the near-term has little hope of stabilizing to the point of linear predictability.

I've been reading about how $70.00/bbl is a psychological barrier for the average US consumer, but I think it's closer to $100.00/bbl. We saw $70.00/bbl after the hurricanes, and consumer habits changed only negligibly. However, once prices hit $100.00/bbl, that *will* be more than the market will be able to continuously bear and we will see drastic cuts in just about everything except prices until oil returns to an acceptable level. However, in the run up to $100.00, we will see plenty of sporadic adaptation--just nothing on a truely systemic level. Oil is testing the waters to see how high it can go without losing a sale--even it will have a ceiling. The trouble is living through it until that ceiling is found.

Quoting HPRamper (Reply 4):
Fuel prices would drop if we stopped hard-talking Iran about attacks and such. Plain fact that is making traders very nervous...that's why oil prices have shot up even just over the last two weeks.

It's not only Iran that has traders' panties in a bunch--it's supply-side issues with Iraq and Nigeria and demand-side craziness with China and the US as well.

The biggest reason prices are spiking? Refiners are shifting away from adding MTBE (which helps curb air pollution but contaminates groundwater) to gasoline. Just by removing this will shrink the national gasoline supply by about 150,000 barrels *a day*. Interestingly enough, MTBE is to be replaced with ethanol, which has caused *that* price to spike about 20% because about 50% of ethanol's total daily output will be needed.

Me? A Prius is looking mighty tasty right about now, lol.

Airwave  eyebrow 
When you do things right, people won't be sure you've done anything at all.
 
dispatchguy
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RE: Fares And Fuel Prices

Thu Apr 13, 2006 7:07 pm

Back in the summer of 1997, I worked for United Feeder Service (UFS) at the South Bend airport.

I recall from back then the BUA walk-up fare from SBN-ORD was 257.00 for the "privilege" (if you want to call it that), for flying on a beat-up British Aerospace ATP, for a 71 mile hop across Lake Michigan into Chicago.

Now as of the time I post this, the BUA fare, according to United.com, is 562.80. Now granted, back in 1997 we didnt have all of the post 9/11 security surcharges like we do today; but 562.80 to fly on a cramped ERJ, for the same 20 minute, 71 mile flight. For that amount of cash, I better be getting a helluva lot more than a 10-pretzel bag of pretzels, and a completely disinterested flight attendant in the back.

Back in 1997, surprisingly, there were a lot of people that just flew SBN-ORD instead of driving, and back then I couldnt blame them. Incidentally, from DENORD, same day, same fare basis (BUA), according to United.com, the fare is 609.30.

I posted in another thread that I dont mind paying the fare as long as it is worth the service received. In the DENORD segment (on a mainline aircraft), I wouldnt mind paying the BUA. In the SBNORD segment (on a cramped ERJ aircraft, with minimal, if any, inflight service), there is no way in hell that I would pay that BUA fare, because the transportation and the service on top would not be worth the fare paid. By the time I farted around at SBN with check-in, the TSA shmoes, waited at the gate, take the inevitable delay into ORD, I easily couldve driven it.
Nobody screws you better than an airline job!

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