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chrisp390
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Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 4:12 pm

Sen Schumer called for a federal investigation into the high price of plane tickets saying airfares should be dropping along with the price of fuel.

Maybe this guy doesn't know anything about hedging or realize how the industry is only finally starting to make money and has forgotten all the times he travelled in the past when oil was at record highs and airlines were incurring major losses to subsidize his travels.

Article is here, http://www.nydailynews.com/news/poli...ce-plane-tickets-article-1.2045481

[Edited 2014-12-15 08:33:36]
 
815Oceanic
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RE: Sen Wants Probe Into High Price Of US Air Tickets

Mon Dec 15, 2014 4:16 pm

This man made Delta switching from 3x MD88 to 3x MD90 on ROC-ATL big news after AirTran left the market. He's known for working with airlines but this is all marketing to make him look good. We gained 30 seats on Delta for a loss of 230 seats on AirTran.
 
usairways85
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RE: Sen Wants Probe Into High Price Of US Air Tickets

Mon Dec 15, 2014 4:22 pm

Title should be updated to say "US airline tickets." I thought this was specifically against US Airways fares (ala US Air)
 
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enilria
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RE: Sen Wants Probe Into High Price Of US Air Tickets

Mon Dec 15, 2014 4:29 pm

So, on one hand Schumer is a moron and the reason prices are high is because airlines have cut capacity dramatically. Cutting the price in a vacuum would not help much because then there would not be enough seats to accommodate the demand increase and there would be shortages.

OTOH, the reason there is so little capacity and prices are so high is because the mergers allowed market dominance and that led to less and less capacity. So, I welcome the investigation as to how the mergers led to higher prices as a means to eliminate future merger approvals, BUT the genie is stuck in the bottle for now. The only thing the govt can do to effectively lower prices short-term is to ease the process for new start-ups or change the rules on foreign ownership.

Quoting usairways85 (Reply 2):
US Airways fares (ala US Air)

That's the exact reason they changed their name to US Airways!!!!
 
chrisp390
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RE: Sen Wants Probe Into High Price Of US Air Tickets

Mon Dec 15, 2014 4:33 pm

Quoting enilria (Reply 3):

I agree. I tried to word it as best as I could, problem was there wasn't enough character space
 
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par13del
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 4:33 pm

Quoting chrisp390 (Thread starter):
Maybe this guy doesn't know anything about hedging

Exactly, it's no different from the banks who were bailed out for their risky investments, in this case rather than the government covering the risk that the airlines took with the hedges, the pax are covering.
Unfortunately, when the individual takes financial risk we do not have "others" to cover our risk and prevent losses.
 
FlyPNS1
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 4:38 pm

I agree that Schumer is misguided on this and is really just trying to score political bonus points. However, the airlines have hurt themselves a bit as they made it clear in the past that they HAD to add bag fees, seat selection fees, etc in order to cover "the high cost of fuel." Now, fuel prices have plunged and the fees are still there.
 
usflyguy
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 5:02 pm

Supply and Demand. If consumers weren't willing to pay the prices, the prices wouldn't be where they are. Why wasn't he demanding an investigation into the oil companies while they are/were raking in billion in profit yet the price for a gallon of gas was $4+. I would expect something like this from Issa.
My post is my ideas and my opinions only, I do not represent the ideas or opinions of anyone else or company.
 
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enilria
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 5:11 pm

Quoting FlyPNS1 (Reply 6):
I agree that Schumer is misguided on this and is really just trying to score political bonus points. However, the airlines have hurt themselves a bit as they made it clear in the past that they HAD to add bag fees, seat selection fees, etc in order to cover "the high cost of fuel." Now, fuel prices have plunged and the fees are still there.

Yes, the solution is more capacity and the govt can't force that. If the airlines removed the fees now it will just be replaced with a fare increase. I think we will see several more points of capacity this year and if prices are still low 6 months by now fleet plans for 2016 will start to change.
 
Osubuckeyes
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 5:12 pm

Quoting usflyguy (Reply 7):

Supply and Demand. If consumers weren't willing to pay the prices, the prices wouldn't be where they are.

If airlines didn't eliminate competition and remove the supply prices wouldn't be where they are...
 
kl911
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 5:48 pm

Quoting chrisp390 (Thread starter):
Sen Schumer called for a federal investigation into the high price of plane tickets saying airfares should be dropping along with the price of fuel.

Great guy, wish we had the EU commission launching an investigation too. Ticket to Jakarta is 239 Euro, Fuel surcharge 250 Euro.......

It's all fine, but please don't call it fuel surcharge.
 
blueflyer
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 5:50 pm

Let's not forget that, adjusted for inflation, ticket prices are still very low. They're trending up, and the reduction in supply is a major factor, but not the only one.

Airlines have no one but themselves to blame for this proposed probe, however. Adding fuel surcharges makes sense when customers are professionals, such as in the trucking industry. When it comes to consumers, if fuel surcharges are added to the price of a ticket when oil goes up, fuel surcharges need to come down, or disappear, when oil goes down. If it doesn't, they'll feel cheated and complain...

It isn't realistic to expect the average passenger to understand the concept of fuel hedges, or remember the timing of fuel surcharges compared to the price of oil.

How many people have the detailed knowledge to challenge the cost of home insurance premiums? How many people can even challenge a claim that a price increase is justified by inflation? Why expect more of airline passengers?

Finally, when constituents complain, how often does a politician reply by "no you have it all wrong no one is cheating you trust me." That doesn't generate as much headlines as "I'll get on it!"
 
lpdal
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:07 pm

I, personally, do not think plane tickets (at least, the ones I purchase) are too expensive. Yes, the prices have generally gone up, however, so has everything else. Milk, food, utilities, and the like have all skyrocketed price in my area in recent years. I think that signals a quasi-trend that, as mentioned above, less supply -> higher prices.

If you can't afford to travel by air, there are other options. Trains, bus, etc...

-LPDAL
TWU represented. All of my views and posted content are mine alone, and should not be viewed as official communication from my employer, its subsidiaries thereof, or any other entities or airlines.
 
billreid
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:15 pm

Quoting LPDAL (Reply 12):

I, personally, do not think plane tickets (at least, the ones I purchase) are too expensive.

Sorry I disagree totally.

last summer the average R/T airfare USA - AMS was $2,200
the average AMS - USA was 1,050 Euro or $1,365

The mergers have been great for profitability, but have killed competition.
The consumer loses, the American loses!
Some people don't get it. Business is about making MONEY!
 
Flighty
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:20 pm

Airfares are seeing rich profit margins because of consolidation.

Fares were unavoidably going to rise when WN bought FL for example. Or when DL and NW merged, eliminating MEM. Even a cursory examination of anti-trust law will tell you that mergers are not legal when consumers are certain to face material harms due to market power.

Kind of like when 4 cell network carriers potentially go to 3, prices rise nationally. T-mobile proved to be a vital price setter nationally. The DOJ correctly quashed that merger. That's impossible to deny legally, knowing what we know now, having seen the price wars that transpired from the T-mobile side. Not controversial.

But the same was true of AirTran. What does it mean today? It means temporarily we are going to see elevated prices and 20-30% profit margins until new entrants bulk up and depress yields. When the cycle repeats in 10-12 years, we should be more careful with mergers.
 
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LOWS
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:20 pm

Quoting LPDAL (Reply 12):

I, personally, do not think plane tickets (at least, the ones I purchase) are too expensive

Do you even pay for your own tickets...?

Also, trains are a hardly an option in the US where 1. Trains in the US are horrible, 2. It is a massive country.

[Edited 2014-12-15 10:24:10]
 
FlyBigDeltaJets
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:41 pm



[Edited 2014-12-15 10:42:06]

Source: http://www.askthepilot.com/cheaper-and-safer/


[Edited 2014-12-15 10:42:58]
 
MIflyer12
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 6:59 pm

Quoting FlyBigDeltaJets (Reply 16):



[Edited 2014-12-15 10:42:06]

Source: http://www.askthepilot.com/cheaper-and-safer/

If Schumer ignored all data since 2009 he probably wouldn't pursue this.
 
roseflyer
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:00 pm

Quoting FlyBigDeltaJets (Reply 16):

I am not sure what your point was with your chart. In 1980, inflation adjusted oil price was about $90 per barrel in today's dollars. Between 1983 and 1985, it was consistently about $60 per barrel.

That chart indicates that airfares have dropped 42% since 1980. Oil prices are lower, but more importantly fuel burn per seat is about 50% lower (comparing a 727 and 737-900ER). That chart actually shows fuel costs dropping does directly relate to air fares.

The senator wants to know why fuel prices have dropped 40% yet air fares are up 10% and is asking the DOT and DOJ if there were too many mergers. I think this is a good topic for the senate to investigate to determine if they will allow further mergers in the future. I hope they do evaluate this since if a hypothetical merger between AS and DL happened, I could see fares in airports like SEA, ANC, LAX, etc going up!

[Edited 2014-12-15 11:17:31]
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Osubuckeyes
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:10 pm

Quoting Roseflyer (Reply 18):
That chart indicates that airfares have dropped 42% since 1980. Oil prices are lower, but more importantly fuel burn per seat is about 50% lower (comparing a 727 and 737-900ER). That chart actually shows fuel costs dropping does directly relate to air fares.

I've seen that chart around A.net before, and most people ignore the fact that fuel burn on a per pax basis is much lower than it was in the 80s. Fares are much more directly correlated to fuel burn when there is competitions, and when there isn't fares don't respond as much to changes in fuel price. I will acknowledge that also has to do with hedging nowadays.

Edit: Here is an interesting chart that illustrates that mid-sized markets for the most part are seeing less and less competition and as a result airfares are rising.

http://www.wsj.com/news/interactive/...4052702303980004579576012567760336

[Edited 2014-12-15 11:12:01]
 
AWACSooner
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:18 pm

Quoting Flighty (Reply 14):
Airfares are seeing rich profit margins because of consolidation.

I beg to differ...it's mostly due to the fact they're charging ancillary fees that AREN'T TAXED!!!
 
flightsimer
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:18 pm

Quoting enilria (Reply 3):

It was USAir not US Air. The space was only added when they rebranded to US Airways.
Commercial / Airline Pilot
 
FlyBigDeltaJets
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:20 pm

Quoting Roseflyer (Reply 18):
That chart indicates that airfares have dropped 42% since 1980. Oil prices are lower, but more importantly fuel burn per seat is about 50% lower (comparing a 727 and 737-900ER). That chart actually shows fuel costs dropping does directly relate to air fares.

Fuel still accounts for nearly half of an airline's costs. Add in the fact that employee pay hasn't kept up with inflation since 1980 and you have even more of a reason to justify that today's airfares should be even higher than they currently are. Many of today's air travel consumers feel that flying is a right instead of a privilege and that the airlines should be in the business of charity by subsidizing their travel.

If you really want to complain about the cost of goods and services, take a look at the profit margin measuring stick instead of straight margin. The oil/gas companies (to say nothing of the airlines) aren't even close to the top of that list. Maybe the distinguished gentleman from NY should open a federal investigation in to the leading internet, pharmaceutical, and telecom companies.

[Edited 2014-12-15 11:21:37]

[Edited 2014-12-15 11:23:34]

[Edited 2014-12-15 11:23:56]
 
rwsea
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:44 pm

We've seen the results of airline consolidation, and they are universally terrible for consumers. Many hub cities have lost service (CVG, MEM, and CLE being the most recent examples), fares are sky-high with no sign of coming down, and frequent flyer programs are being devalued on a nearly weekly basis. It's clear that the big 3 US airlines now have the travelling public by the balls, and flexing their muscle.

Unfortunately there isn't a lot of recourse as many of the foreign routes are now covered by JVs, so international fares are sky-high as well. That said, I try to fly smaller airlines now as much as possible. By flying with say, Alaska and Virgin, rather than DL/UA, I like to at least think that I'm helping to support smaller airlines that might be able to hold down fares from the new Oligarchy.

Quoting billreid (Reply 13):
Sorry I disagree totally.

last summer the average R/T airfare USA - AMS was $2,200
the average AMS - USA was 1,050 Euro or $1,365

The mergers have been great for profitability, but have killed competition.
The consumer loses, the American loses!

Airfares to Europe from the US, rather than from Europe to US, seem to be much more expensive. I usually get around this by booking a roundtrip to Europe with miles, and then booking a second roundtrip from Europe to the US. This obviously only works though when going to Europe at least twice in a year.
 
commavia
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:54 pm

Oh great - just what we need - more "investigations" from Chucky.

Lost in this malaise of ridiculousness is that, even for all of the implications of alleged nefarious, questionable "greed" of the airlines, the U.S. airline industry this year is still likely going to product an industry net margin in the low double-digits at best (actually more likely high single digits on an industry basis). This is hardly unreasonable, and indeed seems quite appropriate, given the inherent level of risk and complexity that shareholders must accept with the daily operation of an airline.

Oil dropped and fares haven't dropped ... and? There is more to the cost structure of airlines than fuel, and either way airfares are priced just like the vast majority of other consumer products and services - which is to say that they aren't priced purely based on the fluctuating cost of inputs, but rather their relative economic value and the price the market will bear. As with so many other things, it's incredible how airlines are always held to a patently unfair double standard.
 
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DocLightning
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 7:55 pm

Quoting usflyguy (Reply 7):
Supply and Demand. If consumers weren't willing to pay the prices, the prices wouldn't be where they are.

People keep saying this, but much like food and gas, air travel is not something that many people can simply choose to do without. Air travel is necessary for many people for many reasons. It might be for business or for court-ordered visitation. It is the dominant means of long-range travel and is no longer a luxury for the wealthy like it used to be.

With the recent mergers, consumers have less and less choice as there is less and less competition. So, for example, if you live in the Detroit Metro Area, Delta has something like a monopoly. Oh, yes, you can choose to fly UA or AA if you're willing to connect through ORD to get just about anywhere, but if you actually want to get somewhere with reasonable dispatch on a nonstop, it's DL or bust. It isn't exactly a free market situation for the consumer.

Now, I don't have a problem with airlines running at a profit, but I do have a problem with them decreasing capacity for the purpose of milking the consumer. I also have a problem with the nickel-and-dime business model. I think that all airline fees (not just airfare) should be taxed. It's hardly a panacea, but it will bring some rationality back to ticket pricing.
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FlyBigDeltaJets
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:00 pm

Quoting DocLightning (Reply 25):
Now, I don't have a problem with airlines running at a profit, but I do have a problem with them decreasing capacity for the purpose of milking the consumer.

I can certainly empathize with this sentiment, but I have the same argument for internet, television, and cell phone service, yet I don't see congressmen lining up to investigate or curb the rate of mergers/acquisitions.
 
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enilria
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:01 pm

Quoting FlyBigDeltaJets (Reply 16):

[Edited 2014-12-15 10:42:06]

Source: http://www.askthepilot.com/cheaper-a...afer/
Quoting Roseflyer (Reply 18):
I am not sure what your point was with your chart.
Quoting osubuckeyes (Reply 19):
I've seen that chart around A.net before

FYI, fares are up another 10% 2011-2013 (plus fees are up) and I'd argue it's even worse by now.

Ancillary revenue is up 50% from then.
http://www.tnooz.com/wp-content/uplo...-at-10.32.19-AM-e1415118805417.png
 
Osubuckeyes
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:29 pm

Quoting commavia (Reply 24):
As with so many other things, it's incredible how airlines are always held to a patently unfair double standard.

The airlines were the ones that implemented fuel surcharges, ancillary fees, and higher fares and blamed it on the price of oil. How is it double standard when the consumer asks why those things are still around when oil goes down? I know why. The airlines have eliminated competition and now can price however they want with little repercussions.

Quoting FlyBigDeltaJets (Reply 26):
I have the same argument for internet, television, and cell phone service, yet I don't see congressmen lining up to investigate or curb the rate of mergers/acquisitions.

Net neutrality for the internet, television has a huge amount of competition from online streaming sites and newer products, and T-Mobile had a merger rejected with AT&T, but otherwise people do put up a stink about cell phone prices.
 
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United_fan
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:36 pm

Quoting 815Oceanic (Reply 1):
This man made Delta switching from 3x MD88 to 3x MD90 on ROC-ATL big news after AirTran left the market. He's known for working with airlines but this is all marketing to make him look good. We gained 30 seats on Delta for a loss of 230 seats on AirTran.

Same Senator that touted another mainline ROC-CLT flight. That didn't last too long . Back to 1 .
He's in the news every week with some BS cause . Anything to get his mug on the TV .

[Edited 2014-12-15 12:37:06]
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silentbob
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:41 pm

Quoting DocLightning (Reply 25):
People keep saying this, but much like food and gas, air travel is not something that many people can simply choose to do without.

Actually, it is exactly the type of thing that many (and I would argue most) people could do without.

Quoting DocLightning (Reply 25):
It might be for business or for court-ordered visitation. It is the dominant means of long-range travel and is no longer a luxury for the wealthy like it used to be.

Court ordered visitation has to be a miniscule fraction of a single percent of all air travel. Basing an argument on that is somewhat absurd. As for business travel, that has been decreasing for years. There are also other options. taking a bus, train or driving yourself all falls into a cost - benefit equation.

Quoting LOWS (Reply 15):
Also, trains are a hardly an option in the US where 1. Trains in the US are horrible, 2. It is a massive country.

They aren't the most efficient mode of transportation, but they are an option when traveling. On the east coast, rail is a very viable option for travel. The federal subsidies also help keep the cost down as well. Most travel in the US isn't from one coast to the other, and when it is, and time is of the essence, then it is going to cost more.
 
FlyPNS1
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:47 pm

Quoting commavia (Reply 24):
There is more to the cost structure of airlines than fuel, and either way airfares are priced just like the vast majority of other consumer products and services - which is to say that they aren't priced purely based on the fluctuating cost of inputs, but rather their relative economic value and the price the market will bear.

You're right, but the problem is that the airlines claimed that the reason all the fees were added is because of fuel. They MADE the connection between fuel and fares. Now, they are trying to disavow the connection as fuel prices drop. Kind of a double standard, eh?
 
Flighty
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 8:59 pm

The nation cannot function without air travel. It is a necessity just like electricity or telephones or email. That doesn't mean individual companies must provide it, but it does mean that market access has to be provided for new entrants to start flights. If market access is blocked, then incumbent airlines can milk the country using a glorified taxi medallion system, perhaps for centuries.
 
Osubuckeyes
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:02 pm

Quoting Flighty (Reply 32):
If market access is blocked, then incumbent airlines can milk the country using a glorified taxi medallion system, perhaps for centuries.

Until Uber, Lyft, SideCar etc... with Cessna's and CRJs start!      
 
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EA CO AS
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:03 pm

Quoting commavia (Reply 24):
Lost in this malaise of ridiculousness is that, even for all of the implications of alleged nefarious, questionable "greed" of the airlines, the U.S. airline industry this year is still likely going to product an industry net margin in the low double-digits at best (actually more likely high single digits on an industry basis). This is hardly unreasonable, and indeed seems quite appropriate, given the inherent level of risk and complexity that shareholders must accept with the daily operation of an airline.

  

This, this, a thousand times this.

No one has a problem with, say, cell phone manufacturers enjoying a 30-40% profit margin, yet airlines only now starting to realize profit margins in the 10-18% range (after being at 1-3% for decades) are suddenly "milking consumers" and need to be investigated?

Hogwash; Schumer is just pandering to the consumer - nothing more.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
mpdpilot
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:06 pm

While prices are going up, I think we are far from needing a congressional investigation...

As some others have pointed out, airfares are not exactly high compared to historical numbers, and while that may be different in certain markets, I wouldn't say air fares are sky high.

I think the real problem people have with air fares is the emotional one of, DL, AA, and UA reporting billions in PROFIT and people still having to pay $400 to go to Disneyland. Because if you go back 10 years, people were paying $500 to go to Disneyland and airlines were laying people off left and right and filling for bankruptcy like it was going out of style, and there were no complaints. This is actually a question of margin.

If you start to look at margin, airlines are right were they should be. Take DL for example they are projecting a 4Q margin of around 11-12%.

For some reference (data from Forbes Global 2000 list):

10 Largest drug companies - not one with less than 10% margin (Pfizer - 42%)
10 Largest banks - one less than 10%, with most over 15% (ICBC - >25%)
10 Largest Auto Manufactures - all around 5% (Hyundai - >8%)
10 Largest Oil & Gas - all aroun 8% (Gazprom - >20%)
10 Largest Media Companies - all around 10% (Viacom - >15%) (Disney - 13%)

Airlines may seem like they are making ridiculous profits and gouging the customer, but I really think they are not.


Quoting DocLightning (Reply 25):
With the recent mergers, consumers have less and less choice as there is less and less competition. So, for example, if you live in the Detroit Metro Area, Delta has something like a monopoly. Oh, yes, you can choose to fly UA or AA if you're willing to connect through ORD to get just about anywhere, but if you actually want to get somewhere with reasonable dispatch on a nonstop, it's DL or bust. It isn't exactly a free market situation for the consumer.

As someone who grew up in a small town where we always had to connect in MSP, ORD, or DTW, this argument that keeps being made about having less nonstop options, comes across very entitled as someone else put it. If someone refuses to connect to save some money, they are probably not the most price conscious flyer...

As FlyBigDeltaJets put it, air travel is not a right. But even more than that, airlines transport millions of people each day. Sometimes that means having to connect in ORD to save a few dollars. Sometimes it means if you live in a small town, you only have 4 flights a day to DEN.

Quoting FlyBigDeltaJets (Reply 22):
Many of today's air travel consumers feel that flying is a right instead of a privilege and that the airlines should be in the business of charity by subsidizing their travel.

With all of that being said, the one way we are limiting competition in this country is with slots and gate limitations. This whole situation in DAL over VX, WN and DL fighting over gates. If competition was our goal, then all three and even UA if they wanted would be able to fly there. The slots in DCA, LGA, JFK, and EWR should not limit airlines from starting service. The lack of "open" gates at ORD should not limit service. Forget about mergers, if you want more competition, take down some of those barriers to entry.
One mile of highway gets you one mile, one mile of runway gets you anywhere.
 
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mayor
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:09 pm

Quoting Roseflyer (Reply 18):
I think this is a good topic for the senate to investigate to determine if they will allow further mergers in the future.

They can investigate all they want, but these things are controlled by the DOT and DOJ, not congress.

Quoting chrisp390 (Thread starter):
Sen Schumer called for a federal investigation into the high price of plane tickets saying airfares should be dropping along with the price of fuel.
Quoting commavia (Reply 24):
Sen Schumer called for a federal investigation into the high price of plane tickets saying airfares should be dropping along with the price of fuel.

Just another public official that fails to realize that the airlines aren't public utilities, but are subject to market forces, which is as it should be, in a free market society.


BTW, why does no one investigate the cost of a new car? A car that may have listed at $10k a few years ago is now double that, and it's probably not even built here. Their savings of sending the work to Mexico, doesn't seem to be working if they're jacking up the prices that high. Anyway, back to my original question........I think the answer is that the airlines have always been everyone's whipping boy and it hasn't changed.
"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
 
grrtvc
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:17 pm

What is the fundamental problem here; airlines making a profit, belief there is limited competition, right to travel by air, or the privilege to fly by air, etc? I as cost continuous as the next person but I also know that I don't have a "right" to fly, I have a privilege.

Airlines are NOT a public utility so why are so many clamoring that airfares are too high? If you don't like the price feel free to drive, take the bus, or take the train. And yes, before someone says it, those are not always convenient modes of transport but does that mean airfares should be cheaper than they are for one's convenience?

What should airfares be? $1, $100, $500? Should it be based on distance, time in the air, type of a/c, number of seats available, etc? Sounds very much like regulation.

Yes, I did not like the idea at first of breaking out bag fees, food, etc. but as someone who travels several times a month it makes complete sense. Give me a base fare and if I decide to bring 5 bags, eat two meals, and sit in a bigger seat then I should rightfully have to pay for it versus the guy next to me who didn't check a bag, bought a meal at the airport, and is fine in his coach seat.

Its interesting too that every town thinks they have a right to air service. Some EAS communities (connected by highways) are less than 50 miles from a larger airport yet they feel they need air service. How is that helpful? Certainly communities in the State of Alaska and elsewhere in the US need EAS but there are plenty of cities receieving it only because of politics.

Some in this world have this belief that every airline should serve their community, have enough seats everyday to accommodate anyone contemplating flying, and the seat should be nearly free.
 
FlyPNS1
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:31 pm

Quoting EA CO AS (Reply 34):
No one has a problem with, say, cell phone manufacturers enjoying a 30-40% profit margin,

Actually, the cell phone industry is under a lot of scrutiny.

Quoting mpdpilot (Reply 35):
The slots in DCA, LGA, JFK, and EWR should not limit airlines from starting service.

The slots are there because there is only a limited amount of airspace, terminal space and overall capacity. Getting rid of the slots won't fix the problem.

Quoting mpdpilot (Reply 35):
The lack of "open" gates at ORD should not limit service.

It's up to someone to build more gates, but I don't think that is Congress' job or the job of the DOT/DOJ.
 
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TWA772LR
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:38 pm

He probably got bumped off a flight to Cancun and wanted to change his flight and had to pay a $50 change fee and arrived 30 mins after he wanted.

I was watching this guy on Closing Bell and they happened to divulge more on the topic. They didn't take into account that fuel prices are falling so fast that airfares haven't had a chance to catch up, and all those silly govt. taxes don't help neither. In that program they showed average fares for 2000 and 2011, 12, 13 and today, they never took into account inflation.

I figured all this out and I'm just a on-again/off-again college junior.
When wasn't America great?


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einsteinboricua
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:47 pm

Quoting FlyPNS1 (Reply 6):
However, the airlines have hurt themselves a bit as they made it clear in the past that they HAD to add bag fees, seat selection fees, etc in order to cover "the high cost of fuel." Now, fuel prices have plunged and the fees are still there.

This. A million times this. The purpose of the mergers was to ensure profitability. Airlines have been generating profits since 2011 at the earliest (AA the exception until it entered bankruptcy protection). The excuse for bringing the bag fees back when oil started climbing past $60 was that they needed the revenue or they would collapse. Oil plunged in late 2008 and airlines did not relieve consumers of the fees, and that was before the merger mania started. Now all the majors have consolidated, they're generating profits like never before, oil prices are plunging (hence a lower fuel price)...why no relief to the consumer? Surely if airlines can pass on to passengers the costs incurred by dealing with Uncle Sam or black gold they must be in well enough positions to pass on savings as well.

Fly another airline? Try living in a fortress hub city and see how that works out?

Use another means of travel? The day we have a high speed rail, this argument will be useful. Until then, it's not efficient. This is not a call to have $1 fares, but I also shouldn't be milked out of every dollar I have. Those profits should, at the very least, be reinvested in a better cabin experience for ALL classes of service.
"You haven't seen a tree until you've seen its shadow from the sky."
 
billreid
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:47 pm

Quoting rwsea (Reply 23):
Airfares to Europe from the US, rather than from Europe to US, seem to be much more expensive. I usually get around this by booking a roundtrip to Europe with miles, and then booking a second roundtrip from Europe to the US. This obviously only works though when going to Europe at least twice in a year.

A decade ago that wasn't the case. The problem is you gotta have the miles to do the inside travel. I am wondering if the airlines are against your strategy?
I came up with a cheaper way.
I am retired military and I took a hop in October and flew back on Arke for an amazing 238 euros OW.
I have to admit Arke wasn't quite the same as KL though.
Some people don't get it. Business is about making MONEY!
 
FlyBigDeltaJets
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:58 pm

Quoting einsteinboricua (Reply 40):
Those profits should, at the very least, be reinvested in a better cabin experience for ALL classes of service.

But that's exactly what's happening, at least at Delta. DL is in the middle of 4-5 year plan in which they are investing BILLIONS back in to the onboard product, the economy cabin included.

[Edited 2014-12-15 14:00:31]
 
Prost
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 9:59 pm

As a senator for the soon to be minority party, I don't know how much leverage his hearing will get. A bunch of senators grandstanding about their experiences going to and from DC, how their golf clubs maybe cost $25 when they went on their official trip to Hilton Head Island? Those trade commision trips to south of France in August?

I wouldn't want to be an elected official, but come on folks, our nation has a lot of issues that need to be dealth with. If the airlines didn't have $ Billion of debt, maybe there's be something to see here. But let's say we changed the fee from 'fuel' to 'debt repayment for the decades you travelled on us while we were losing our shirts fee' would that make it better?
 
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par13del
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:01 pm

Quoting mayor (Reply 36):
Their savings of sending the work to Mexico, doesn't seem to be working if they're jacking up the prices that high.

Check the investors and top level executives.

Quoting grrtvc (Reply 37):
Airlines are NOT a public utility so why are so many clamoring that airfares are too high?

We see this all the time, but the public has invested billions in the airlines so its not that simple, when was the last time an airline or a collection of them built an airport? Yes they pay fees just like car drivers pay tolls, but when you look at the number of roads being used by the public, or the number of airports and air travel infrastructure do you really believe that the airlines are paying their fair share?
Devils advocate is the gist of the post.
 
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jetblastdubai
Posts: 2007
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:02 pm

Quoting EA CO AS (Reply 34):
Hogwash; Schumer is just pandering to the consumer - nothing more.


  

Schumer has some nerve complaining about the prices a group of private companies charge for their service. A service that is completely optional for anyone to use. Schumer was mysteriously absent when oil companies were making huge profits when oil was up. Did he just wake up?

Meanwhile Schumer was part of the group of politicians that passed the most bloated, convoluted, unread bill in history that increased the cost of a different service for many, many businesses and citizens and then made it mandatory that they purchase it or face a fine.

I live in Iraq but I'm convinced that the most dangerous place on earth is between Chuck Schumer and a TV camera.
 
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scbriml
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:19 pm

Quoting jetblastdubai (Reply 45):
Schumer was mysteriously absent when oil companies were making huge profits when oil was up. Did he just wake up?

Despite making large profits, the oil majors make considerably less margin than Starbucks and McDonalds. It's just a question of scale - in order to spend billions finding and producing new oil and gas fields, you have to make profit. Business 101.
Time flies like an arrow. Fruit flies like a banana!
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chrisp390
Topic Author
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:19 pm

Look at DL back years ago when it was in bankrupcy and in general disarray. The service was nowhere near what it is now as the airlines were cutting back on everything they can. Now look at DL, it is making big money and reinvesting it right back into its cabins, aircraft, staff bonuses, terminals, and to build a better network. I have invested big in airlines for many years and been following developments closely. I have no doubt AA will follow in similar steps and its product and service will be signifigantly enhanced in the coming years as its profit makes its way back into the business. I always find it interesting that many people state mergers cause airline service to deteriorate because if anything in the usa it has enhanced it by allowing the airlines to finally make profit they can reinvest into the business. Yes service to small towns may vanish but airlines are a free business and should not be expected to continue serving somewhere that is not viable. There are many incentives cities can offer and alternative airlines such as Allegiant that may see the place differently and serve of if it fits in with their business model,

Market forces will play out. Airlines like Spirit & Allegiant & Jetblue will keep the industry under control. Seat count is increasing in the usa going forward and air fares will adjust accordingly to fill those seats in the future.
 
grrtvc
Posts: 190
Joined: Sat Sep 13, 2003 1:15 am

RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:19 pm

Quoting par13del (Reply 44):
We see this all the time, but the public has invested billions in the airlines so its not that simple, when was the last time an airline or a collection of them built an airport? Yes they pay fees just like car drivers pay tolls, but when you look at the number of roads being used by the public, or the number of airports and air travel infrastructure do you really believe that the airlines are paying their fair share?
Devils advocate is the gist of the post.

I always appreciate the Devils advocate point of view, it always helps to understand the prospective of others and educate oneself. Airport funding is certainly a complicated issue, fortunately or unfortunately I know way more than I would like about it.

Generally speaking, the funds required to run and maintain an airport are recovered from the airlines, property leases, terminal rents, parking fees, etc. In addition, airlines collect fees imposed by the FAA and TSA that do not always come directly back to the airport in which they were collected. It is very rare if any state or local tax dollars are used to support an airport. (Keep in mind I am using a generalized statement here. Yes, there are some airports and airport projects that receive local tax dollars but they are the exception, not the rule.)

The correlation to a toll road is a good example as it is more of a pay-for-what-you-use cost structure. As where the interstate highway system is more of a everyone pays regardless if you use it or let alone drive, as some of the funds come directly from the tax payers; in addition to fuel taxes.

I would say the airlines are paying much more of their share of aviation infrastructure then say trucking companies are for highways.

Where we really could turn this thread on its ear is to ask why are not the GA folks paying for their use of the airspace but that is a whole other debate and one I'm no where near educated enough to enter the discussion.
 
Flighty
Posts: 9963
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RE: Sen Wants Probe Into High Price Of USA Air Tickets

Mon Dec 15, 2014 10:50 pm

Quoting chrisp390 (Reply 47):

Market forces will play out. Airlines like Spirit & Allegiant & Jetblue will keep the industry under control. Seat count is increasing in the usa going forward and air fares will adjust accordingly to fill those seats in the future.

Agreed.

This is a nice little interlude now when the legacies can shape up and look their best and flash some money. Then the LCCs will maul them. Then the bottom will drop out of the industry, again.    Wow!

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