Are Airfares Getting More Expensive?

Via Today in the Sky, airfares have continued to decline in real terms – prices had already fallen by more than a third between 1977 and 1992 and new Bureau of Transportation statistics data shows that prices are now lower still.

Now, fares are up 10% in a year. And fees are up too. But it’s hard to get too excised about that given the long run trends. (Fuel) costs are up markedly as well.

According to this report, Cincinnati is the most expensive airport to fly in and out of. Nate Silver would think that means the pricing is unfair, but if it were somehow uber-profitable to be flying Cincinnati routes then Delta wouldn’t be pulling back from the airport, and certainly other profit-hungry airlines would jump in and ramp up service to take advantage of above-normal profits.

Atlantic City had the lowest airfares. As much as I complain about Spirit Airlines, and as much as average fares obscure travel cost with them because of their myriad fees, I think this is about as strong a case for the existence of Spirit Airlines as you can possibly make.

It’s interesting to observe that the phenomenon of airline fees isn’t a new one, the percentage of revenue earned by airlines from their fares has been on the decline for 20 years, is slightly higher now than it was in 2009, and has remained roughly steady over the past five years.

The report alone doesn’t indicate this, but it also strikes me that Ft. Lauderdale has some of the lowest fares in the country. It’s largely a leisure market, to be sure, and that helps drive airfares downward. But it’s also a low cost airport. Airlines like Spirit prefer it, and airlines like Virgin America and Alaska fly there precisely because of lower operating costs than nearby Miami. American dominates Miami and can subsist there because of Latin American feed, but for domestic operations Ft. Lauderdale ought to be preferred by both passengers and airlines, and that mix generates low fares.

I want to noodle on the fact that over the past 11 years airfares have increased the most in airports with a significant Southwest Airlines presence like Dallas Love Field and Houston Hobby, the rest of the top 5 are consistent in Burbank, Reno, and El Paso.

Interesting data and always useful to have context for discussions of airfares.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I agree with you, Austin air tickets are getting more and more expensive thanks to Southwest dominance. I can see a normal rountrip from Austin to the East coast at $400 and $300 to the West Coast

  2. Southwest’s big price jumps seem to coincide with the end of its big fuel hedging advantage and a strategic change in its operating philosophy as they entered high-fare markets and rather than cutting everything to $29/$49/$69 they preferred to undercut the incumbents slightly.

    I think your critique of the CVG situation is a bit too credulous. The high fares in that market are a result of one airline dominance. Kansas City is an example of a mid-size market with a large airport but historically low fares. Seattle is another. They were not dominated by a hub carrier, while CVG was. CVG had more nonstops, tho.

    Also, CVG was/is heavily dominated by Comair’s 50-seat RJs. They are not economical in this expensive oil era and DL has responded by pricing those flights higher than mainline jets or larger RJs. I see that all over its system, but its most pronounced at CVG.

    Demand is not static. It responds to airfares. CVG had many many flights because so many of its passengers were connecting. As DL downsized there CVG became less of a transit hub and the vicious cycle ensued. I would argue fares in CVG are so high largely due to single airline dominance and RJs.

  3. Looks like Alaska will be a new arrival at FLL come the summer. Not sure if the route is only seasonal. Up until now they have only flown to MIA prolly due to their partnership with AA.

  4. Anecdotally, airfares are way up in 2012.

    SFO-LAX – used to run $39 one-way on WN. up to $59-69 last year. now $100 – except for TU/WE.

    SFO-IAD – was consistently in the $200-300 range. now $400-500 (sometimes higher) though I snagged a seat in Feb. low season for $350.

    My flights to Mexico are all running 20% more than last year, and 100% more for certain summer dates (which last year were selling at deep discount up to the date of travel).

    So from my view, North American fares are way up, and show no signs of backing down. I’d chalk it up to a combination of capacity cuts as well as several fare hikes by WN, which usually sets the bottonm.

  5. I won’t say I’ve paid less out of pocket this year than last for airfare, but I haven’t seen a steep increase traveling primarily between PHL and LAX/BUR. With Virgin America coming to PHL, we saw some great fare sales earlier in the spring.

  6. If you follow the airline financials, you know that airfares have been increasing at a fairly steady year-over-year rate of 10%. I haven’t seen a breakdown, but my hunch is the “junk fares” are the ones that have increased the most. It’s gotten very hard to fly REALLY cheap. I’d also note that the cheapo int’l airfares are also almost impossible to find. Crossing the Pond, even if winter, is now generally expensive!

  7. I can vouch for SWA and its “price” gouging. GSP is a prime example. I was getting GSP to MHT pre-SWA for mid to high 200’s, now I am being gouged upwards to high 300’s.

    Low cost airline my keister.

    The only thing I am doing is amassing points via their Visa Card and getting reward flights.

    Boo for the SWA effect.

    I will say they do have good Customer Service.

  8. Thank you very much for using the word ‘myriad’ properly! Almost no one ever does, and I really appreciate it.

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