Why Plane Ticket Prices Aren’t Going Down Anytime Soon
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Bad news: Airfares prices are going up, and they’re likely going to stay that way until scientists finally crack the code of cold fusion. The LA Times recently took a look at some of the factors behind the rise in prices, and the news is grim for those hoping the increase is simply a blip. It seems three main factors are at play here.
1) Fuel
Fuel prices are going up due to a recovering world economy, and unless a new financial crisis resulting in another great recession is around the corner, don’t expect fuel prices to drop anytime soon.
2) Fewer Seats
It’s simple supply and demand. As the airliners were hammered during the economic turndown, they raced to end plane leases and increase capacity per plane. Now, flights are averaging 85% capacity, meaning they have less need to drop prices to fill seats.
3) Merger Madness!
Back to our old friend Adam Smith. Six major airliners have combined into three even more major airliners over the last few years (United/Continental, AirTran/Southwest, Northwest/Delta), which has resulted in less competition, fewer seats, more price control, soggier sandwiches, more in-flight Adam Sandler movies and other bad news for budget-conscious fliers.
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The good news in all of this is that international fares seem to be holding steady. Credit a weaker international economy (particularly in Europe) and markedly more competition outside the U.S. for this good fortune. One more reason to head out of the country next trip.