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Stocking Stuffers

Tuesday, October 28, 2014

Delta Airlines was one of the first to hike fares last week, despite falling fuel prices.

Alberto Riva

The major airlines in the U.S. reported their earnings last week, and they are staggering.

If you thought lower fuel prices would lead to lower airfares, think again.

What Goes Up, Doesn't Come Down

U.S. airlines are raising fares on domestic flights even though they are getting a windfall from lower fuel prices.

Last Thursday, a trial-balloon hike of $10 round-trip implemented by Delta stuck after Southwest Airlines joined other carriers Friday in bumping fares up.

Both United Airlines and American Airlines matched it Friday evening making for a very quick success, said FareCompare.com

All the major airlines are reporting record load factors with Southwest Airlines bragging that its flights out of Dallas' Love Field are running over 90% full.

So what we have here is the major carriers doing very well holding down capacity and raising fares and packing planes.

Southwest Airlines, which used to be the friend of low fares and market expansion, is now just like the other major carriers. It seems that the hopes of flyers who want reasonable fares will now fall to Spirit, Frontier and Allegiant.

We're Stuffed

Heading into the holiday travel period, the airlines expect even cheaper fuel, due to a dive in crude oil prices.

Jet fuel price, an airline's biggest single expense, has dropped by about one-fifth since mid-June.

Yet holiday travel will be more expensive in 2014 than in 2013.

A new study by Expedia reports that domestic fares for the Thanksgiving holiday are up 17% over last year, to an average of $467. Christmas airfares are up 2% to an average of $493, the travel site said.

Flights over Christmas averaged $482 in 2013 and are averaging $493 in 2014, a 2 percent hike."

Carriers raised fares five times this year and attempted to do so 20 times.
So even as oil prices dropped, instead of passing the savings onto the customer, the airlines participated in ramping up fares.

Full of Bad Cheer

The airlines like to say that flying has never been cheaper, and they are just starting to dig out of the hole from the 2000s, which resulted in billions of losses. But this is probably the most misleading argument about airfares today.

- All the major carriers except Southwest took a trip through bankruptcy court and unloaded most of their debt onto unsecured creditors, wiping out their shareholders and strong-arming their employees into accepting reductions in pay, benefits and working conditions.

- Adjusted for inflation, each major airline is saving billions in equivalent labor costs achieved though outsourcing - everything from menial jobs in airports, to regional "Express/Connection" flights with contract pilots, to maintenance and aircrft fuelers, to call center employees.

- Service has decreased. A 150-seat aircraft today typically has no more than three flight attendants, down from five-six years earlier. Additionally, complimentary meals are no longer provided to main cabin passengers except on transcontinental flights.

- Fares today do not include ancillary fees, such as those for baggage, seat assignments, meals, etc. that consumers pay extra for now. Tickets have also become more punitive in terms of change and standby fees.

- Aircraft load factors are expected to be in the upper 80th percentile, compared with barely 50 percent years earlier.

Fuel Surcharges Have Nothing To Do With The Price of Fuel

On Monday the price of crude oil fell below $80 a barrel for the first time since mid-2012 as energy prices continue to plummet around the world.

So why aren't the airlines reducing the so-called fuel surcharge? Isn't this just another name for a fare increase?

Fuel surcharges are a convenient way to raise and lower all fares in a market by a mixed amount without having to refile each fare, explains the blog View From The Wing.

Only a few airlines in the U.S. and a few partner carriers impose these fuel surcharges on customers booking award tickets. On flights to Europe, your ticket breakdown still shows fuel surcharges of usually several hundred dollars.

The Huffington Post calls it a pure money grab and rip off that has gone far beyond the price of fuel.

There was a class action suit filed in 2012 against British Airways for failing to disclose what portion of their fees were attributable to fuel surcharges.

FlyersRights believes some re-regulation of our air transportation industry is needed. The existing model doesn't work, except for Wall Street profits.

Your Letters!
(In response to "Ebola, The Plane Facts")

Dear FlyersRights:

Well it seems that who ever you got your "facts" from about the safety of flying was full of S**T. CDC HAS now confirmed that a second nurse that treated T E Duncan in Dallas HAS Ebola. AND what's more, she has flown on a commercial flight even after showing symptoms! So your and the Obama administration's approach of burying your head in the sand and telling everyone that it's not contagious and that it's safe to fly with exposed people is WRONG!

Read this IF you care to know the facts; http://www.cnn.com/2014/10/15/health/texas-ebola-outbreak/index.html

So from here on out, I don't believe a word that you say. TAKE ME OFF OF YOUR MAILING LIST!

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Dear FlyersRights:

I don't agree with you that we should ban flights from West Africa or quarantine everyone coming in from that region. For one thing, symptoms of Ebola can take up to 21 days to manifest, and there simply is no reasonable way to quarantine large numbers of people for that long at an airport.

Checking for fevers isn't going to be effective either, for the same 21 day reason, and screening questions won't do a lot of good (people can lie; Duncan did). Further, aid workers and WHO personnel will be a lot less willing to fly to Africa to help with the ongoing epidemic if they don't think they'll be able to get back home.

There aren't enough personnel now, and losing people will only exacerbate the current situation and create a bigger public-health menace. Finally, there's more than one way to get back to one's home country, even if flights from that part of the world are banned. Witness the millions of Cubans who flew from Florida to Mexico to Cuba when the U.S. had a travel ban with that country. Or that guy who flew from Europe to Canada and then drove south into the United States with multiple drug-resistant tuberculosis.

Part of the price we pay for living in a free society is expecting, or at least hoping, that other people will act responsibly. I believe it is currently illegal in the United States to get on an airplane if you have or think you have a contagious disease. That includes the common cold, not just Ebola. (Even if it isn't illegal, it's stupid; not only do you put other people at risk but being in an airplane while sick is a miserable experience, and it's not like they can land halfway there to let you off.)

I think the public would be better served with a public-information campaign instructing people not to fly if they're sick. Further, it would be tremendously helpful if airlines would either refund fares or at least offer credits to people who decline to fly when they're sick. That's the sort of law we should be demanding from Congress; absent the financial incentive to use a ticket they already paid for, I think most sick people would stay home. I know I would.

Just $0.02 from a civilian.

-JJ

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(In response to "F Minus")

Dear FlyersRights:

Here is the deal, and I am coming at this from a Pure Sale Perspective. We live in an era where there is no One Size Fits All. Each person spends money on things for their own reasons.

So, not that I would want to be in Economy Minus, but there is a Market for that. Southwest has been doing it for years, but did not call it that.

I focus on Sales and Sales Enablement. Not trying to sell you anything, but I look at things a little differently.

Sorry if that does not make sense. Just how I look at it!

-PB

Dear Phil,

The problem with "economy minus" is, where does it end? "Economy minus-minus"? Then "Economy minus-minus-minus"...

And this would be way for the airlines to charge regular-coach passengers more. Then charge "economy minus" passengers the same price that regular-coach fares were. So you'd pay the same, and get less.

Travelers expections are already getting lower and lower. A few years ago, your expectations for a coach fare were a bag included and some food for the price of the ticket. Now we've all been trained by the airlines to expect almost nothing with the price of a coach seat.

Sincerely,

Kendall Creighton

FlyersRights