How much are you really paying for your plane ticket?

We’ve heard airline employees gripe ad nauseam about how flying just isn’t what it used to be … because it’s so much cheaper than it was back in the glory days. True, we’re looking at a much different world post-regulation, but that was so long ago that it isn’t relevant any more.

So, what about today? Are airlines still getting hammered in the deal (as they contend), or are consumers giving ’til it hurts? The answer, of course, is somewhere in the middle.

You probably saw my story this week that puts plane tickets up 13.1 percent year over year for the second quarter, though it really just offsets a 13 percent decline last year. Nonetheless, the $341 average domestic fare is close to the 2008 peak of $346 and the third-highest average domestic fare attained since 1995 (2006 came in second at $342). It really does feel like we’re getting screwed.

Think again. Airline employees have a point, but only narrowly.

Adjusted to 1995-equivalent dollars, the average domestic fare this year is only $238. That’s a 20 percent drop from the $297 average fare in 1995. Over the past 15 years, the airline industry has lost a lot of ground. The peak, in 1995-equivalent dollars, was reached in 1999 ($302) and maintained in 2000 ($300) before the slide began. Even in this analysis, however, 2010 shows a marked improvement from the 2009 level of $213 (in 1995-equivalent dollars).

So, in pure cash, the airlines have been getting shafted. The industry’s position falls apart, however, when you consider the inclusion of ancillary fees, which are expected to be good for $8.9 billion in airline profits this year, according to IATA. The inflation-adjusted fare we’re paying doesn’t include the amenities we used to receive … and the airlines are generating extra income from what they used to include in the price of a ticket.

There’s no doubt that airfare is cheaper than it’s been in at least a decade and a half, but you’re not getting the value you used to.

[photo by Mr. T in DC]

Cheap tickets still exist, despite airfare inflation

Is it really getting more expensive to fly? Earlier this week, the Department of Transportation revealed that ticket prices were up 13.1 percent year over year for the second quarter of 2010, a stunning increase – though tempered by the fact that fares actually fell 13 percent year over year from the second quarter of 2008 to the second quarter of 2009. If nothing else, this does raise concerns about whether we won’t have access to cheap tickets for a while.

With some strength coming back to the travel market, it’s easy to speculate that rates will continue to rise, especially if business travelers come back into airports in force. And when you look at the history of airfares over the past decade and a half, it’s easy to see why. Despite grumblings in the industry that flying is getting cheaper, average fares have climbed 14.8 percent cumulatively from 1995 to 2010, with 2010’s average domestic fare of $341 approaching the 2008 peak for this period of $346.

But, there’s a silver lining. There’s still enough market inefficiency to make deals possible, and the rising strength of intermediaries (i.e., online travel agencies) means that you should be able to score some great fares next year. As the battle for brand recognition as a way to access consumer wallets heats up, look for competition to put some pressure on the economic drivers that push fares higher.

I’ve heard from Bill Miller, Sr. VP of Strategic Partnerships at CheapOair that average ticket price (base fare only) fell 0.3 percent year over year for domestic flights and climbed 0.2 percent year over year for international flights. Effectively, this translates to no change while the underlying carriers are pushing fares higher.

Miller tells me, “At CheapoAir we work hard to keep airfare prices low for our customers. Year-over-year, airline ticket prices that customers buy from us have actually decreased very slightly. And, our international airfare prices have gone up very slightly. We will continue to focus on finding low airfares for our customers as that is what is important to them.”

So, while fares are still at close to their highest levels since 1995, it doesn’t mean there’s reason to give up hope. Combine the fact that you can still find bargains with the increase in purchasing power that accompanies an economic recovery, and you’re in better shape than you think.

Time to get out on the road!

[photo by AMagill via Flickr]

Airfare prices drop: time to book your fall and winter travel

Have you been holding off on purchasing your tickets this fall and winter? Well, that precipitous drop that we were all eagerly awaiting has finally taken effect, and there are some fan-freaking-tastic flights waiting to be purchased.

The whole fare tidal wave began with an outstanding Southwest Airlines sale kicked off this week, reducing fares to only $30 each-way among many routes. In turn, many of the legacy carriers dropped their fares to the same destinations, so if you fancy paying for your baggage or earning useful frequent flyer miles then you might be able to switch up.

Sample fares include tickets from Chicago to Minneapolis and Kansas City for only $84 round trip.

Needless to say, sites like Kayak and Travelocity don’t search both the legacy carriers and Southwest’s site, so if you are going to do some fare crawling make sure to check all of the sites. You’ve got until the end of the day on Thursday, October 28 2010 to book your tickets, with available travel dates of early December and January – Mid February.

[flickr image via willamcho]

Review – ITA Software OnTheFly for Android

If you have ever booked an airline ticket online, then you have a very good chance you made use of fare information from a company called ITA Software. ITA is so important to the online world that Google purchased them earlier this year. ITA’s technology is what powers many of the major booking engines, including some from the airlines themselves.

So can you imagine how powerful an app could be if it had live access to the ITA fare data? Well, imagine no longer, because owners of an Android phone or an iPhone can download OnTheFly – ITA’s mobile application for airfare searches.

Unlike many other airline ticket applications, OnTheFly is designed with a specific kind of traveler in mind – the kind of traveler that doesn’t get scared when they see booking codes or fare constructions. If you understand how airline tickets work – an application like OnTheFly could be your best tool for fighting overpriced tickets – as long as you know where to look.

The application itself is very well made – the version I tested was for Android, and given the ITA – Google – Android links, it comes as no surprise that this is one well designed application.

The smart design starts when you enter an airport – in addition to the airport name or code you entered, it’ll also show other airports to consider.

In the case of Minneapolis, the closest alternative airport is 61 miles away, but when you enter one of the New York airports, you obviously get some better alternatives. Searches can be done by date, flexible dates, fare class, number of stops and a variety of other options.

The results matrix shows airfare by airline, along with the number of stops – making it very simple to pinpoint the best fare.
Results can expanded with other airports or alternative dates.

Once you’ve picked a fare, you can pick your times. Depending on the departure time, fares may go up, so this simple chart shows then the best time to fly will be.

And once you pick an actual flight, you can display its fare information, mileage and even its emissions data – which is great if you participate in a CO2 offset program.

Now – to be perfectly clear – OnTheFly is NOT a ticket booking application – it merely shows the best fares, from ITA’s database. Once you’ve found the perfect flights, you will need to call the airline and give them the information they need to actually book your ticket. Of course, you can also call your travel agent if you still happen to use one.

Thankfully, OnTheFly tells you EXACTLY what the airline will need to know in order to book the exact ticket you want. Since some of these tickets use specific booking codes, you’ll need this data to snag the fare you found.

Bottom line is that OnTheFly is the best mobile airfare search app I’ve ever tested – but it is most certainly not for everyone. If you just want to go online and book whatever looks cheap-ish, then you’ll probably want to stay away from it. But if you make a sport out of finding the absolute cheapest airfare, maximizing your miles and taking advantage of specific booking classes, you’ll get a real kick out of the power of ITA on your mobile device.

To learn more about ITA Software OnTheFly, and to find download links, head on over to their product page.

Airline mergers could lead to fare “creep”

The Southwest/AirTran merger isn’t expected to push fares much higher. The disappearance of seats that comes with airline consolidation would make you think that prices are about to rise, as the fundamental commodity of the airline industry becomes increasingly scarce. But, we’re not close to that point yet, notes USA Today:

“We’re not at the tipping point,” says George Hobica, founder of “I don’t think fares will be impacted much until we have three legacy carriers and one discount carrier remaining.”

The number of seats, however, is shrinking across the airline industry. Since September 2007, the number of domestic seats available has fallen 10 percent.

According to Hobica, look for fares to “creep upward,” but not at a rate that will horrify customers, a position supported by Frank Werner, associate professor of finance at Fordham University. He tells USA Today: “Generally, airline mergers remove competition from the skies, leading to higher prices. This will happen in markets where the combined Southwest/AirTran will not have a dominant market share.”

[photo by SkilliShots via Flickr]