Fees obscure air travel's true cost increases
8/11/2010If you thought airline tickets have been getting more expensive, you are right. But how much more expensive is difficult to say.
Official data show that airfares have been rising steadily since January. But fares are only part of the price tag, now that airlines are charging fees for everything from checked baggage to exit-row seats. So those statistics do not fully capture the number that matters most: how much it actually costs to fly.
Nonetheless, businesses depend on the data to manage their travel budgets, consumers track price trends to decide when or if they should book a trip, and industry groups cite fare statistics to influence government policies on travel taxes and other regulations.
Given all the fees, historical reports are now comparing apples to oranges. That has not stopped fare trackers from making comparisons to years when all-inclusive ticket prices were the norm.
When the Department of Transportation released its airfare statistics for the first quarter of 2010, it found that the average domestic ticket price was $328, a nearly 5 percent rise over the first quarter of 2009. That price includes government taxes but not baggage and other fees the airlines now charge for services that used to be part of the ticket price.
But the department also noted that fares were down nearly 6 percent compared with the first quarter of 2001 - a comparison that leaves out the fact that a $25 fee to check a bag adds almost 8 percent to a $328 fare.
The airlines that recently reported second-quarter earnings showed a return to profitability, in part because of the added fees. But only a few of the carriers broke out data that specifically illustrated year-over-year fare trends.
Southwest Airlines reported that its average one-way fare increased 19 percent in the second quarter, to $132, not including government taxes and fees. And American Airlines reported a 14 percent rise in its passenger yield, an industry measure that represents the average fare paid.
Meanwhile, the Air Transport Association, the airlines' main trade group, reported a 25 percent increase in passenger revenue in June, compared with the same month last year. Although the bleak economy in 2009 affects any comparison, June was the sixth consecutive month of year-over-year revenue increases after 14 months of declines.
Yet none of these numbers includes the extra fees, so travelers are most likely paying even more than these double-digit fare increases indicate. Many experts expect that to continue.