29 January 2011

Have We Reached The Bottom Of Airfares? Can We Stay There?

The USA Average fare domestically is about $230 in 2009 (the last full year of data). This is in my view the lowest it will ever be. The decline from ten years earlier dropped the fare from $300.

Why do I come to this conclusion? The cost of the ticket will now rise above this number as its not possible in my view to get a lower price into the equation. The unbundling of the price of the ticket also means that we will see some headline prices but we will never see a lower average fare than what it is now. But to keep the real prices low - we all have to be vigilant. Fighting to keep the real process open and continual focus on the removal of costs - particularly legacy and unnecessary consumer costs - must be maintained.

So spare a thought for the process of lowering the fares. The work of such luminaries as the late Sen Ted Kennedy, President Ford, and Alfred Kahn. Jimmy Carter gets the credit for seeing the process through to its conclusion. All of them deserve the credit.

Here is a nice little piece in Business Week/Bloomberg about the "good old days".

Frankly the noise over those who are complaining about the lack of transparency and the addition of fees need to just get a life. You my friends are living in a bygone era. Today's customer is SO MUCH smarter than you give them credit. They will find the lower price that suits them no matter what happens.

Thanks to the pioneers who went before us and created the environment for these low fares. For those unsung heroes in the airlines and in the various distribution outlets who enabled the lowering of airfare by taking cost out of the equation and finding innovative ways to promote and sell low cost - THANK YOU. For those of you who are fighting to preserve an outdated system that in fact does the opposite and raises fares through the use of obsolete technology and outmoded business practices - SHAME ON YOU. Particularly for cloaking your bad behaviour in the coat of consumer advocacy.


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