Please sign in to post.

Why cheap flights won't come back for a long time (economic nerd stuff)

The economics of airline ticket prices and fees were created by the Devil himself, or possibly Paul Krugman. It's a delicate balance of asymmetric ticket prices where first class pays for coach -- and bad thing happen when this system falls into imbalance, like if there were a really bad virus that fundamentally altered business communications.

Without further ado, here's a reason the marching bands don't follow the horses and elephants in a parade:

https://youtu.be/Dba1RqmzOjo

-- Mike Beebe

Posted by
4845 posts

Lots of opportunities could exist for extra airline revenue, like having just pay toilets. And while seatbelts might be required as part of airfare, there could be a sizable charge for a working buckle. And those first-class-subsidized seats in coach? The coach seats could now be wooden benches. No seatbacks, so no concern about somebody reclining one into your knees (marketing opportunity - pitch your seatback-free seating class to potential passengers!), and more room for more rows, packing more steerage butts onto those benches. And those packets of snack crackers that are now a full year older than they were last March, charge passengers to not have them foisted on them in coach.

High upcoming travel demand could make for high prices, especially if there’s less flight supply.

As for marching bands, when they were at the back of the parade, there were a lot of unfortunate slide trombones, and cornets, and clarinets, and sousaphones ...

Posted by
378 posts

Lots of opportunities could exist for extra airline revenue, like having just pay toilets. And while seatbelts might be required as part of airfare, there could be a sizable charge for a working buckle. And those first-class-subsidized seats in coach? The coach seats could now be wooden benches. No seatbacks, so no concern about somebody reclining one into your knees (marketing opportunity - pitch your seatback-free seating class to potential passengers!), and more room for more rows, packing more steerage butts onto those benches. And those packets of snack crackers that are now a full year older than they were last March, charge passengers to not have them foisted on them in coach.

So how long have you worked for IcelandAir?

-- Mike Beebe

Posted by
7401 posts

The coach seats could now be wooden benches.

Well, this may not pass muster on the flammability standards, but the rest sounds plausible. :-)

Posted by
1612 posts

This week's RS radio show one of the segments includes Rick joking about how as he's walking through the business class section on his way back to coach in his head he's thanking those people for helping to subsidize his trip.

Posted by
4845 posts

You know, benches could be installed in Business Class, too. They’d still provide lay-flat beds. But they’d be hand-finished mahogany or Jatoba wood, whereas coach benches would be old scrap pine.

Posted by
9636 posts

Ticket prices are always reflected based on demand.

I flew last week on a trip I was supposed to take last June. (Not inernational, relax Covid travel police). The fare was $35 more than it was last year. I flew Delta and like advertised, many of the seats were blocked. But not all. There were a total of 4 flights. Three of those flights were full (full as in all the "available" seats were taken.) Service was a small ziploc bag with two small snack bags and a bottle of water. First class was also offered beer and wine. That's it. No other service. No hot beverages. No soft drinks. You could get more water if you wanted (8 oz bottles.) They did hand out disinfectant wipes when boarding and there was another one in the snack bag. On one flight FC was offered a larger snack box including hummus, cheese, crackers and a microscopic toblerone.

I have to fly the same route next week and the tickets were bought less than a week ago. The price is up 25% but much of that could be because of last minute ticketing. However, I have to fly the same route in a month and the same trip is now costing another 10% above the new amount. The airline must predict that demand will be higher especially as more and more people get vaccinated.

The airports were busy and most gates seemed pretty full. Of course, people were disancing so it may have just seemed more crowded as every other seat was empty.

Airlines have been losing money faster than ever before. They need to make it up. They will charge what the market will allow and what people will put up with. People will be traveling (and not just RS followers going to Europe.) Most people haven't traveled in over a year to see family, or take a vacation. They're ready and so are the airlines.

The same is true for the hotel. Next week I'm paying less than I did last week. But in a month, the hotel is almost sold out and all lower priced rooms are gone as well as all discounts. The hotel I am currently in now doing about twice as much business as it did six months ago.

Travel is picking up. And when the demand goes up, so do the prices.

Posted by
65 posts

Unfortunately, that is a pretty good analysis. Paul Krugman (btw, NOT a financial conservative) would most likely agree that the era of cheap airfare may be over.
Some of you who are old enough will recall the very high prices of airfare before de-regulation. All my hippie friends flew through Iceland to get to Europe because that airline was not part of the regulatory agreement which set the prices. In those days, there really was a sort of cartel which set prices. On the other hand, the experience of flying was a whole lot more pleasant for those who could afford it.

One can compensate by planning longer European visits thereby amortizing the increased cost of airfare over the longer vacation time. I expect the costs of lodging and dining in Europe to DECLINE for the next few years as a result declining tourism (as explained in the video, of course)
Hmm..... A month in Portugal rather than 2 weeks. I could get into that.

Posted by
378 posts

Ok, so now businesses are cheaping out on buying all those stupidly-overpriced tickets to the wonderland that is Business Class. Highly-paid suits start weeping bitterly upon the fur-lined seats of their golden toilets (admit it: if Amazon sold those, you'd own two). "Wherefor will those massive piles of cash come from now?" they bewail, and then they look DIRECTLY at coach and start rubbing their hands together in glee. "These people want to fly. They have money. Quid pro quo!"

That airline prices are all roughly the same isn't evidence of collusion any more than Piggly-Wiggly and Safeway both charging about a buck-fifty for a can of creamed corn is. There's fixed costs involved for both stores: salaries, the cost of the can, the unholy methodology by which corn on the cob is turned into whatever the hell creamed corn is, trucking, electricity, blah blah blah. And, if Safeway sells said corn for $1.25 and PW is asking consumers to cough up $1.50, guess who wins that contest? So it's in both store's interest to keep prices as low as possible while altering whatever non-fixed costs are built in to achieve profit. Given the stores each pay roughly the same fixed prices, it's no surprise that both are charging roughly the same price. There's no grand Creamed Corn Conspiracy (CCC), it's just capitalism at work.

tl;dr -- Creamed Corn is horrible on all levels.

-- Mike Beebe

Posted by
4845 posts

Some of you who are old enough will recall the very high prices of airfare before de-regulation. All my hippie friends flew through Iceland to get to Europe because that airline was not part of the regulatory agreement which set the prices. In those days, there really was a sort of cartel which set prices. On the other hand, the experience of flying was a whole lot more pleasant for those who could afford it.

So is that an explanation for why people seemed to dress up for flights a long time ago? Nowadays, or at least up until 12 months ago, it seemed as if passengers - business and coach class - those who were making an effort, had changed into at least a clean T-shirt and pair of shorts for the flight. And those were the ones who didn’t prop their bare feet up on the fold-down tray table in the seatback, or on top of the seat ahead, for everyone to see. I bet even the Iceland-bound hippies didn’t do that in the old days.

If the cost of flying goes up from now on, maybe it’ll be just “The 1%” flying in Premium Class, subsidizing the rest of the upper 20% at the back of the plane? Or is the 1% flying on private planes, and passenger jets aren’t even part of their world?

Re: cream-style corn, it’s actually a nice side with a grilled steak or pork chop. The offensive canned vegetable is spinach, a noble and delicious green, reduced to an abomination during the canning process.

And Safeway has canned veggies on sale right now, 59 cents a can, but you have to buy 5 cans. Volume sales! Maybe British Airways will have a 2-for-1 fare sale.

Posted by
2527 posts

I think we all can get behind creamed corn being horrible.

Posted by
2527 posts

...except Cyn, I guess, who apparently is a shill for the creamed corn industrial complex.

Posted by
7401 posts

I am surprised to read creamed corn is still available.

My understanding is in 1968 the U.S. Supreme Court held it violated the 8th Amendment

( See Dick and Jane vs, Green Giant et al )

Posted by
5908 posts

Nothing worse than accidentally buying and opening a can of creamed corn when you meant to get the regular stuff. Just happened recently.

Posted by
1750 posts

First, creamed corn is actually pretty good with the prime rib at Lawry's.

Second, my gut tells me airfares could go either way, just like lodging. Will they raise rates to make up for lost revenue, or will they have fire sales to bring in the masses? It really is a coin toss, and since both industries now have rooms full of computers doing dynamic pricing (code for changes every 5 minutes), it will probably be both as the year goes on esp. as the CDC edges closer to saying yes, if you got the jab it's OK to fly.

Posted by
1612 posts

Usually when a comment appears from Estimated Prophet it's time for me to head for the door,
but I have to give credit where credit is due: that one-liner here above is as close to perfect as mortals can get.

In the same spirit let me just make sure this discussion is hashtagged with

NotAllCreamedCorn

and to remind everyone to listen to Jim Jefferies' story about airplane seat etiquette:

https://www.youtube.com/watch?v=qFx1Cpxpx1E

Posted by
21167 posts

I am perfectly happy to subsidize the rif-raft in economy. Need to show compassion for the less fortunate.

Posted by
2769 posts

Frank and Cyn, thanks for making me laugh. Also, I really like a certain frozen brand of creamed corn. I got on a plane(to a nearby state) this past weekend for the first time in 14 months and was amazed at how happy I was to get on a plane and slog through airports. Of course, it didn't hurt that there were no lines at security in the small regional(but still called international) airports where we started our flights. My husband, who had previously flown twice during Covid, said "don't get used to it".

Posted by
7401 posts

What I had heard was that coach 'paid the bills' and the Pointy Part of the Plane Produced the Profit. ( and now this topic has a 2nd vegetable)

Had not heard that Biz/1st was 'subsidizing', coach.