Addicted to Cheap Airfares?

Well, are you? I know I am! In a recent article by MarketWatch, it mentions that our constant craving for a deal is ruining the airline industry. I happen to agree with them on this one. Compared with several years ago, we are paying rather cheap prices for flying.

I am a little too young to remember this but the article talks about the old airline People Express. The had $99 coast-to-coast flights back in the early 80’s. Back then that was thought as extremely cheap. Today, it is not impossible to get a coast-to-coast flight for around $200 (using Southwest’s Ding fares). Accounting for inflation, the $99 flight back in the 80’s should cost about $500 today. Why are the prices so low today?

Deregulation has opened up the business for extreme competition and has driven the prices way down. As you may know, this extreme competition is seriously hurting the airline industry. Will all the airlines eventually join together as one in order to stay around?

The only airline that seems immune is Southwest Airlines (which is what I fly). This is because they hedge their fuel prices and are still paying prices from a few years ago. It won’t last forever and I imagine they will be in trouble in years to come. As I mentioned in a previous post, airlines are also adding more fees to stay afloat. As soon as these fees were mentioned, people cried in outrage. Why should we be outraged when we are already paying historically low prices?

What would you do if the ALL of the airlines decided to raise their prices by 100%? It may come to this if they all start losing large amounts of money.

Would you be happy with ticket prices that fluctuated with the price of fuel? Prices go up when fuel goes up and prices go down when fuel goes down.

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4 thoughts on “Addicted to Cheap Airfares?

  1. Morgan

    If airlines raised their rates 100 percent I don’t think I would have a problem with it. I do have a problem with extra fees for a pillow or two checked bags.

  2. Adam

    @Morgan – I think I agree with you on that one. If I knew that they raised their prices 100% in order to stay around, I wouldn’t have a problem with the price hike. However, charging for pillows and bags is a little ridiculous.

  3. E.C.

    Since I only fly on business with others footing the bill, nothing would change for me if prices doubled. I do agree that the baggage fees are annoying.

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