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September 27, 2010

Left Unchallenged, Airfares Skyrocket Until…

Filed under: Travel — Edgar (aka MrConsumer) @ 5:24 am

Airfares between Boston and Washington, DC — a flight that is only about one hour actually in the air — have skyrocked in recent years to as much as $518 roundtrip.

Take this trip from Wednesday October 27, 2010 until Friday that week:

Over $500 for a one hour flight is crazy, you have to agree, but that is the price being charged by US Airways, Delta, United and American. 

Now, let’s price out that same flight, exactly one week later — leaving on Wednesday Nov. 3 and returning that Friday:

Wow… the fare fell to $149 from $518 on most major carriers – a more than 70% price drop. What’s going on here?

*MOUSE PRINT:

“JetBlue Airways today is proud to announce plans to serve the popular Ronald Reagan Washington National Airport (DCA), its third airport in the Washington region, with seven daily nonstop flights to Boston’s Logan International Airport (BOS) and one daily nonstop flight each to Fort Lauderdale-Hollywood International Airport (FLL) and Orlando International Airport (MCO) beginning November 1, 2010.” — JetBlue press release.

While there was plenty of competition in the Boston to DC market, there wasn’t any real price competition, until JetBlue, a low-cost carrier, entered the market. You really have to wonder how did it come to pass that all those legacy carriers uniformly charged that outrageous $518 price?

• • •

6 Comments

  1. As Mouse Print notes, it’s competition that keeps prices at reasonable levels. That’s why the government’s recent approvals of major airline mergers is worrisome. Delta merged with Northwest; United will merge with Continental, and most recently Southwest announced it will acquire AirTran.

    In each case, the companies involved assured federal regulators that the new companies would not take advantage of the reduced competition to raise prices; rather the savings involved in consolidation would be the source of the merged company’s gains.

    So far, that appears to be less than truthful. Under Delta, for example, Northwest’s promotional fares have largely disappeared and in markets where competition is minimal, prices for casual travelers have jumped considerably.

    The Southwest acquisition may bring this carrier to some markets not yet served by a discount carrier and that will be good. But in many instances, new service from Southwest will merely replace the existing service from discount carrier AirTran, either keeping competition the same or actually reducing it. (Southwest does offer free baggage checking which AirTran does not.)

    The bottom line is that in many markets the government’s casual disregard of the loss of competition means that air travelers will be paying more.

    Comment by JonK — September 27, 2010 @ 8:51 am
  2. Were those flights always full with no additional landing slots? Then competition is working and the price rose to meet demand.

    Adding the low cost carrier may have increased landing slots, increasing capacity.

    Edgar replies: Actually, I believe AA transferred its slots to JetBlue.

    Comment by Robert — September 27, 2010 @ 10:06 am
  3. About a year ago I checked prices on flights between Detroit and Milwaukee. A direct flight takes about an hour.

    The cheapest flights (~$500) went through Orlando and either Philadelphia or Washington, DC. Direct flights were about $300 more.

    Needless to say, I drove (6 hours) instead.

    Comment by cmadler — September 27, 2010 @ 11:11 am
  4. I travel on vacations several times a year. As a Red Sox fan I take several road trips with the team and this year it was Texas, Denver and San Fran along with regular trips to Toronto and Baltimore. I have NEVER paid more than $350 for a RT ticket in the United States.

    For Baltimore the trip is usually well under a $100 each way. Oh….I have also flown Sourhwest only once in my life. Shop around as there are still plenty of bargains – just plan ahead.

    Comment by Rick — September 27, 2010 @ 2:59 pm
  5. Price drop has more to do with being over 30 days out than anything else. If you book within 7 days it would be highest. Always book as far in advance as you can to get the lowest price. I fly to San Juan, PR once a year and pay a lower price for first class tickets by booking several months in advance than someone else pays for coach who does not book until the last minute. The down side of this is that if your plans change you will get hit with change fees plus fare increases. This system has been around for years.

    Comment by mitaliano — September 27, 2010 @ 10:30 pm
  6. I disagree with the idea that it was solely because of the timing of the booking. I travel for business and have to book travel generally one week out. I know the prices that are charged for these trips. For example, I know that I could never fly Philadelphia to Boston with only 1 weeks notice because the flight (less than an hour) had a price of about $1,000 for a RT ticket to fly out early morning and come back at the end of the work day. The only carriers handling that route were US Air/United. Needless to say I took Amtrak the night before and stayed an extra day. Much cheaper.

    Fast forward to the last time I had to make that trip (about 3 weeks ago), Southwest has begun to fly that route. My price, when purchasing a ticket 1 week out, was $275 (on United). Only one reason for me that the price dropped $700. Competition.

    Comment by PDM — October 6, 2010 @ 8:13 am

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