With oil prices down, the airline industry is enjoying record profits. While airfares will reportedly drop (barely) in the near future, right now they’re exactly where they were when the price of gas was at a record high. Any way you want to spin it, these airlines are making out like bandits.
Joshua Schank, president of the Eno Center for Transportation, a Washington think tank, told The Washington Post:
“Airline Economics 101 is that prices are set by origins and destinations, not by the cost structure, so cost plays a very small role in the actual setting of the price. That’s why you get all those crazy pricing things in the airline industry where sometimes a shorter flight will cost you way more than a longer flight.”
This explains why flying between Atlanta and Charlotte will cost you, on average, $286. That’s for a one-way ticket, a journey of 226 miles. That means the flight costs $1.27/mile, which is the most expensive figure out of any U.S. route. In contrast, the median cost per mile on U.S. flights is just 23 cents. That’s Southern pride for you – they’ll pay five times more to stay below the Mason-Dixon Line than to fly anywhere else!
Interestingly, the next four most expensive flights are also regional. Here are the top five:
1. Atlanta-Charlotte – $1.27/mile
2. Austin-Houston – $1.23/mile
3. Chicago-Indianapolis – $1.20/mile
4. Chicago-Cincinnati – $1.15/mile
5. Portland-Seattle – $1.01/mile
The reason these flights are so expensive is because they’re so short that there’s no competition. The ones that do make the trips take advantage of the lack of competition and jack up the fare, even though costs are relatively low. This might leave you wondering, who would be willing to pay that kind of markup? People who aren’t picking the tab, of course. These five flights all connect business destinations. Airlines will almost always increase the price of business-oriented flights because they know business travelers will pay it.
In contrast, the five cheapest flights in the U.S. all connect to major tourist destinations:
1. Las Vegas-Philadelphia – 0.096¢/mile
2. Atlantic City-Tampa – 0.101¢/mile
3. Las Vegas-Washington – 0.101¢/mile
4. Miami-Plattsburgh, N.Y. – 0.102¢/mile
5. Las Vegas-Peoria – 0.102¢/mile
Airlines know that most tourists book their tickets months in advance, scouring the Internet for the lowest possible fare and exploiting every loophole to save. The bean counters at major airlines know it’s not worth their trouble to try and up-sell these fliers – they know a price war is the only way they’ll win their business.
Is there a lesson to be learned from all this information? Yes, but it may not be that helpful. If you want to save money on airfares, you just have to fly like a tourist. Better yet, only fly into and out of Las Vegas. Word of warning though: you’ll save money on flying, but you’ll lose it all in the casino. No matter what, you’re going broke.