Cost of airline Ticket in United States
Since the start of the year 2013, air carriers have increased the price of air tickets four times. There are several reasons that cause this rise in airfare increases. First is the rise in fuel costs that has hit the industry in recent months. The Middle East turmoil is the major cause of sharp rise in fuel prices. A gallon of jet fuel today costs $2.99, a 58% rise from $1.89 since last summer. According to Federal Aviation Administration (FAA), 2012, fuel costs accounts for approximately 40 percent of airline industry’s costs. Secondly, there is less competition attributed to bankruptcies and mergers of airline companies. In United States, there are only four major airlines in the market. Thirdly, there are increased airline taxes and security fees. Terror attacks like September 11 are also to blame for the increase in ticket prices.
According to U.S. Bureau of Transportation Statistics, there were negative changes in airline activities in 2013 compared to 2012. There was -0.3% in enplaned passengers from 644 millions to 642 millions. Departures in 2012 were 8,980 and in 2013, there were 8,744 departures representing a decrease of 2.6%. Freight/Mail in 2012 were 19,767 million lbs compared to 2013, 19,736 representing a negative change of 0.2%. According to FAA, airline industry is expected to rise from 731 million passengers carried in 2011 to 1.2 billion by the year 2032. In 2011, Air traffic grew by 3.5% and the same is expected to grow by more than 90% by 2032.
In the third quarter of 2012, domestic Air Fares increased by 1.8% compared to the third quarter of 2011. This was from $361 in 2011 to $367 in 2012. This was fifth-highest average fare for any given quarter after the Bureau of Transportation Statistics started collecting these records in 1995. The second quarter of 2012 had the highest air fare of $385. Average fares reported by BTS are based on domestic itinerary fares that consist of round-trip fares. Fares reported are based on total values consisting of the prices that were charged by the airlines inclusive of the additional taxes and fees charged when the ticket was purchased. Baggage fares paid at the airports or onboard the aircraft are not included in the average Air Fare. In the third quarter of 2012, 71.2 percent of the total revenue for the airlines was collected form passenger fares where this is down from 87.6 percent of revenue collected from fares in 1990.
In January 2013, a round-trip fare within U.S. averaged $367—this is 10% higher than in January 2012. According to Rick Seaney, the chief executive officer of the FareCompare’s, there has been an average increase in fares of $5 to $12 for the last three months of 2013. In 2013, fares are seen to rise at the front, in the first class and in the business class. US Airways raised its fees on overweight and the oversize luggage from $100 to $175. FareCompare’s watch that, there has been a lot of air hike activities in the year 2013 as compared to 2011 and 2012 (New York Times, 2012).
In July 2011, the U.S. Department of Transportation (DOT), proposed to put a check on revenue information with regard to the fees collected by airlines for a la carte items. During this time, airlines adopted a la carte pricing where they had a separate fee for the checked baggage, meals, entertainment onboard, transportation of pets and transportation of unaccompanied minors. According to the department, this move was meant to make the pricing transparent both to the consumer and the airline analyst. For example, U.S. Airways put pricing for the checked bags within U.S. Canada, South America, Bermuda and Latin America for the first bag up to ninth bag. The charges are different from the charges for a passenger with a bag to Transatlantic, Transpacific and Brazil. Most carriers have services of transporting unaccompanied minors and other a la carte items (BTS, 2011).
References
Bureau of Transportation and Statistics, (2011). Reporting Ancillary Airline Passenger Revenues. Federal Register Notice. Retrieved November 30, 2013 from http://apps.bts.gov/publications/federal_register/2011/html/rita_2011_07_15.html
Federal Aviation Administration, (2012). FAA Aerospace Forecast. Fiscal Years 2012-2032. U.S.department of transportation federal aviation administration aviation policy and plans
New York Times, (2012). Airfares Are Chasing Oil Prices Higher. Retrieved November 30, 2013 from http://www.nytimes.com/2011/02/24/business/24fare.html?_r=0
