Premium Travel Starting to Trend Downward
You might be seeing more room in the front of the plane, premium travel is trending downward, according to the International Air Transport Association’s latest figures.
The numbers in business and first class ticked up slightly .06% in November, the latest figures available. But that´s down from earlier highs at the beginning of the year. And given the slowdown in the growth of world trade and the resulting fall in business confidence, two factors that are reliable leading indicators for first and business class travel, those numbers are not going to be any better.
Economy class, on the other hand, is doing better. Just as premium travel started sliding, economy travel began growing. Compared to the start of 2011, economy traffic has grown by 3.8%, while premium traffic contracted 0.1%. (Source: IATA report)
Airfares Might Be Up, But Their Increases Still Lag Inflation
Average domestic airfares rose to $361 in the third quarter of 2011, up 6.2% from the average fare of $340 in the third quarter of 2010, according to the latest figures from the Department of Transportation. But fares are still a good deal. Airfares in the third quarter of 2011 increased 7.1% from the third quarter of 2000, not adjusted for inflation, compared to an overall increase in consumer prices of 30.6 percent during that period. In the 16 years since 1995, when the DOT began tracking fares, airfares rose 25.5% compared to a 48.1% inflation rate. The average inflation-adjusted third-quarter 2011 fare in 1995 dollars was $244 compared to $288 in 1995 and $297 in 2000. (Source: DOT)
Spirit Airlines Campaigns against New Consumer Protection Rules
Not everyone’s happy about the new Department of Transportation consumer protection rules that went into effect late last month. Spirit Airlines has launched major attacks on two of the new rules. The first is against the rule that requires airlines to display the price of the fare including taxes and fees. Spirit says that the DOT is making airlines hide those taxes and fees.
The DOT denies that, saying airlines are free to say that a fare is $399 and that that price includes $21.80 in taxes and fees—as some airlines do already. In a second attack Spirit has now tacked on a $2 fee because of the rule that requires airlines to give customers 24 hours to change their minds on an otherwise nonrefundable fare. (This rule does not apply if the ticket is booked within a week of the flight’s departure).
Legacy carriers have offered this option for a decade. Spirit says this rule means airline inventory will be held by people who don´t really intend to buy a flight, keeping other flyers from booking those seats. That means the airline has to spread its costs over fewer customers, thus raising prices for all customers, rationalizes Ben Baldanza, president and CEO of Spirit. Some industry observers believe the no-refund policy actually has a chilling effect and keeps consumers from booking tickets because of the all or nothing nature of such transactions. (Source: Spirit press release, industry interviews)
Airlines Lobby Government to Back Development of Commercially Viable Bio-Fuel
With fuel expenses increasing more than 30% for most airlines in the fourth quarter, it’s no surprise the industry is lobbying for the development of a commercially viable bio fuel.
Airlines 4 America, which represents major U.S. airlines and Boeing, have made a series of recommendations to the U.S. Department of Agriculture to speed the development of bio-fuel. These include using grants to jumpstart development and reauthorizing the 2008 Farm Bill, which included more than $100 million to invest in researching and developing bio-fuel. (Source A4A press release)