Air

Airfare

Airfare is something that affects nearly all of us at one time or another. Regardless of the reason, most people occasionally have the need to travel by air, and in order to do so, the airfare must be paid. There are many different viewpoints on airfare, and after examination of just a few of them, it seems quite easy to form an opinion on the reasonability of current airfares.

The three main perspectives that I have focused on seem to represent a majority of people who would have opinions on airfare. There is the perspective of the travelers (business and pleasure), who are generally opposed to higher airfare; those of the airlines, which use many reasons for justification of airfare increases, such as increasing fuel prices and security costs; and the views of government organizations, such as the Department of Transportation, which are neutral and typically just present facts.

One perspective of the traveler comes from survey results published by the National Business Traveler Association in late 1997, which represents corporate travel managers and travel service providers. The survey results indicate that record airfare increases have significantly impacted corporate travel programs. The increased airfare resulted in a significant reduction in corporate travel as well as an increase in advanced bookings for business travel, which both must equate to a monetary loss for the airlines. The survey results also mention that the higher airfares will prompt corporations to take drastic countermeasures, such as reducing the amount of corporate travel by up to 50% and redirecting business to low fare carriers. This clearly indicates the dissatisfaction with airfare increases.

The neutral perspective on airfare comes from a report published by the Federal Aviation Administration (U.S. Department of Transportation). The report focuses on the impact that low cost, low fare airlines have on airfares. It mentions that low cost airlines force major carriers to operate more efficiently and reduce fares. As a result, Americans are benefiting. One amazing fact in the report states that the competition caused by low cost, low fare airlines saved Americans an estimated $6.3 billion in airfare last year. Also mentioned is the fact that in cities where low cost carriers exist, the average one way ticket has been reduced by $54. After reviewing the report, it is safe to say that low cost, low fare airlines are the primary reason that Americans are paying lower fares, but in cities where low cost carriers don't exist, fares are still very high and are increasing. A positive note to this is the fact that low cost service is spreading to all areas of the country, leading to greater savings for people in all areas.

The perspective of the airlines on fares seems quite different from the other perspectives examined. In an article in the Seattle Times (August21, 1996), the topic of discussion is a fare increase beyond the 10% federal excise tax (a tax placed on passenger fares by the government). In a week, major U.S. airlines raised ticket prices 10% as a result of the tax, even though prices had already been increased enough earlier in the year to cover the tax. One reason given for the fare increase was the increasing cost of security. The article indicates that a spokesman for Continental Airlines said that the prices were raised to meet high demand and pay for several recent expenses. Another very interesting reason given for the airlines increasing fares is simply "because they can" (Szabo 1). The article continues on to