Airfares Down 50 Percent Since 1978, Study Shows

 

Flying is cheaper and safer than ever, but good luck to anybody who makes the point.

February 25, 2013

WHENEVER I TAKE THE TIME to remind people of just how inexpensive flying has become, my inbox gets socked with hate mail. People simply hate flying, and the level of anti-airline contempt is so high that it has become almost impossible to say anything positive about the experience without being called a shill, an asshole, or worse.

I wonder if Derek Thompson, over at the Atlantic, is feeling the heat. Thompson just published a short but very revealing piece showing how the price of air travel has fallen 50 percent over the past three decades. You can read it here. It includes a remarkable graph, which I’ll reproduce below:

Notice the upswing since 2009 or so, but overall the trend is very, very clear.

Normally when I bring this topic up, one of the regular rebuttals is the likes of, “Oh, well maybe base fares are down, but it’s those [expletive, expletive] fees that are killing us!”

Except they’re not. I realize that people feel nickel-and-dimed when asked to pay a surcharge for checked luggage, onboard food, or a reservation change. But as the graph clearly shows, these “unbundling” fees, as they’re known, barely change the picture.

Personally I feel that unbundling is a smart idea. It allows certain passengers to purchase ancillary items that not everybody wants, absorbing a higher share of the cost. This helps keeps the overall price down. And these ancillaries were never “free.” They were included in the price of your ticket, and that price was once a lot higher.

How high? In 1939 it cost the equivalent of $6,000 for a round-trip ticket between New York and France. As recently as the 1970s, an economy ticket from New York to Hawaii cost nearly $3,000.

I’ve shown you this before, but here it is again. The item below was found by a friend of mine in a flea market several years ago. It’s an American Airlines ticket receipt from just after World War II. In 1946 a passenger named James Connors paid $334 to fly each direction between Ireland and New York.  That’s equivalent to $3,690 today – each-way.

AA 1946 coupon.

Earlier this winter Aer Lingus was selling round-trips to Ireland for under $600. That’s less than a tenth of what Connors paid.

It’s only in the past 30 years or so that flying as we know it — as an affordable form of mass transit — has come to exist.

I’ll remind you too that roughly 83 percent of flights arrive on time.

People often talk about the good old days of air travel, and if only we could return to them. On the one hand, it’s a sentiment I can understand. I’m old enough to recall when people actually looked forward to flying. I remember a flight to Florida in 1979, and my father putting on a coat and tie for the occasion. I remember cheesecake desserts — on a 60-minute flight, in economy. Yes, things were once a little more comfortable, a little more special.

Though how much so is arguable. Just two nights ago I flew in economy class from Tokyo to Bangkok — a six-hour flight. The seat pitch, maybe, was tighter than it once was. However, I had an on-demand video screen with a hundred or so movies and games to pick from. (Remember those blurry, scratchy bulkhead screens and painful plastic headsets?) I had a power port, a USB connection, free wine, and a full hot meal that was probably better than a meal would have been in the old days. (And up front, in first or business class, no contest. Today’s premium cabins are far and away better than they used to be, with full-flat sleepers, wide-screen video, deluxe food and drink, and so forth.) Inflight WiFi, already widespread on US domestic routes, will soon be commonplace even on transoceanic flights.

Do you really want to fly like people did in the ’60s? Are you sure?

There’s no denying that airlines today could and should do a better job — at communicating, at treating their customers with dignity and respect. But those good old days, maybe, are more mythical than we admit.

And we haven’t even gotten to safety yet.

As revealed in a recent New York Times story, the Aviation Safety Network reports that 2012 was the safest year globally since 1945.

There are twice as many commercial aircraft worldwide, carrying twice as many passengers, as existed in 1980. Yet, per passenger-miles flown, flying is an estimated five times safer. Narrowing it to the past ten years, the number of people who fly annually has increased by roughly 20 percent, to just over two billion. Over that span, the number of fatal crashes has held steady at around twenty per year. Here in the United States, the accident rate has fallen 85 percent since 2000. From 2008 through 2012, the odds of being in a fatal accident were approximately one in 45 million.

Consider for a moment the year 1985:

What may have been a fantastic year for music (Husker Du‘s “New Day Rising,” one of the greatest indie albums of all time, hit the stores in January) was arguably the darkest ever for commercial air travel. By the end of the year, 27 crashes had resulted in the deaths of just under 2,400 people.

These included the Air-India bombing over the North Atlantic, with 329 casualties, and, two months later, the crash of Japan Airlines flight 123 outside Tokyo, with 520 dead. (That’s right, the second and fifth-most deadly accidents in aviation history happened 49 days apart!) Also in 1985 were the Arrow Air disaster in Newfoundland that killed more than 240 U.S. servicemen, the infamous British Airtours 737 fire, and the crash of a Delta L-1011 in Dallas that killed 137.

All of that in under 365 days.

Through better crew training, better technology, and the collaborative efforts of airlines, regulators, and groups like ICAO, we have engineered away what used to be the most common causes of accidents. The old standards of safety no longer apply. Maintaining such a high level of safety won’t be easy, but the record shows it is holding.

I am well acquainted with the hassles of modern-day air travel, don’t worry. I don’t enjoy claustrophobic planes, delays, noisy airports or the TSA any more than you do. But a spade is a spade. You don’t have to love flying, but neither should you take it for granted.

 
A VERSION OF THIS STORY ALSO APPEARS ON BOSTON.COM

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28 Responses to “Airfares Down 50 Percent Since 1978, Study Shows”
  1. Roger says:

    I think the biggest problem is self inflicted by the airlines due to yield optimisation. The vast majority of passengers essentially get the same experience – the same checkin, the same TSA, the same seats and distance between them, the same noise levels, the same staff etc. That is okay, but no two passengers pay the same amount. This taught passengers that the amount paid is what is important, and note how much effort is put into reducing it (eg it is the default sort order).

    What is amazing is how price sensitive passengers became. I used to follow a site where they would report one of the carriers doing a $5 across the board increase on a Wednesday evening, and how on the following morning they would have to roll it back, or the other carriers would follow.

    Unfortunately the airlines haven’t figured out how to provide a varied product – you can get business class (~6 times economy price) and on some airlines premium economy (~3 times economy). As I’m 6’4″ I’d happily pay for more legroom, but those multiples are too much.

  2. Vincent "Vinny 'da Noggin" Insania says:

    The graph aggregates too much for Vinny. It would be interesting to see graphs for captive regionals/feeders for the period. Maybe there’s something there, maybe not…we just don’t know.

    As for quality of travel, at least air vacationers aren’t up to their ankles in raw sewage while aloft. Yet.

  3. Caz says:

    I always like the musical references you include in your blog posts occasionally; as I was only 8 at the time, I didn’t experience Husker Du until after I discovered Bob Mould’s solo work as a young teenager, so I had to work my way backwards. But New Day Rising is definitely my favorite of theirs. I have always been curious how you feel about Mould’s solo work as I don;t think I’ve ever seen you mention it before.

    Regarding the price of flying, I’ve only been at it for about 15 years, and the thing that I didn’t like that I wish would come back was free drinks on international flights in economy class. With a set of headphones or a book, and a few drinks those long flights went by a little quicker.

    It is hard to argue that flying has not become less expensive though; when my parents lived in LA, I could routinely get flights from ATL to LAX for under $300, which I thought was fantastic. I’d be curious to see what a similar fare would have been 20 years ago.

    Thanks for the post!

  4. Woody says:

    Customers are the ones to blame for the current state of air travel. Nobody books a room at a Motel 6 and expects the same experience you’d get at a Ritz Carlton — even though both properties provide the same basic service: a place to sleep for the night. But airlines who have tried to offer a more premium product (at a price), including better legroom (AA was first, but abandoned it), meals in coach (Continental), quickly lose out to budget-minded travelers. Everyone seems to hate flying Spirit and pledge to never fly them — but that cheap cheap cheap fare keeps bringing them back.

    • Simon says:

      What you say is definitely not wrong. Customers’ cheap-cheap-cheap attitude is a lot to blame for the state of aviation.

      But I think you should also reconsider your hotel example keeping in mind Roger’s excellent point. The problem is compounded (and people are re-inforced in their thriftiness/greed) because among all those people staying at the Hyatt, some paid Motel 6 rates, while others paid Ritz Carlton rates. Airlines charge across a huge range even in economy, but in the end everybody ends up getting the same (lousy) service all the way from checkin to arrivals. No wonder people only buy the super-uber-cheapest.

      • Kyle says:

        My Dad who is a pharmacists at a compounding place had to go to a business meeeting back in September of 2005 or so in Houston Texas from Portland Oregon where he worked.

        Both my Dad and his boss had the same exact first name (Don)

        My Don has never flown that far before where the farthest was to Salt Lake City when I was 6 in the 90 and on his way back he got a last minute flight on first class because somebody canceled out.

        Dad told me he wasn’t slowed down by security and in 1st class they actually use real knives and glasses. In fact the silverware is actually silver.

        The Flight Stewardess would come around letting you have seconds on meals and drinks which Dad had breakfest with real eggs and orange juice or soda that you can have more on.

        She also asked if you need anything which if you want extra pillows and blankets you would get it and the chairs were extra wide with plenty of leg room.

        In coach on the way up Dad said the lady would’ve been more like “Here!” actually throwing items to you hoping you’d catch them like peanuts or a tiny carton of juice and you wouldn’t have room to even move you’re legs.

        Hope that person in front of you doesn’t heave a heavy chest.

  5. Al V says:

    There is already a fair amount of service tiering in place, it is just not fully obvious. Paying for meals, drinks, baggage check, or blankets is one form of tiering. Others are express check-in, airline clubs, and preferred seating. In reality, purchasing a first class seat is a way to aggregate all of the premium features, but I can also buy them a la carte – which I agree with Patrick is a much fairer way of allocating the costs. If I don’t drink, why should I buy a ticket that includes the cost of alcohol?

    People who complain about air travel today seem to simply be asking for 60s style service at 10s prices, which is obviously not an economically viable model for the airlines.

  6. 39alpha says:

    Legitimate unbundling is not so terrible, and I for one have never understood people’s specific hostility toward luggage fees. It unquestionably costs the airlines a fair amount of money to check a bag, and there’s no particular reason that shouldn’t be passed on to the customers who use that service.

    What gets me riled up, though, is the charges that have no relationship whatsoever to the cost of the service. Ticket change fees, for example, are close to theft — they are so high only because the people who pay them have no real choice. And given that overbooking is routine, the fees can’t be justified on the basis of the airline having to fly empty seats when someone cancels a booking. A somewhat similar example is the practice of charging outrageous fares on routes dominated by a single carrier (look at the study of fares between ex-UA and CO hubs after those airlines merged!).

    • Rod says:

      I would add luggage fees. Air Canada raised its fees by 80% over a two-year period. What possible justification (I asked them in a heated e-mail) could be advanced for this, other than gouging the passenger —- because he’s a fish in a barrel?

  7. Marcio V. Pinheiro says:

    I miss the leg room in the 707s…

  8. Etaoin Shrdlu says:

    Cheap, safe, but truly unpleasant for the folks in the back of the plane.

  9. Simon says:

    In Europe it’s quite common to find a booking fee and a “fuel surcharge” on your ticket. The former is usually between €5 and €15. It’s not a CC fee (those are then sometimes added on top if you do not use a debit card or bank transfer, hello? this is 2013!). I find it ludicrous I’m paying a booking fee when I have to do all the booking myself. I wouldn’t mind if I’d have to pay for somebody to do the booking work for me at a ticketing desk or so, but if I do it all by myself on the internet, why should I pay? I don’t pay rent for the shopping cart at Safeway either. And finally, it’s not as if it were an option. I can’t opt out of booking. So why is there an extra charge as if this were some kind of fancy add-on?

    The “fuel surcharge” is what gets me really riled up though. What the hell is that? Can I fly without fuel today? Yeah? OK, I’ll opt out. Thanks. Umm, no. You need fuel to fly (even if you flunked physics 101) so quite obviously it’s not some kind of add-on. Why charge extra for it? Peak oil? Yeah right, I’m supposed to believe that’s just an extra charge that will be reduced as soon as the raw oil barrel price comes down. Sure. What I miss here is a regularity authority stepping in and requiring that only charges for optional items be added to ticket prices. Just as the EU forced carriers to advertise only full ticket prices (rather than advertise €1 to Paris and then add €200 in “extra” fees), I’d like to see them step in here and require all non-optional costs be included in the base ticket price. Only real extras and taxes/airport fees should be added as the former are optional and the latter are not imposed by the airline.

    • Rod says:

      “What I miss here is a regulatory authority …”

      Regulation is out of ideological fashion, remember. :)

      “I wouldn’t mind if I’d have to pay for somebody to do the booking work for me at a ticketing desk or so, but if I do it all by myself on the internet, why should I pay?”

      If my own experience is anything to go be, you’re also increasingly doing your own check-in (whether the machine chooses to be nice to you or not). This is so the airlines — like everybody else — can fire the human beings who used to do this.

  10. Albert says:

    Thanks Patrick for reminding us of the actual facts. I had an idea how much prices went down some time ago when perusing an old French magazine from the early 70′s where Air France advertised its “cheap” economy fares from Paris to New York City. A quick conversion in today’s euros and taking inflation into account showed me that economy forty years ago was way more expensive than business class today.

    May be air travelers complaints come from the overall flight experience. Once you’re on board and the aircraft is up in the air, it’s not so bad. The problem is getting there: overcrowded airports, security circus, late boarding because the aircraft is not ready, having to ride a bus from the gate to the plane, waiting in line because there are a dozen aircraft ahead of you for take-off… Not all of it the airline’s fault, but that’s the only brand the passenger will see, the only company they have a contract with, not the airport, not the luggage handlers, so the airlines get the blame, and on top of it, they are the only ones in the whole chain who are unable to turn a profit.

  11. Jim Wattengel says:

    Random Comments:
    One of the motivation for un-budling is that the AreFare potion has more taxes built in; less goes to the airline after taxes. The non-AirFare items in general have lower taxes in the price so a large percentage goes to the airline and less to the govm’t.

    As 39alpha says, the ticket change fees are a rip-off. A few years ago I was at Newark in a snowstorm that was precicted to close the airport. I wanted to change my flight to an earlier on to get out before the closure. This seemed like a win-win nobrainer for me and the airline but they insisted on the change fee…. in the good old days I was a weekly ruturn o Chicago for about 6 weeks. We reserved a later flight (7pm) and if we got to the airport earlier simply moved to am earlier flight on a space available basis at no cost.

    Another anoying practice: by the airlines is the practice of nearly real time price changes by the airlines when planning a trip. For example when planning a trip I check out various things including schedule, connections and price. As a flight fills the reserved seats the airlines increase the price. So a prices researched a few minutes in the past can increase substantially in the short time one is checking out other possibilities. i remind me of he hyperinflation time 20 years ago here in Brazil.

  12. Tom Henderson says:

    In 1980 my wife and I flew Detroit to Sydney, Australia return for $1,339 taxes and fees included. Last year we made the same trip (without having to stop for fuel in Hawaii) for a whopping $161 more, $1,500. No question, airfares are a bargain.

  13. Jane says:

    Until I was 22, I had been on the shuttle to Boston once and an Icelandic air flight to Europe. We drove everywhere, California, florida…. Meanwhile, my nine year old (who wants to be a pilot), has well over 100,000 miles in the air. I would consider it a luxury to drive cross country again. Now the dictate of ‘time is money’ makes it the more expensive trip.

  14. 39alpha says:

    Simon-

    The US regulators are actually pretty good about making sure the airlines aren’t charging “extra” for non-optional stuff. They’re not even allowed to advertise fares without taxes nowadays (that changed a year or two ago). As you said, Europe is the home of the real bait-and-switch stories about fuel charges and such tacked on just before you actually buy the ticket.

    It’s actually kind of surprising since Europe in general has stronger consumer-protection laws than the US.

    • Simon says:

      That is indeed surprising but I guess it explains why customers in the US don’t have to deal with utter nonsense like “fuel surcharges”.

  15. Kyle says:

    Now while Bomb Sniffing dogs would not detect the suppose box cutters that fateful day what the non-existent dogs would detect would’ve been any traces of bomb materials if those EDS machines failed to do so that Bill Clinton gave funding too pretending he didn’t ignore the security recommendations.

    Then the 9/11 suspects would’ve been yanked to the back rooom which they would be patted down and possibly have the box cutters confisicated due to the dog being alerted so the pat down would not be all for nothing.

    If Bill Clinton funded money for a stronger connection between the FIB and CIA the airport officals would view the 9/11 suspects profiles and find out they are wanted.

    The news report would’ve been more like *Major Multi Airplane Terror Plot Foiled By Security!” with a bunch of BS about how good Clinton is.

  16. Kyle says:

    For some reason after typing all that the internet slowed to a crawl almost preventing me from posting even though it’s the middle of the night.

    Now the speed is back to normal on this post.

    I wonder if the government was throttling my connection for showing that article?

  17. Geoff G. says:

    I think the problem is that people have short-term memories – Fares today are higher than they were in 2005ish (as shown in the graph). So if someone complains about high fares and I reply “They’ve never been cheaper!” they’ll respond by saying they flew to Florida in 2005 for three-hundred bucks, and today it’s five-hundred, so fares are way higher and they miss the good ol’ days.

  18. Chris says:

    The only problem that I have with using fares the indicator for the “cost” of a flight – even with the fees included – is that they don’t count time as a cost. Sure, your ticket is less expensive now than it used to be, but you’re much less likely to be flying direct to your destination. Deregulation begat hubbing, which begat wasting time at ORD, ATL, DFW, etc. Add the increased potential for missed connections, and you start to get at the real time cost of deregulation and those cheap fares.

    Going onward from that, hubbing has also had some weird effects on airport constructions. Airports have had to go all-in to appease their hub carriers only to see them go bankrupt (TWA/STL) or simply leave (US/PIT). Ultimately, the cost of these white elephant runway and terminal projects is passed on to all Americans through the FAA subsidy system.

    Even large airports have needed to spend billions rearranging their runways to deal with the increased coordination of a hub-and-spoke system, while their number of passengers per aircraft movement has been dropping due to the prevalence of RJs.

    Not to mention how many small airports have lost virtually all of their service, rendering them burdens on smaller municipalities.

    Add in the hidden time and capital expenditure, and the picture may change drastically.

    • JamesP says:

      Really? If anything, it seems to me hub/spoke was the way *before* deregulation. It seems far easier to fly direct now than it did then.

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