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Save/ShareHow much has the price of air travel changed in recent years? The government routinely makes an estimate, but its way of making estimates may be wrong.
The problem? While officials count some fare hikes in their recordbooks, they ignore others.
Let's start with the fare hikes that happened in the past week, which officials counted correctly. Since last Thursday, American, Continental, Delta, Northwest, and United hiked their fares between $4 and $50 roundtrip on most of their routes. These higher ticket prices will count as part of the rising cost of living by the Department of Labor's Bureau of Labor Statistics, or BLS. That's the federal agency that calculates the national inflation rate, a.k.a., the consumer price index.
But the BLS may still be understating two other trends that have been making air travel more costly. No one knows the amount of the error—but official figures for airfare inflation in the past decade may be off significantly.
Here's the skinny:
The first problem is airline nickel-and-diming, which has become widespread. Services that used to be included in your ticket price now require additional fees.
Let's say that two decades ago you paid $200 for a plane ticket. Back then, your ticket included meals, the option to check up to three bags for free, and a fair chance of an on-time arrival.
Now, for argument's sake, let's say that the same flight still costs $200*, but you have to pay an additional fee for your meal, the cost of checking a third bag is $50 roundtrip, and delays drag your trip out for perhaps a half-hour longer.
In short, you're paying the same, but you're receiving worse service. It's no different from paying more for the same quality of service. Either way, it's inflation.**
There's a second problem. "The baseline service (the way you used to be treated without paying extra) is only getting worse," as editor Erik Torkells has previously noted.
What flier hasn't felt the dramatic shortfall in customer service by airlines in recent years? Whether it's the additional leisure time one now has to spend booking one's own ticket and using self-service check-in kiosks, or the reduced legroom on planes, or the reduced meals and amenities once you're in the air, or the loss of valuable time because of record flight delays, we all have our gripes.
But the number-crunchers at the BLS make few adjustments for service deterioration in its inflation statistics. This problem was first pointed out a decade ago by the Boskin Commission, which was convened by Congress to recommend ways to measure inflation better. (The commission was headed by Stanford University economist Michael Boskin.)
The Bureau's 1997 response to the Boskin report acknowledged, among other things, that analysts have hypothesized reduced convenience and comfort of air travel" as an example of the "quality decreases that are ignored in the CPI [or Consumer Price Index]." Yet no solution has been put into place.
Does it matter if the airfare inflation is underreported? Sure it matters. Calculating the inflation rate is a political exercise of the highest order. For instance, underreporting may mean that you don't get as much money as you should if you receive Social Security income, which is tied to government COLAs, or cost-of-living adjustments. Plus, the failure to accurately report the cost of flying also affects major policy debates about how airline mergers could help or hurt consumers. If politicians believe that fares have fallen far more than they actually have in recent years, they will be more likely to approve mergers between airlines, figuring that the resulting drop in competitiveness wouldn't affect consumers too much.
To ward off potential nit-pickers, here are two footnotes:
*In my example above, I am aware that a dollar isn't as worth as much today as it was two decades ago. I am assuming that the $200 ticket prices are "real, inflation-adjusted dollars," or, in other words, that the $200 tickets are truly an apples-to-apples comparison because I've adjusted them (for the sake of argument) for the declining purchasing power of a dollar over time.
**"Either way, it's inflation," is a quote from Bloomberg columnist Caroline Baum, and author of Just What I Said, who has noted for years when discussing inflation through "service degradation" in various industries, including air travel. She's a pioneer in this line of thinking.
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not only are airlines now charging for items that used to be included in the ticket price but they are using misleading prices in their advertising eg fares quoted one way that only apply with a round trip,fare quotes that exclude so called taxes and fees which seem to adjust according to the whim of the airline.if you buy a rail or bus ticket the price quoted is the price you pay. the same should apply with airline tickets
Posted By desmond brown on March 19, 2008, 12:55 PM
It is possible to book an American Advantage reward trip on line. Multi cities awards are allowed, but cannot be booked online. If a multi cities award is booked on the phone, there is a $15.00 fee; the fee is $20.00 if booked at one of their offices.
If there is no option, they should charge fees.
I was not told this, yesterday, at an AA office in Buenos Aires, I read it later on their website.
I guess this or anything should surprise me from an airline that charges $5.00 for a beer from someome who pays close to $1500.00 for a rt ticket from Buenos Aires to Europe.
Posted By gerald mendel on March 20, 2008, 12:34 PM
Personal experience-2007
United Airlines held us on the ground for three hours while they had a part flown in from St. Louis--which turned out to be the wrong one when it arrived. They offered NO help as to what we should do when they de-planed us. The 125 passengers descended upon the United Service Desk (Chicago)where only two employees were available. 35 minutes after we arrived at the service desk, one of the employees announced that it was time for her lunch break and took off. We were kept waiting and did not dare leave for fear of missing our chance to get home on that day (our original flight was to have left at 8 a.m.). Finally, at about two (2) in the afternoon, we were informed that there were no more United flights to Boston that day with any space, so we would have to fly on the next day. It was a "take it or leave it--I really don't care" attitude. We asked about compensation, lodging, food, etc. and were "shrugged off" -- the "There is nothing I can do about it." No supervisors ever showed up. No help was given. We were on our own to somehow find accomodations, food, etc.
I will never fly United Airlines willingly again.
With over 40 years experience of flying, I can assure you that this kind of service was unheard of even ten years ago. And, since those in charge set the tone, I blame United Airlines management. If you own stock in this airline, sell. NOW.
Posted By John Carter on March 20, 2008, 3:15 PM
I have another personal experience with United Airlines:
My sister and her two kids came here to visit with the rest of our family in NY - JFK airport from Melbourne, Australia. A day before she was to depart to Australia she figured that she'd confirm their flights only to find out that there were no tickets for herself and her son but there was one for my niece. Now, my sister paid close to $10,000 for the three of them to fly here in COACH class - round trip tickets. It took several calls, visits - basically hours of work with both my sister, ME and the travel agent in Australia to get them all on the same plane. United was incredibly lacking in understanding and consideration. When we finally got them on the same flight - they were seated apart from one another. United could care less. THeir response was well, he's ten years old, he'll be alright - there are other adults there who can look after him. My sister who is an attorney working for the Australian government at the time...was furious!! I can certainly understand why! When she got on the plane - there were absolutely NO friendly flight attendants - not one was willing to help her seat the kids with her. The flight attendants were cold and could care less as to what my sister and her kids did. THank God that her husband took another flight home the week before on a DIFFERENT airline. After all was said and done with, United basically gave them each a $25 voucher for United Airlines for their troubles. Can you only imagine if this were your family flying across the world?? Did United think that my sister or her family would ever WANT to fly their airline again? Let alone the rest of us - from her experience? Never again!!
Posted By annette on March 20, 2008, 4:56 PM
A Delta experience:
I flew Delta on occassion but preferred not to as they have very little leg and seat room (and I am thin to begin with). I had accumulated enough miles for a free ticket. When Delta was in the process of being taken over by another company winter before last, they - Delta, sent out emails to all their frequent flyers to gain support so that this merger would not happen (with US Air). I wrote my first and only support letter for this airline. No thanks, but within a month - I lost my free ticket - a quick 10,000 miles "expired." I didn't even know this happened until I needed to fly on Delta and saw I didn't have enough miles anymore to use their airline's frequent flyer program. What a rip that was!! Their frequent flyer program makes it virtually impossible to purchase miles as they are sooo ridiculously expensive and equally so if I wanted to transfer miles to someone else. So much for loyalty! Again, I will never fly this airline again either.
Posted By annette on March 20, 2008, 5:01 PM
Go fly on Southwest and quit whining! If you think THEY don't have problems...by all means TRY THEM! Every airline has good days and bad days! Does YOUR car start everytime you want it to? Do YOU always get to where you are going at the exact time YOU said you were going to? Have YOU paid for a gallon of gas lately? Try DRIVING for what you are flying for! Get it? You have a choice...use it for God's sake and quit the whining!
Posted By Hugo on March 20, 2008, 11:41 PM
I stopped flying United in 1969 when I had to hold my daughter on my lap due to overbooking, and never getting the promised refund. So 39 years later, I booked a flight LAX-SYD. Our flight was delayed 2 hours waiting for 58 "missing students". Meanwhile our luggage was on the ramp getting soaked. Upon arrival in SYD we found our luggage soaking wet and could not find an agent or a ticket counter for UAL. My two suitcases were crushed so that the side panels were demolished. Filed a claim upon return to SAN and was offered $100 future flight coupon. We needed 4 tickets to OGG the next month, and flew Hawaian Air Lines (first class!) So UAL missed out. Had to buy new bags in Maui since my temp repair failed. Never again on United!
p.s. The airline hub approach is worthless. I want to fly from point A to point B. Not A to B by way of C!
Posted By John on March 22, 2008, 1:33 PM