The Wall St. Journal has an interesting article looking at how much it’s costing airlines to fly you from here to there – you may be surprised to hear that upwards of 70% of your fare may be going just to pay the fuel bill. For example, American’s fuel bill for a roundtrip flight from New York to Los Angeles on a 767 is about $488. The average fare is $671. You can see the problem. JetBlue’s more fuel-efficient A320s only cost about $292 in fuel, but their average fare is only $414. Fares aren’t anywhere close to where they need to be, which is why we’ve heard about the airlines shrinking their routemaps — and we’ll see plenty more of that soon.
Fares are already pushing the point where leisure travelers are changing their plans – and we haven’t heard how hotels and resorts will be affected by changes in traveler behavior. The entire industry is in the midst of a major upheaval – and unfortunately for the traveler (especially the leisure traveler), we’ve hit the end of road for cheap flying (at least for a while).
(Editor’s Note: Reader TJL just pointed out the most interesting thing that I missed in the article – that United pays about $32 more in fuel on their PS flights than AA for their transcon route, but their average fare is $300 higher. To TJL’s point, how much longer can AA keep that up? How can they compete? But worse, is AA in any position to reconfigure its 757s to include a premium product? Probably not. So they’re stuck with a brutal plane to serve the route because its a flagship product for them. Delta, on the other hand, has chosen to fly a 737 on that route, and while the product is pretty lame, and they get $230 less per passenger than AA, their fuel costs are significantly less. This looks terrible for AA; unfortunately for United, there’s really no other routes (save ORD-LAX, perhaps) where they could fly the PS service.)