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REAL COST OF TRAVEL
01 August 2005
Everyone knows the flying public never had it so good. Or do they? Adam Pilarski of Avitas looks at the real price that the airline passengers are paying.
US airlines have lost more than $30 billion since 2001.
There are many factors for such colossal losses. The one
universally blamed is the changed revenue environment.
While costs are generally coming down, except for
out-of-control fuel prices, ticket prices have remained
stubbornly low. Having dropped precipitously just before
September 11, 2001 as a temporary cyclical response to the
economic recession, yields have continued to fall.
Various explanations are offered for this price behaviour.
They range from the structural change type (business travellers
will never again splurge on expensive tickets) to the dominance
of computer technology in buying tickets, from too much
competition to the fear factor (many people are afraid to
travel), from the spread of low-cost carriers to video
conferencing making travel obsolete.
No matter the explanation, lower yields are universally
accepted as the main culprit for the disastrous situation among
US airlines. The percentage of GDP devoted...
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