It’s official: fares are as high as I’ve seen in the past five years

It pains me to write this, but it’s true. I’ve been monitoring the price of airfare pretty closely for over five years now, and I’ve never seen airfare as consistently expensive as it is now. Sure, there are some deals out there, but on the whole, I’m not only seeing the fewest low “base fares” I’ve seen in years, but the inventory in the low fare buckets isn’t there either.

For those of you not familiar with airline pricing, there are two components to the price of a ticket. Airlines publish fare basises (that’s not a word, is it?) between city pairs, which are typically primarily restricted by their fare bucket requirement, advance purchase requirement, etc. For example, at United, “L” fares are among the lowest, so a base fare could be L_14__, filling in the blanks with (seemingly random) letters. The “L” is the fare bucket required, and the 14 is the advance purchase requirement, in days. So I’ve been noticing lately that the base fares have been among the highest I’ve ever seen. Historically, it was pretty normal to see a base fare of around $203 from Tampa to the west coast, while most now are hovering around $280 or so.

The other component to being able to price a fare is that the actual fare bucket is available. Airlines typically have 15-20 fare codes they use as a form of inventory/revenue management, so they might only release higher fare codes when the flight is getting full, when they anticipate higher demand, etc. So not only have the base fares gone up (as described above), but the low fare buckets don’t seem to be available.

And while I’m on this tangent, I get emails all the time asking something along the lines of  “I’m trying to book a ticket from Chicago to San Francisco, and United is four times as expensive as American. Why?” Hopefully the above sheds some light on that. Typically airlines match each other on the actual base fares, though they might not actually release space in the low fare buckets, which is the other component required to price a ticket.

While the high fares make it tough to mileage run, kudos to the airlines, I suppose. I guess the industry consolidation we’ve seen over the past few years has been good for something.

Comments

  1. Agreed! Fare on the routes I usually fly have increased on average at least 50% if not more. It almost feels like they big Three, who are suppose to be competing, are actually colluding. The demand is obviously back to the levels it was a couple of years ago, but capacity is probably only around 75% of the 2007 levels.

    I guess we just have to wait until either one of the airlines cracks and bring out more planes or hope for some stupid investors to open up some new discount airlines.

    Either way, this year probably won’t be a good year for MR, I’ve only got three months to get 50K on AA for EXP, and I don’t think i’m going to make it.

  2. So true… I’ve been monitoring the short hop from SFO/SJC to LAX in May for a while now, and it has never dropped below $150. That fare was <$100 sometimes the last couple of years.

    You're right though, at least the airlines are recovering. I just feel like we're the ones getting screwed!

  3. Nice breakdown Ben. Also, fyi, for United’s domestic fares, there is usually an ‘A’ or an ‘E’ after the fare bucket indicator (e.g., LA14XX or LE14XX). The ‘A’ fares are one way, and the ‘E’ are roundtrip and generally carry minimum stay restrictions which make MRing more difficult on those fares. As a former IMer at United, there is actually a logic to the sequencing.

    Agreed on the fares being higher. Good for the airlines, bad for us mileage runners. And with fuel surcharges on the rise, I doubt I’ll find any decent international runs like I did the last couple of years.

  4. Higher / rising demand (of flying), flat / declining supply (of airplanes / seats) – a perfect combination to lead to higher prices

  5. After watching fares on my usual route NYC/LAX, United had (has) a $313 all in available in mid-July. eek
    Flying from HPN (White Plains). This is a K fare.
    Fares are/were between $400 – $550 for summer travel. at all NYC area airports. $313 is the new $225.

  6. The airlines, especially UA/CO, keep trying to find a sustainable fare ceiling. I noticed fares on several routes actually dropped today (Saturday) from mid-week highs. As has often been the case, the carriers will overshoot the mark with fare increases, consumers will suddenly freeze on further purchases and the carriers will suddenly retreat. I expect to see a lot of back and forth through the Spring as all the carriers push the limits on fares.

  7. I just did something I never thought I would! I’m flying to MCO and am actually flying JetBlue! They were over $300 cheaper than United, which is pretty substantial. I’m trying to be loyal, but when JetBlue can undercut United by $337 that should signal to UA that they have some pricing issues to deal with!

  8. With fares going up, are award tickets in shorter supply? Or have our miles (that were acquired when fares were cheap) gone up in value across the board? Do you think that you could recalculate the value of a mile in this high-fare environment?

    I would appreciate any insight you have into this question, lucky.

  9. Yeah AJ, that’s the way to think about it, as far as Mileage runners are concerned, the earn to burn ratio is still the same.

  10. @ AJ — That’s a great question. Aside from the general trend we’ve seen reducing the number of first class award seats out there (Swiss all but eliminating first class awards to Star partners, Lufthansa reducing the number of first class seats, Singapore eliminating virtually all premium cabin award space, etc.), I’d say availability has remained relatively constant, so I suppose the argument could definitely be made that the value of miles has gone up.

    The slight issue with “recalculating” the value of miles is that it would be tough to decide what basis to use in their valuation. If we’re basing miles off premium cabin fares, well, premium fares have remained relatively constant. If you’re like me and value miles based on what you would be willing to pay for international first class, well, the increased cost of domestic and international coach travel doesn’t really change the equation much. In other words, I don’t suddenly value international first class any more.

    I guess the one area that the value of miles has gone up (measurably) is for domestic coach travel, which isn’t the best value to begin with.

    Does that make any sense?

  11. @lucky Yes, absolutely, but if there’s someplace you absolutely must be and you’re booking a coach ticket, then the value of a mile is always in the back of your head. I mean, there are definitely situations where a last-minute (or even advance purchase) SFO-JFK fare might be $350+ one-way, in which case I start to think that I might rather spend the miles if there’s Saver availability.

    Like you, I would decline to spend more than $2500 on any first-class trip r/t, so I generally think I should burn when the yield exceeds 2cpm as that’s the very most benefit I could get out of a first redemption (again taking into consideration the accrual of mileage on paid tix). That’s becoming increasingly easy to do in this fare environment.

  12. The increases aren’t just limited to the Big 3. I am seeing Alaska, Frontier, Southwest, Virgin also with fare increases.

    It is my impression that in the past they either held sales or increased inventories of lower fare classes until the planes were full or close to full, while now they are reducing discount inventory and starting to hold to 21, 14 & 7 day advance purchases, even if that means empty seats. Are you seeing the same?

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