The History of Airline Ticket Prices, Fees and Projections for the Future

Most consumers are confused: what's the deal with current airline ticket prices? The American economy has been down for the last 36+ months, but the average consumer doesn't understand the correlation between airline ticket prices, the economy, and ultimately, their wage or salary. Truth be told, airline ticket prices are much more complicated than the overall picture of the economy. Airlines have to work within certain parameters to be sure that they are at least breaking even on as many flights as possible, which involves logistics, oil prices, salaries and pensions, and the buying and maintenance of aircraft, many of which are tens of millions of dollars to purchase.

So what is the history of airline fares and what is the best way to predict their future values? Also, is it possible to predict extra fees, like meal or baggage fees?

Historically speaking, the price per ticket, and the average change per ticket varies vastly by location. This is due to weather, the state, county and city, as well as the overall cost of living in the area. For example, at Houston 's Bush Intercontinental Airport , the average domestic ticket, in the year 2000, was a little more than $410. In the third quarter of 2010, the same ticket was roughly $440. This equates to a 10-year (2000-2010) change of roughly 6.44%. In the years 2009-2010, the change was a little over 16%, leading a consumer to wonder why, with the current economic stability and high unemployment, airfare has gone up in price. This may be largely due to oil prices, which have skyrocketed beginning at the end of 2010 and in to 2011. In addition, the airlines have become masters of supply and demand: cutting flights with less demand, creating a supply crunch.

In contrast, consider Santa Ana ( Orange County ), California : in the ten year span of 2000-2010, overall, airfare decreased by 7.62%, but between the years of 2009-2010, fares skyrocketed by nearly 18%. This decrease could correlate directly with the overall financial health of the area; California as a whole was one of the states hardest hit by the economic recession in 2007.

When it comes to bag fees, the airlines have complete discretion on whether to even institute a fee per checked bag. Southwest Airlines and Jet Blue Airways are two of the few airlines left in the world that do not charge the average traveler a bag fee (for the first checked bag). Among the other airlines, fees range from roughly $15 to $50, with the average fee right at $25 per bag. As oil (and other) expenses go up, travelers can expect that these fees will unexpectedly go up to compensate for the difference.

Resources:

http://www.msnbc.msn.com/id/42361831/ns/travel-news/

http://www.bts.gov/programs/economics_and_finance/air_travel_price_index/html/table_09.html

http://www.airfarewatchdog.com/blog/3801089/airline-baggage-fees-chart-updated/