The biggest driver of airfares is competition. And budget airlines have certainly ratcheted up that competition.
In 2008, low-cost airline carriers only accounted for 4% of American travelers. Since then, that share has expanded to 15% and it continues to grow. With those kind of numbers, mainstream airlines are forced to compete with those budget tickets.
Air travelers from the D.C. area also benefit from the fact that we are among the major metro areas with competing airports.
“When you’ve got three major airports within an hour of each other, and you have every airline and their mother flying in and out of these airports, guess what? You have a lot of competition,” said Willis Orlando with Scott’s Cheap Flights.
Willis said the term “average airfare” is also irrelevant. The only fare that matters is what you pay. So if you paid $400 for your ticket and the woman sitting next to you paid $1,200 for the exact same flight, her fare may have pushed the average price up, but doesn’t it change anything about what you paid.
You can’t book “average” fares. You can only book “available” fares. And those prices change more frequently than anything else consumers buy.
“If the average price of a gallon of milk is $3.88, chances are you are not paying more than 25-cents more — or less — than that. If the average price of a gallon of milk goes up by a dollar, you are not going to find a flash sale on milk for $1.25. It is just not going to happen,” Orlando said. “But when it comes to airfares that’s not the case.”
That said, average fares have risen recently — about 5% in the past month, and about 12% in the last year. Longer term, it is still cheaper to fly, especially when you factor in inflation.
“Over the last two years, fares are actually down about 23%. Over the last 10 years, they are actually down about 40%,” Orlando said. “It may seem like airfares are getting higher, but it is very, very relative if you’re looking at average fares.”
Scott’s Cheap Flights believes cheaper airfares aren’t likely to go away long-term. Airlines make the majority of their revenue on things other than economy airfares, such as expensive business and first-class seats, selling frequent flyer miles, credit cards, corporate contracts, cargo and, of course, all of those additional fees.
As a result, Orlando says airlines are less reliant on economy airfares and will compete with budget carriers who pull down economy class ticket prices.