Why are international air tickets so expensive? Legacy costs?

Question

Air tickets for international flights are sky-high in these couple of years. For flights from U.S. to Japan, the price has been tripled in the past 7 years.

Everyone blames high oil price, but I think it can explain a fraction of the price hike (some one says the fuel cost is only 35% of the total). Many people claim "demand and supply" issue, but I am skeptical because the number of flights allowed for each carrier is highly restrictive. Major U.S. airlines have most flights, and can control the overall price level.

I suspect a larger factor may be legacy costs (e.g., pension, healthcare costs for retirees of AA, UA and Delta). In fact, nowadays foreign carriers offer a cheaper price than AA/UA/Delta. It is often cheaper to fly from the Midwest to Asia via Toronto by Air Canada. Singapore Airlines and Japanese carriers also offer a cheaper price. Such phenomena were not common many years ago.

Do you have any evidence and justification to support or argue against my claim?

Answer 1

There are several reasons. Partly supply and demand - airlines have cut capacity on planes (although maybe not as much on international routes, particularly to Asia), but demand hasn't dropped as much as supply. Partly it's oil prices - I've heard that it's at least 35% of an airline's operating cost. A lot of taxes and fees are applied - particularly to international routes. And the whole labor cost thing too. It's a combination of all of it.

Answer 2

Oil prices are one reason as the price of oil has jumped a lot. Employee salary used to be the largest expense of an airline. Now it is fuel cost. Also know that airlines have cut capacity or number of flights so as fewer seats are available to be sold, the higher the ticket price. Also know that airport taxes are pretty high as well. Different countries charge different rates. Sometimes it seems as though the taxes are almost as much as the ticket itself.

Answer 3

I believe the main reason behind it is the same why many manufacturers have moved their operations to other countries, everything is much more expensive in the US. Many big US companies have set up phone service centers in Asia, but airline companies can't even save on this.



- Fuel cost is a reason not only due to the gas price, US airlines have more American passengers whose overall body weight have increased over the past decades, the load per flight is already bigger than Asian airlines. Every pound of weight counts when flying.



- Legacy costs are up for retirees, healthcare costs for current employees have increased by double digit % for years too.



- Legal, insurance costs for US companies are much higher than Asian counterparts.



- Salaries and wages for every employee are higher in the US, mechanics, baggage handlers...



- Labor unions.

Answer 4

Yes, fuel cost, pensions, pensions, pensions and dividends and bonuses to higher ups and always wanting to keep costs down: Air canada, a once so proud company is now in the process of letting all major (and other) maintenance to sub-contractors, some in south america somewhere, so now I may just fear flying Air Canada

Answer 5

there is not any secret, magic internet site with the "maximum inexpensive" airfares. you could desire to do the study, and be as versatile as accessible on the subject of return and forth dates. verify the return and forth web pages (airgorilla, expedia, priceline, travelocity, etc.) and additionally verify the airline web pages. I even have frequently (no longer constantly, yet frequently) discovered the main suitable fares on the airline web pages. you ought to verify airways like JetBlue and Southwest that don't use the return and forth web pages. verify with a real return and forth agent to invite approximately promotional fares and particular bargains. in case you apart from mght prefer a hotel or condominium motor vehicle, verify the value of mixing the purchases in a equipment. as an occasion, i found a manage airfare + hotel in Hawaii for a week that became into purely $a hundred greater effective than purely the airfare. whilst traveling to far places verify the fees once you cut up the value ticket. as an occasion, looking "Chicago to Nairobi" (all on one value ticket) might value a splash plenty greater effective than looking "Chicago to London" and then "London to Nairobi". If that seems to be the case, talk with a real return and forth agent approximately getting the greater constructive fare all on one value ticket. good success!

Answer 6

It depends on the fuel costs for that airline, cabin crew salaries, airport taxes, onboard amenities etc