Why are cheap flights so hard to find? – Internal sources

Five years ago, Scott Keyes booked a $130 flight from New York to Milan. When he told his friends and colleagues about his great find, they told him they wanted updates whenever he found incredibly cheap flights.

And so a newsletter was born. Keyes started researching all the best deals and sending them out in a mass email to anyone interested. Two years later, with 5,000 subscribers, Keyes decided to launch Scott’s Cheap Flights, a platform that helps travelers find low international fares.

But while cheap international flights are becoming easier to find, the reverse is true with domestic fares, and the reason has everything to do with competition in the airline industry.

New international carriers like Air Asia, Fastjet, Norwegian Airlines, Ryanair, Westjet and WOW Air are disrupting the global air travel market, driving down prices and improving service quality.

But consolidation within the domestic airline industry in the United States is driving up prices for flights to non-central cities, and many economists believe that price-fixing and collusion among airlines are keeping airfares up. static interiors despite lower fuel and maintenance costs.

According to Keyes, global air travel has never been more accessible.

“It’s the golden age of cheap flights,” he told InsideSources. “It has never been cheaper to travel abroad than it is today. Five years ago, you would hardly ever see flights to Europe under $500. Now you see them regularly in the 300s, sometimes less.

The cost of a flight has many elements, but the two main ones are the cost of fuel (directly linked to the price of oil) and the state of competition with other airlines.

Keyes said part of the reason for lower international airfares is fuel prices, which have decreases during the last years. “International travel, because you’re going further, is much more dependent on the price of fuel,” he said. “With the exception of the last few months or so, the price of oil has been quite low by historical standards.”

From Keyes’ perspective, increased competition from low-cost international airlines like WOW Air and Norwegian Airlines has also driven prices down. Cheap flights with traditional airlines with an international presence – such as Delta, British Airways and Cathay Pacific – are now easier to find due to the entry of new low-cost airlines into the market.

“Traditional airlines have started to compete on price and I don’t think the international market has stabilized yet,” Keyes said.

The US domestic market, however, is another story.

John Kwoka, a distinguished professor of economics at Northeastern University, told InsideSources that he thinks the series of mergers between US airlines over the past 20 years has produced anti-competitive effects for consumers.

Besides price increases, mergers have also made it more difficult for new carriers to enter the market, Kwoka said.

“There’s no question there have been efficiencies from mergers, but I think those have been weighed in a way that allows mergers to continue,” he said. “In order to isolate the effect of the meltdown, you need to control fuel costs. It is true that fuel costs have come down considerably and prices have come down slightly, but that masks the effect of the merger. When fuel prices drop 30%, air fares don’t drop 30%.

While it’s not impossible for new airlines to enter the market – Allegiant, Frontier, JetBlue and Spirit are proof of this – these new airlines, all of which generally charge lower airfares, have had a lot struggling to expand their presence in the US market.

“JetBlue, Frontier and Allegiant are increasingly fringe players in what is now a game between the big four (American Airlines, Delta, Southwest and United),” Kwoka said. “Some hubs are notoriously difficult to access and establish services.”

As a result, budget airlines only serve certain cities, making certain parts of the country very expensive to reach by air.

The rise of the hub strategy – in which a major airline selects busy cities as bases of operations – means that flights to hub cities are cheap while flights to non-hub cities are more expensive . The reason for this is basic economics: it is more expensive for an airline to fly to a less crowded city, because every unfilled seat on a plane is a loss for the airline.

Not only that, but Silke Forbes, an associate professor of economics at Tufts University, said investors with large stakes in many of the “big four” don’t want too much competition between airlines because if prices drop too much, investors lose money.

“A few studies have been done on airlines owned by the same investors, and there’s concern that if a company like Vanguard owns shares in United and Delta, then Vanguard doesn’t want United and Delta to compete very strongly, because then investors don’t get higher returns,” Forbes told InsideSources. “Prices are higher on routes where these airlines are the two competitors investors are investing in.”

Forbes said there are other studies that indicate this is a difficult conclusion to draw because you have to “infer from the data”.

But Kwoka thinks flights would be cheaper overall if the US domestic market were more competitive, and he thinks there’s a legitimate antitrust case to bring against the “Big Four.”

But until that happens, there are several ways to try and get the cheapest flights. For international and domestic flights, Keyes said to start by searching first by price rather than certain dates or airlines.

“The way most people tend to search for cheap flights goes through this process: step 1 decide where you want to go, step 2 decide when you want to leave, then step 3 what is the price of that flight? But by setting price as the third priority, you tend not to get a very good deal,” he said. “Rather than deciding when you want to go or even where you want to go, prioritize price.”

When you need to travel on specific dates, such as returning home for Christmas or heading to Fort Lauderdale for spring break before classes resume, it’s best to book as early as possible. Airlines have realized that people who wait until the last minute to book a flight are usually not very price conscious, which is why airfares two weeks from departure are much more expensive than airfares at four weeks from departure.

Also, if you book as early as possible, it allows you more flexibility with dates and makes it easier for you to find the cheapest possible flight.

“The most important thing is flexibility,” Keyes said.

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