- Nov 9, 2003
- 16,512
- 5,865
Posted on Mon, May. 17, 2004
Ted Reed
FARE GUY
Will budget carriers depress fares?
While Charlotte/Douglas is still nation's priciest airport, days of high-cost flights might be numbered
TED REED
Although a recent survey shows that Charlotte fares are once again the country's highest, it's clear the noose around high air fares is tightening almost everywhere.
A Department of Transportation survey showed Charlotte/Douglas International Airport with the highest fares of any major U.S. airport during the third quarter of 2003, the latest available data. Historically, the honor has bounced back and forth between a handful of airports including Charlotte, Richmond, Va., and Cincinnati, which was highest in the previous survey.
But increasing competition from low-fare carriers around the nation is altering the status quo.
In Philadelphia, Southwest Airlines' arrival this month has started to force fares down. In Denver, once a high-fare bastion, fares dropped for nine consecutive quarters until an uptick in the third quarter of 2003.
US Airways is testing a new pricing plan in Syracuse, N.Y., where it faces no direct low-fare competition. The airline has lowered its highest fares by 31 percent to 56 percent for flights between Syracuse and five cities, including Charlotte. The highest roundtrip walk-up fare between Syracuse and Charlotte fell to $786, down from $1,190.
And in a recent presentation to union leaders, US Airways said it expects that because of low-fare carriers, most U.S. markets including Charlotte should have lower fares by 2007.
According to the Transportation Department survey, the average one-way Charlotte fare was $247, up from $219 a year earlier.
Average one-way fares in the next three highest markets were Cincinnati, $235; San Francisco, $230; and Richmond, $226. Philadelphia was seventh at $194, while Denver was 12th at $181.
The long-term downward trend at Denver International is encouraging for Charlotte.
Denver's airport was widely criticized when it opened in 1995. People said it was too far from downtown and that its $4.9 billion construction price tag was far too high. To help make up the cost, airlines paid nearly $17 per passenger to operate in Denver. The cost has since fallen to $15.20 per passenger, still high, especially when compared with about $1.50 per passenger in Charlotte.
Denver International's predecessor, Stapleton International, had three hub airlines. Then Frontier Airlines shut down and Continental Airlines decided not to open a hub at the new airport. That left United Airlines, with its high-fare, high-service model as the sole hub carrier at Denver International, with the power to set prices on many routes.
But in the late 1990s, low-fare carriers began moving in. Today, the airport has AirTran Airways, JetBlue Airways, a revamped Frontier, ATA, Spirit Airlines and America West Airlines. Their gradual growth over the past few years has fueled the decrease in fares.
Airport spokesman Chuck Cannon said the low-fare carriers don't seem to mind the relatively high airport charges. "They pay a little more, but the bottom line is they're making money here," he said.
Cannon noted that the airport is designed to help carriers avoid costly delays. It has six runways and so much space between concourses that two airplanes can push back simultaneously from neighboring concourses.
Nevertheless, low-fare carrier ATA says it is concerned about airport costs after losing $64.7 million in the first quarter. ATA operates between Denver and Chicago's Midway Airport; it also is the only low-fare carrier that operates in Charlotte. "Denver costs are high," said spokeswoman Lisa Jacobson Brown. "We wish they were lower."
Still, at the moment, Denver International has the best of both worlds: United operates a hub and carries 60 percent of airport traffic on flights to dozens of cities, while low-fare carriers fly to fewer destinations but keep fares down. Perhaps it is a model for what Charlotte can become. Says Cannon: "The more competition you can get, the better."
Ted Reed
FARE GUY
Will budget carriers depress fares?
While Charlotte/Douglas is still nation's priciest airport, days of high-cost flights might be numbered
TED REED
Although a recent survey shows that Charlotte fares are once again the country's highest, it's clear the noose around high air fares is tightening almost everywhere.
A Department of Transportation survey showed Charlotte/Douglas International Airport with the highest fares of any major U.S. airport during the third quarter of 2003, the latest available data. Historically, the honor has bounced back and forth between a handful of airports including Charlotte, Richmond, Va., and Cincinnati, which was highest in the previous survey.
But increasing competition from low-fare carriers around the nation is altering the status quo.
In Philadelphia, Southwest Airlines' arrival this month has started to force fares down. In Denver, once a high-fare bastion, fares dropped for nine consecutive quarters until an uptick in the third quarter of 2003.
US Airways is testing a new pricing plan in Syracuse, N.Y., where it faces no direct low-fare competition. The airline has lowered its highest fares by 31 percent to 56 percent for flights between Syracuse and five cities, including Charlotte. The highest roundtrip walk-up fare between Syracuse and Charlotte fell to $786, down from $1,190.
And in a recent presentation to union leaders, US Airways said it expects that because of low-fare carriers, most U.S. markets including Charlotte should have lower fares by 2007.
According to the Transportation Department survey, the average one-way Charlotte fare was $247, up from $219 a year earlier.
Average one-way fares in the next three highest markets were Cincinnati, $235; San Francisco, $230; and Richmond, $226. Philadelphia was seventh at $194, while Denver was 12th at $181.
The long-term downward trend at Denver International is encouraging for Charlotte.
Denver's airport was widely criticized when it opened in 1995. People said it was too far from downtown and that its $4.9 billion construction price tag was far too high. To help make up the cost, airlines paid nearly $17 per passenger to operate in Denver. The cost has since fallen to $15.20 per passenger, still high, especially when compared with about $1.50 per passenger in Charlotte.
Denver International's predecessor, Stapleton International, had three hub airlines. Then Frontier Airlines shut down and Continental Airlines decided not to open a hub at the new airport. That left United Airlines, with its high-fare, high-service model as the sole hub carrier at Denver International, with the power to set prices on many routes.
But in the late 1990s, low-fare carriers began moving in. Today, the airport has AirTran Airways, JetBlue Airways, a revamped Frontier, ATA, Spirit Airlines and America West Airlines. Their gradual growth over the past few years has fueled the decrease in fares.
Airport spokesman Chuck Cannon said the low-fare carriers don't seem to mind the relatively high airport charges. "They pay a little more, but the bottom line is they're making money here," he said.
Cannon noted that the airport is designed to help carriers avoid costly delays. It has six runways and so much space between concourses that two airplanes can push back simultaneously from neighboring concourses.
Nevertheless, low-fare carrier ATA says it is concerned about airport costs after losing $64.7 million in the first quarter. ATA operates between Denver and Chicago's Midway Airport; it also is the only low-fare carrier that operates in Charlotte. "Denver costs are high," said spokeswoman Lisa Jacobson Brown. "We wish they were lower."
Still, at the moment, Denver International has the best of both worlds: United operates a hub and carries 60 percent of airport traffic on flights to dozens of cities, while low-fare carriers fly to fewer destinations but keep fares down. Perhaps it is a model for what Charlotte can become. Says Cannon: "The more competition you can get, the better."
