Airline CEO says pre-Covid economics might 'never' return
HARRISBURG, Pa. (KDKA) — The average one-way fare between Philadelphia and Orlando reached $138 last summer, up from $114 in 2019, the last summer travel season before the pandemic. That's an increase of 23%.
Between Pittsburgh and Orlando, the average one-way fare reached $157, up from $122, a 32% increase.
Multiply those numbers by two for a round trip and by however many people travel together, and airfare alone to see Mickey Mouse can cost a family hundreds of dollars more now, never mind the costs of admission, hotels and food.
The figures are based on a CBS News of U.S. DOT airfare data via Cirium from July through September of 2022 (the most recent period available) and the same months in 2019.
When might things return to how they were before the pandemic, when airlines earned healthy profits but fares were considerably lower?
"The answer to that question is never," United Airlines CEO Scott Kirby said during the company's quarterly earnings call in January.
Kirby was referring – more specifically – to the costs of running an airline, which have surged for several reasons, including higher labor costs, which executives like Kirby believe will remain permanently higher. Fuel costs – the biggest expense of all for some airlines – are far above 2019 levels too, although those could someday subside.
If airlines can manage to continue passing their higher costs through to consumers in the form of higher airfares, that wouldn't be a problem for airline employees and investors. But it would be a problem for consumers, who had become accustomed to paying airfares that – throughout most of airline history – rose at a lower clip than overall inflation.
Not all airline seats are created equal. Because of a tight pilot market – and because pilots flying smaller jets can rather easily get higher-paying jobs flying bigger jets – smaller jets, typically with between 50 and 76 seats, have become particularly uneconomical.
An example of what that means at Harrisburg International Airport?
"We've always had three or four flights to Detroit a day on Delta, on 50-, 70- or 90-seat airplanes," airport spokesman Scott Miller said. "Today, the 50-seat airplanes are gone" – from the airline's entire fleet. "We have one 90-seat flight a day to Detroit. That's not enough."
The impact – in a world of supply-and-demand economics – of that seat scarcity on airfares? Well, Tammy Paczkowski, who arrived in Harrisburg from Minneapolis via Detroit on a business trip, said she paid about $1,300 for the round trip, which is about double what she has paid for the same route in the past.
Tricia Hare, in town from Atlanta for her father-in-law's funeral, paid nearly $1,000 per ticket, round trip, for the hour-and-a-flight for herself and her children, which she – like most people who spoke with CBS News – said was considerably higher than she was accustomed to paying.
Colette Robinson, traveling to Indianapolis to visit her boyfriend, said she has routinely been paying between $100 and $200 more per round trip than she used to pay for similar trips.
Another illustration of the impact of seat scarcity on airfares?
For February 2023 compared to the last month with normal airline schedules before the pandemic, February 2020, scheduled weekly departing seats – according to Cirium schedule data – are down 10% at Philadelphia, 4% at Pittsburgh and 21% at Harrisburg. They are the state's three busiest airports.
The varying differentials are largely a consequence of each airport's exposure to small jets: An airport like Harrisburg depends on a lot of small-jet services to hubs like Philadelphia, so when airlines pare small-jet service, both are impacted; midsized Pittsburgh, on the other hand, is neither a hub nor a smallish "outstation," as airlines call non-hub airports.
At all three airports, domestic fares are up.
On the other hand, at Pennsylvania's No. 4 airport, Allentown's Lehigh Valley International, February seats are up 4% compared to 2020. And summer fares? Sure enough, they were down 6% compared to 2019, based on the same DOT/Cirium data used to analyze fares to Orlando.
Not everyone at the airport Thursday had paid more for their flights. Elijah Reyes said he felt fortunate to find a round-trip fare of $364 between Houston and Harrisburg, with a connection in Atlanta. He often pays more like $430, he said.
Despite Kirby's assertion that the industry will never fully return to a pre-Covid economic state, Miller said he does expect at least some increase in scheduled airlines seats, which would put at least some modest downward pressure on airfares.
"But when will that happen: this summer? This fall? Next year? We don't know," he said. For now, "as an airport, it's frustrating. You don't want to see people driving hours to go places they used to be able to fly."