CHRIS SUNUNU:
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People are being creative. They're flying on different days. They're going to fly Tuesday and Saturday. They're using their points programs on their credit cards. So by being more creative about it, you as the customer can have a better experience, a more cost-effective experience booking a little ahead of time. And again, are these prices going to go down anytime soon? Probably not, and it's not because the issue in Iran is not going away. And even when it does, you have a refining problem here and capacity. Welcome back to The Takeout. That is Chris Sununu, former Republican governor of New Hampshire, and he is the current CEO of Airlines for America, the trade group that represents the airlines. And he was addressing, basically, American travel workarounds. Higher jet-fuel costs have pushed airfares, you probably have noticed, up. How high? To 10-year highs. According to Hopper, which is an air-travel data platform, the cost of a typical round-trip domestic flight this Thanksgiving will average $402, a 31% increase over last year. If you're curious, round-trip domestic flights for Christmas, $452. Joining me now is CBS News Senior Transportation Correspondent Kris Van Cleave, who recently spoke to the head of Alaska Airlines. What did he tell you? Well, Major, Alaska is the fifth-largest carrier in this country. And like everyone else who has to fuel up, they are feeling the pain at the pump. Jet-fuel prices are nearly $2 a gallon higher than where Alaska thought they would be when they built their current economic plan. And at that point, when we're talking fuel above $4, it gets very expensive to operate, and the airlines are passing that bill along to flyers. And there's really nothing you can do, other than the workarounds that Chris Sununu described? Yeah, and so we asked Ben Minicucci, the CEO of Alaska, what are they seeing? Are they seeing that impact who is flying? We know people that can afford to fly are spending big on premium products, but what about everybody else? Take a listen. Is the idea of that low-fare flight deal gone? Can it exist at $4-plus a gallon fuel? I think it gets more difficult. Airport costs have gone up tremendously. Between fuel, labor, and these airport costs, that almost represents today 70% of our cost structure. So the only way to offset it is with revenue. Are there people that aren't taking trips now? The strongest demand we're seeing is in premium and less in main cabin. So that's an area that we're focused on is, how do we get people that are not going on that trip because of the increase in fares? So more revenue comes from things like more premium offerings, but it also comes from raising airfares. And so now we hear from Alaska that they have seen some softness now, perhaps, in the economy cabin. So how do you recapture that while also trying to keep pace with the rising cost of fuel? That is their conundrum and the airlines in general, Major. And for the holidays upcoming, Kris, how much do airlines rely on that? They're not as dependent as retailers are on that holiday shopping spree, but they need that revenue. Yeah, so the fourth quarter is typically one of the most lucrative for the airlines. They know that people who maybe only take one or two trips a year, one of those trips is likely going to be around the holidays. So it is going to be typically very busy. Planes are going to be very full, and people are going to be paying more now than they did last year and perhaps over the last decade. What we've heard is that demand has remained strong for the holidays, but the booking window has changed. More people are booking very early, hoping to lock in a lower price, fearing that fuel will push airfares even higher, as we've seen a steady increase in fares. So that window to book before fares really start to climb is shorter than it would normally be. Hopper says do it by no later than Halloween but says the sweet spot might be right now. Kris, about 45 seconds. Big picture, you talk to people in the industry all the time. There is a general shrugging attitude among the American traveling public that it's just a drag, air travel. How is that being addressed, or how do they think about that sentiment? Well, it's interesting because, Major, increasingly, your experience as a flyer depends on what you're paying. Premium flyers have a much higher satisfaction rate than folks that are in the economy cabin. But overall, a recent JD Power survey found that consumer sentiment was up about 8% over last year, with the really big caveat that as airfares go up, that tends to fuel discontent. But it's really now, what experience are you getting when you get on the plane? If you're in business class or premium economy or one of those fancy lounges, you'll like the experience a lot better. Well, maybe it's just me then, Kris. I appreciate the time, sir. You've just got to pay more, Major. [LAUGHTER] Everyone keeps telling me. Everyone keeps telling me that. KVC, love to see you, man. Thank you so much. Good to be with you.
