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The "unlimited" frequent fliers who flew too much
Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers. (www.latimes.com) More...Sort type: [Top] [Newest]
As a former airline employee (fare construction for tickets), I remember when AA started all this nonsense. It has done nothing but cost airlines money since its inception in the early 80's. If all of these airlines had kept pace with increasing costs, instead of keeping ticket prices at an obscenely low level, they might not all be so broke. Today's airfare from LAX to JFK on Delta is $368 - in 1980 it was $198.
Here's the deal. If fares were adjusted for inflation There are several ways to calculate adjusted for inflation..
Here they are $2.52 using the Consumer Price Index
$2.22 using the GDP deflator
$3.07 using the value of consumer bundle
$2.43 using the unskilled wage
$3.74 using the nominal GDP per capita
$4.95 using the relative share of GDP
So let's first use the mean...Which would be $1 in 1980 is $2.57 today.
$198 X 2.57 = $508..
If we avg out all the indexes, we get 3.26 times 198 =$645.48
Normally the consumer price index or the market basket of approx 85 items is used to adjust for inflation in comparative pricing.
I find the market basket to be inaccurate. The CPI seems to work best.
It is really not low fares that have hurt the carriers. it is high labor and high fuel costs. Labor cost can be controlled by eliminating unions and their above market rates. Labor is the single highest cost of doing business.
Here they are $2.52 using the Consumer Price Index
$2.22 using the GDP deflator
$3.07 using the value of consumer bundle
$2.43 using the unskilled wage
$3.74 using the nominal GDP per capita
$4.95 using the relative share of GDP
So let's first use the mean...Which would be $1 in 1980 is $2.57 today.
$198 X 2.57 = $508..
If we avg out all the indexes, we get 3.26 times 198 =$645.48
Normally the consumer price index or the market basket of approx 85 items is used to adjust for inflation in comparative pricing.
I find the market basket to be inaccurate. The CPI seems to work best.
It is really not low fares that have hurt the carriers. it is high labor and high fuel costs. Labor cost can be controlled by eliminating unions and their above market rates. Labor is the single highest cost of doing business.
All of the Legacy carriers are looking under every desk,in every wastebasket, in every closet to slash costs. Not one of them has a management team that I would trust with the remote control to my TV.
I love it. These guys were brilliant!
I am not all that sympathetic to American Airlines, though it seems that some holders of these passes acted unethically...if an average group of airline passengers is surveyed, there are significant variations in the prices paid for tickets, variations that the airlines have profited from in the past....
Since none of us actually have seen the different contracts involved it's hard to say where the fault is in each circumstance. It is clear that AA made some bad deals and now they want out. If the contract says they are not allowed to sell companion seats it will also contain the remedy if they are actually "caught" doing so. Caught to me means they can prove money exchanged hands.If the early contracts didn't contain that language then then the holders are in the airline business!!!!lol