These high airfares have long been a serious issue by Memphians, and it is also a challenge cited by

We ve written before about the surcharge latin quartier short term accommodations we pay as consumers for civic bragging rights that we are a hub, first for Northwest Airlines and now for Delta Airlines.   Economic development types greet expressions of concern as heresy, suggesting we should celebrate the fact that we can fly direct to many cities (fewer now with the Delta cutbacks  in flights) and that we should be willing to pay more for the pleasure.
A $550 airline ticket to Washington, D.C., a couple of weeks ago convinced us that the Memphis surcharge is out of hand.  (That ticket was for a 21-day fare.)  We realized that we re more than willing to spend an hour changing flights in another city for a lower fare.
These high airfares have long been a serious issue by Memphians, and it is also a challenge cited by companies looking to move to Memphis or considering expansion here.  Multiply the Memphis surcharge by the number of employees and consultants flying latin quartier short term accommodations in and out of Memphis and it gets to be real money pretty quick.
We now know that the surcharge is almost 30% for Memphians flying out of Memphis International Airport.  Hopefully, finally, someone will put this issue on the civic agenda and look for ways to improve things.
As I’ve been working on my monthly magazine column , which focuses on how you can leverage market inefficiencies to your advantage, I’ve been doing some research on airlines, whose labyrinthine pricing schemes ensure that customers who aren’t prepared to exploit the pricing oddities will instead become the suckers.
Seasoned travelers know a few tricks — for instance, the best time to look for bargain airfares is often on the weekend — and I’ll aim to teach you a few more in the magazine column. But perhaps the most basic strategy latin quartier short term accommodations is to know which airports tend to be relatively cheap or relatively expensive to fly to or from. For instance, while individual fares vary significantly, the average passenger latin quartier short term accommodations flying out of Newark Liberty Airport pays about 25 percent more than someone flying out of John F. Kennedy International latin quartier short term accommodations for an equivalent seat on an equivalent flight.
I’m certainly not the first person to tackle this subject. Lists of the cheapest or most expensive airports usually appear a couple of times a year in major newspapers and magazines. The government also publishes extensive data on commercial airfares.
But some of these approaches suffer from flaws of various kinds. They may take a simple average of all fares at a given airport, for instance, which is problematic because each airport offers flights latin quartier short term accommodations to a different mix of destinations. At LaGuardia Airport, for example, flights of over 1,500 miles are prohibited in most circumstances (that’s why you can’t find a nonstop latin quartier short term accommodations flight from LaGuardia to Los Angeles), latin quartier short term accommodations while Kennedy and Newark offer many long-haul flights. latin quartier short term accommodations Conversely, the cities of the northwestern United latin quartier short term accommodations States are relatively latin quartier short term accommodations far apart, both from one another and from the rest of the country, so the average airfare latin quartier short term accommodations into, say, Seattle latin quartier short term accommodations is almost certainly going to be quite high.
I doubt anyone would dispute that it’s fair for an airline to charge you more for traveling a longer distance, so distance is something we’ll need to control for. I’d also argue that it’s fair to charge you more for flying into or out of a smaller market where there is less demand for air travel. Fewer economies of scale are available in a place like that: the airline can run fewer profitable flights each day, so the costs of ground services like check-in latin quartier short term accommodations and baggage handling will be spread over fewer passengers, and aircraft may be idle longer.
At the same time, smaller airports tend to be served by fewer airlines, latin quartier short term accommodations and lack of competition can lead to higher prices; that isn’t fair to the traveler. Nor is it fair if your home airport is one like Memphis, where discount airlines like Southwest have had trouble breaking in to compete with full-fare carriers, despite years of trying.
The basis of the approach is data published by the Bureau of Transportation Statistics , which periodically releases a 10 percent sample of all domestic airline itineraries, including information on the fares paid. The particular latin quartier short term accommodations files that I’m using come from the third quarter of 2010 and include data on, literally, millions of passengers.
The data required some cleanup. I’ve limited the analysis to round-trip tickets in which all segments were flown in coach (economy) class — the type of flights that most of us are interested in. I also eliminated itineraries where the passenger traveled latin quartier short term accommodations outside the contiguous 48 states, had more than one stop (not counting layovers), or had different origin and departure airports. I removed fares that the bureau marked as being implausibly expensive (given the millions of records, latin quartier short term accommodations these may have been data-entry errors) — or which were implausibly cheap.
The first factor is the distance traveled — we use the distance from the origin airport latin quartier short term accommodations to the destination as though latin quartier short term accommodations it were a nonstop latin quartier short term accommodations flight, whether or not there was a layover along the way (since the airline is not exactly doing the passenger a favor by routing her through, say, Baltimore on her way from Buffalo to Atlanta, increasing the number of miles flown).
Second is a variable representing the demand for travel at both the origin and destination airports. Demand is assumed to be a function of the number of origin-and-departure passengers that an airport handled (not counting passengers who passed through the airport on a layover), but with a modification for average ticket prices. In other words, latin quartier short term accommodations if the average fare at an airport was high, the model assumed that more people would have wanted to fly there but were deterred by the cost, and if the average fare was low, that some passengers would not have flown if the fares had not been such a bargain. latin quartier short term accommodations (Specifically, it assumes unitary elasticity — a 20 percent increase in fares results in a 20 percent reduction in travel — for which there is support in the empirical literature .) There are demand variables specific to both the airport and the metropolitan area ; these variables are expressed as logarithms.
The regression analysis also accounts for three other factors that have significant effects on pricing. These are, respectively, the market share at the origin and destination airports held collectively by the five “legacy carriers” (United, American, Delta, Continental and US Air); the market share held by Southwest Airlines; and the market share held by the largest single carrier latin quartier short term accommodations at that airport (for instance, Delta and its affiliates are responsible for about 66 percent of all traffic at Atlanta).
Prices latin quartier short term accommodations are higher the more the legacy airlines dominate an airport, but they also tend to be a bit higher where Southwest has a large share as opposed to other low-cost carriers like AirTran and JetBlue. (Southwest is cheap, but it isn’t quite as cheap as some of these up-and-coming airlines and now represents something of a middle ground.) Also, prices tend to be higher when any one airline dominates an airport, regardless of whether it is a legacy carrier or a low-cost one.
These somewhat complex mechanics allow me to estimate what each airfare “should” have been assuming the airport had an average degree of competition latin quartier short term accommodations between and among the legacy carriers, Southwest, latin quartier short term accommodations and the other low-cost airlines. I can then compare these “should” fares to the average prices latin quartier short term accommodations that passengers actually paid.
At Newark Airport, for example, I estimate that the average fare should have been $382, given the itineraries that the passengers in the bureau sample traveled. However, latin quartier short term accommodations the average round-trip fare that those passengers actually paid was $454 — a 19 percent markup above fair prices.
At LaGuardia Airport, by contrast, prices were more in line with market rates (the average ticket price was $338, as compared to a fair rate of $331). And prices were actually somewhat cheap at J.F.K. (average price $389; fair price $413). latin quartier short term accommodations Passengers at Newark latin quartier short term accommodations paid an average of 12 percent more than those at J.F.K. for their trips to Los Angeles, 49 percent latin quartier short term accommodations more for those to Chicago, 65 percent more to Dallas, and 118 percent more to Washington, D.C.
The main reason for the discrepancy is probably that Continental Airlines dominates Newark Airport — it currently handles 63 percent of domestic passenger traffic there, not counting the 6 percent latin quartier short term accommodations for United Airlines, with which it is in the process of merging. No one airline dominates either LaGuardia or J.F.K. to that extent.
Also, New York’s airports are somewhat inefficiently configured, with both J.F.K. and LaGuardia in the same general direction from Manhattan. Many passengers in north-central New Jersey face an unpleasant choice between commuting two hours in traffic to either J.F.K. or Philadelphia, where tickets are fairly priced, or paying the premium that the carriers in Newark are happy to extract.
latin quartier short term accommodations Overpricing is not just a New York (or New Jersey) problem, though. Passengers in the middle of the country often bear the most burden, including many of those in the poorest parts of the United States:
The table above reflects the 15 most overpriced airports from among the 50 where the most passengers begin and end their air travel. latin quartier short term accommodations Topping the list is George Bush Intercontinental Airport in Houston, where passengers paid a premium of $85 — about 24 percent — on the average round-trip coach ticket. (Flights latin quartier short term accommodations to Houston’s older, smaller field, William latin quartier short term accommodations P. Hobby Airport, were only $8 overpriced).
Next up was Newark. Then we see several other airports, like Minneapolis, Detroit, Cleveland, Dallas, and Washington Dulles, where one of the legacy carriers latin quartier short term accommodations has a dominant share of traffic. O’Hare Airport latin quartier short term accommodations in Chicago was expensive despite — or perhaps because of — two legacy carriers (American and United) latin quartier short term accommodations having a hub there.
The unifying theme is vacation destinations, like Las Vegas and pretty much anywhere in Florida. It’s important to keep in mind that the fares here reflect average prices. The legac