By Captian Robert Herbst:
One of the most frequent questions I get asked during
interviews is: "Why is the airline industry doing so poorly?"
There can be a long list of answers to that question depending
on if you are the passenger buying a ticket or the employee
working for an airline.
The question actually has an easy answer. Contrary to what
politicians frequently attempt to suggest, airfares on average are
simply too low to cover the ever-increasing and required costs
for safe air travel.
In 1990, the average passenger cost to fly one mile in the
United States was 13.4 cents. Twenty years later, the cost was only
12.7 cents per mile. During the last two decades, the average U.S.
domestic airline passenger fare measured on a per mile cost basis
stayed in a range of 12.0 cents to 14.6 cents. Note: This is revenue
to the airlines and does not include government taxes, fees, security
charges etc. that are now approaching 30 percent per passenger fare.
Comparing 2009 with 1990, the cost of air travel decreased
by 9.9 percent while the Consumer Price Index for inflation
increased by 64.1 percent (cost for air travel excludes government
taxes and fees).
If airline passenger travel costs had kept up with CPI inflation
over the last 20 years, the average fare to fly one mile in 2009
would have been 22 cents per mile, a 59 percent increase over
the actual cost.
Here are a few staggering statistics for the U.S. airline industry:
• In 1990, there were 460 million passengers. In 2009, there
were 704 million passengers.
• In 1990, there were 546,000 airline employees. In 2009,
there were 536,000 airline employees.
• The U.S. airline industry has lost money in 12 of the last 20
years and accumulated a net loss of approximately $29
billion (excludes airline bankruptcy and reorganization
write-downs).
• The price of jet fuel for 2009 was at a four-year low and still
240 percent higher than the airlines paid in 1990.
• Since Jan. 1, 1990, there have been 98 U.S. airlines file
for bankruptcy.
After 20 years of on and off airline industry growth, there
are now 2 percent fewer airline employees responsible for a 53
percent increase in passengers. The numbers make it easy to see
why there are so many complaints against the airline industry.
Sometimes the old cliché: “You get what you pay for,” has
true meaning.
The chart below provides average passenger revenue per
mile for U.S. airlines, commuter rail, and intercity/Amtrak travel
as compared to the Consumer Price Index from 1990 to 2009.
