US airfares down 3.6% in second quarter 2013

By BA Staff

The average domestic air fare decreased to $378 in the second quarter of 2013, down 3.6 percent from the average fare of $392 in the second quarter of 2012, measured in constant 2013 dollars, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported.

Huntsville, Ala., had the highest average fare, $547, while Atlantic City, N.J., had the lowest, $159.

BTS, a part of the Research and Innovative Technology Administration (RITA), reports average fares based on domestic itinerary fares. Itinerary fares consist of round-trip fares unless the customer does not purchase a return trip. In that case, the one-way fare is included. Fares are based on the total ticket value which consists of the price charged by the airlines plus any additional taxes and fees levied by an outside entity at the time of purchase. Fares include only the price paid at the time of the ticket purchase and do not include other fees, such as baggage fees, paid at the airport or on-board the aircraft. Averages do not include frequent-flyer or “zero fares” or abnormally high reported fares.

The second-quarter 2013 fare was down 18.4 percent in constant 2013 dollars from the average fare of $463 in 1999, which was the highest average fare of any second quarter, adjusted for inflation. The 18.4 percent decline took place while there was an increase in overall consumer prices of 40.5 percent. In the 18 years since BTS began collecting air fare records in 1995, inflation-adjusted fares declined 16.9 percent compared to a 53.1 percent increase in overall consumer prices.

U.S. passenger airlines collected 70.6 percent of their total revenue from passenger fares during the second quarter of 2013, down from 1990, the earliest year for which airlines’ revenues and expenses are available, when 87.6 percent of airline revenue was received from fares.

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PHOTOS and Analysis: A new Indian start-up; Zexus Air?

by Vinay Bhaskara

A report in Ch-Aviation is stating that proposed domestic start-up Zexus Air, to be based at Delhi, is planning to acquire four Embraer E175LR regional jet aircraft (with manufacturer serial numbers [MSNs] 17000277, 17000287, 17000291, and 17000309), as per its application with India's Directorate General of Civil Aviation (DGCA) for an air operator certificate (AOC). The aircraft were previously with Brazilian regional operator TRIP Linhas Aereas, a subsidiary of Azul Brazilian Airlines, the Brazilian low cost carrier (LCC) founded by JetBlue's founder, David Neelman

Not much is known about the startup Zexus Air, except that it would operate on domestic routes, likely with a LCC business model. The carrier has not launched a website, and a quick scan of the airline's Facebook page reveals the following picture of a US Airways E-Jet with Zexus Air titles added via Photoshop or some equivalent. The unprofessional photo below does not re-assure anyone about the viability of Zexus Air's business plan, nor their level of capitalization at this present stage.

Image Credit: Zexus Air

Using Embraer E175 regional jets is a recipe for disaster in the Indian airline industry, thanks to discounts in airport costs for aircraft below a certain weight. These discounts, which apply to turboprops of the same size as the E175, are designed to promote service to Tier II and Tier III Indian cities. But as a side effect of the discounts, regional jet operations in India are simply economically un-viable. For example, regional operator Paramount Airways, who utilized a fleet of Embraer E-Jets, was decimated earlier this decade by competition from Kingfisher and Jet Airways ATR turboprops in the South.

Moreover, the Indian operating environment is anything but conducive to a new start-up airline. Demand is weakening thanks to a poor macro-economic climate, and the existing airlines are already locked into capacity growth thanks to massive aircraft orders. Moreover, seasoned LCC veteran Air Asia is soon to launch an Indian franchise, and even Air Costa, with a similar business model based around regional jets, is set to launch operations within a couple of months. Zexus Air, it would appear, is doomed from the start. 

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Analysis: Jet Airways to withdraw from Bhubaneswar

by Vinay Bhaskara

According to several reports, Mumbai-based full service carrier Jet Airways is planning on pulling out from Bhubaneswar from the Winter 2013/14 season. Inventory has been zeroed out from 27th October onwards and flights to and from Bhubaneswar are no longer bookable on jetairways.com. Additionally, sources are saying that Jet Airways has not requested slots at Bhubaneswar for this winter, though we will have to wait for the release of route information onto the Global Distribution System (GDS) to confirm this news.

During August, Jet Airways has operated three flights per day to Bhubaneswar, daily Chennai-Bangalore-Bhubaneswar and return, daily Mumbai-Bhubaneswar and return, and daily Kolkata-Bhubaneswar and return. Mumbai-Bhubaneswar and Kolkata-Bhubaneswar are served with JetKonnect Boeing 737-800 equipment, while Bangalore-Bhubaneswar is served with full service 737-800 equipment. The current service level actually marks a reduction from planned levels at the start of the summer, as an additional two flights per day to Kolkata were initially filed with the Directorate General of Civil Aviation (DGCA) utilizing ATR 72-500 turboprop equipment.

If true, the cancellation of Bhubaneswar is a poor step on the part of Jet Airways. One of the few strengths remaining for the financially struggling Jet Airways is its powerful domestic network, with 49 domestic destinations. Bhubaneswar is the 18th busiest airport in India, and one of the most important destinations in Eastern India. However, Jet Airways has been facing challenges thanks to the steady growth of low cost carrier (LCC) IndiGo in the Bhubaneswar market. IndiGo is the largest carrier in the Bhubaneswar market, with nine flights per day this summer to five nonstop destinations; Delhi, Hyderabad, Kolkata, Mumbai, and Vizag.

Even with the increased LCC competition, it does not make sense that Jet did not at least keep around Mumbai-Bhubaneswar for feed purposes. With the new Mumbai integrated terminal arriving by the end of next year, Jet Airways has the opportunity to build a strong regional hub at Mumbai connecting passengers domestic to international and vice-versa. Since Mumbai-Bhubaneswar is served with JetKonnect equipment, with lower operating costs, it is likely losing the least money of Jet's Bhubaneswar services, and thus it would have made sense for Jet to keep Bhubaneswar around.

But the cancellation is just the latest a growing pattern of poor network decisions made by Jet Airways over the past few years. It is certainly possible for airlines to cut services on their way to profitability; but that usually applies to redundant or heavily money-losing capacity that does not serve a strategic purpose (Delhi-Milan being one rare example at Jet Airways); not a key short haul destination. 

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Trip report: Iberia domestic business class Barcelona Madrid Lisbon

by Vishal Mehra

Last week, I reviewed Iberia’s domestic Business Lounge in Barcelona.

Today, I focus on my first flight with Iberia from Barcelona to Lisbon, via Madrid. This was also my first flight in business class.

Barcelona El Prat - Madrid Barajas
Flight IB2713. Airbus A320. Seat 5F. Business Class
Departure - 18:50, on-time

For intra-Europe and many north African flight, most European airlines don't have a separate cabin for business class passengers. Instead, they use a mobile curtain that is moved after each flight in order to separate both according to the number of passengers flying business class in each flight. This allows airlines to be more flexible, since an Economy class seat can be converted into a business class seat just by moving the curtain.

My Iberia business class seat was essentially an upgraded economy seat with increased seat pitch (34 inches, instead of 31 in economy) and an empty middle seat for increased comfort.

As I settled into my seat I was offered water and something to munch on, while the cabin was getting ready for departure to Madrid. Our departure was smooth, and looking down at Barcelona I saw the beauty of the city once more albeit with an aerial view, bathed in sunshine.

Soon after reaching cruising height, a purser came over and asked for my choice of drink. As this was a short one hour flight, and it was early evening, there was no specific meal service. I must have waited for fifteen minutes for my apple juice to arrive before drifting off for a short nap.

I woke up while we were on our landing approach to Madrid Barajas and I never got my drink, and considering we were on approach, I did not bother reminding the crew of their slip-up. Humans tend to forget things and considering it was my first ever outing in semi business class, I was in good enough humour to forgive as well, but Iberia should take note of such slip-ups, which while minor, have large impact on passenger impression when they occur in the premium cabin.

Looking through the magazine I chanced upon Iberia giving out Pizza at 36000 feet to its passengers, which I thought was pretty unique.

We landed in Madrid on time, disembarkation was quick and I went to explore the airport's famous wavy-roof terminal and the flagship Iberia lounge.

Madrid Barajas – Lisbon Portela International
Flight IB3118. Airbus A320. Seat 1A. Business Class
Departure 2245, on-time
Seat 1A

I was excited about sitting in seat 1A, that magical number in airline seating wanted by enthusiasts, which was automatically allotted to me by Iberia. Business class was the same upgraded economy class with increased leg room, but this time there was just two rows of business class seats, and two out of the eight available seats remained unoccupied, including the aisle seat in my row i.e. 1C, giving me a full three-seater to myself.

Flipping through Iberia’s magazine, I came across this print ad featuring the Taj Mahal and promoting Incredible India. Bought a big smile to my face.

The pre-departure service consisted of a drink and nuts. I chose to go for a tried and tested cerveza, or beer (in English). Service on this flight was better, may be because it was a Schengen flight and I was surprised to find a full-blown dinner served during this short one hour hop to Lisbon. The fish and salad did not appeal to my taste buds, and I moved quickly to dessert.

As soon as I finished dinner we were descending to Lisbon and the beautiful city came in the view with bright lights and hills around it. The landing again was a smooth affair and within five minutes we were at the disembarkation point.

The only negative aspect of this flight was the exit through stairs and buses ferrying passengers to the main terminal. May be it was a short-coming of the airport, considering it was past 11pm at night, but then a full service airline like Iberia should work closely with airport authorities to ensure no dilution in their service offerings.

- Vishal Mehra is a digital marketer at a global agency, smitten by travelling and commercial aviation. He tweets a lot and off late has taken to blogging as well. Follow him on Twitter and visit his blog.

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