Tamara Thiessen writes for Forbes:
As airlines return to Europe skies for summer, the cost of air travel looks set to double on some carriers. A U.S.-Europe economy return in early June cost from $2,126 with Delta. A first class ticket for the same Atlanta-Paris flight costs from $7,085.Pippa Malmgren notes:
Mind, Europe’s borders are shut to most foreign travelers until at least June 15. Travel bans at both ends mean only those with essential reasons to travel can...Early on in Europe’s corona crisis, in March, Delta and others were selling them for $285. Today Delta’s tickets cost over 600% more.
And this doesn't even consider the massive Fed money pump pushing up prices from the dollar demand side.Keep an eye out for rising prices. A supply side shock makes prices rise even though unemployment is rising and GDP falling. Firms have to cover their costs. #inflation https://t.co/aOPbZrTom8— Pippa Malmgren (@DrPippaM) June 7, 2020
Is the discounting over? We will see how the competition reacts. I have held the view that despite overall rising prices airlines would have to discount prices but maybe that will not be the case. Price pressure from both the supply side and the demand side could already be pushing airline prices much higher along with other prices.
-RW
Given that airlines are going to be required to fly at something like 10%-20% of their planes' rated seating capacity, a seat-cost upgrade of 500% is not unreasonable. That said, travelers will have more room to spread out, and may possibly begin to be able to check baggage and bring more than a summer jacket and smartphone into the cabin.
ReplyDeleteThis will again bring air travel into the realm of high-end business, luxury, or higher-income as it was when I was a child (1960s). Similar restrictions and consumer fears may limit the availability of inter-city rail travel to the upper classes as well.