Making Airlines Fly Right

0 Comments | Insight on the News, April 5, 1999 | by Timothy Burn

At the same time, major airlines and other fuel-consuming industries are enjoying the fruits of a worldwide glut in oil supplies. (For airlines, jet fuel is the second highest expense after labor costs.) The cost per gallon of jet fuel in the United States dropped to 44 cents in December, its lowest point since 1993, according to GKMG Consulting Service, which tracks airline-industry statistics.

"We are witnessing a rising tide of dissatisfaction with the airline industry, and even people inside the industry are starting to question recent fare increases," says James Ashurst, spokesman for the American Society of Travel Agents. "The airlines are real busy kowtowing to Wall Street and they are not spending time thinking about the passengers who fill their coffers."

One industry official defends the higher airfares. "Pricing in the airline industry is driven not by costs, but by demand," says John Austen, spokesman for Northwest Airlines. "Our industry is no different than book publishing or software publishing. It is value- and demand-driven."

--TC