Despite complaints that U.S. fare data is so… well… U.S.-centric, we still haven't found a dataset with this level of granularity. And so, the market remains an interesting proxy for the aviation market.
This time, we’re looking at the rise of the premium passenger. To be specific, we are looking at the rise of the passenger paying more than $1,000 for a domestic one-way ticket, but it’s not the spike in premium fares in 2022 that piques our interest. It’s the spike in 2000 - over 20 years prior - that has our attention this week.
Of course, 2001 brought tough times for aviation, though not many appreciate how the cracks in pricing started forming well before September 11th. Remembering the (not-so-fond) moments of the airline bankruptcy conga line that started forming in the early 2000s, it’s easy to forget that the U.S. airlines were generally doing well through 2000. The above chart suggests why.
Airlines saw a spike in the number of passengers paying over $1,000 in 2000 and very early 2001. That spike failed spectacularly, not recovering to 2001 levels until 2022. But why?
You’ll note this chart is in nominal dollars (i.e., not inflation-adjusted), which suggests we should see more tickets over the $1,000 benchmark simply based on the declining value of a dollar. And yes, we do see an increase through 2019, but still not to 2001 levels. When we adjust this for CPI - as we’ve done in one of the many charts we looked at to understand what was really at play - the line just stays flat. Passengers paying over $1,000 in 2000 dollars never exceeded that one strange spike. Not even today.
To some, this won’t come as much of a surprise. Fares have been generally deflationary over the period, further held down by the rise of ancillary fares which are not included in this data. We are reminded of Delta Air Lines’ “Simplifares” where fare caps were put in place to attempt to re-entice the high-paying fliers that seemed to vanish after 2001. By the time 2022 rolled around, we were reintroduced to the idea of inflation. Fares have moved up, but inflation moved faster.
And so we’re left with an odd moment in history - probably not coincidentally accompanied by an asset bubble that time produced in the dot-com variety.
Research published this week
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