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What’s Tampering Airline Prices?

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  • Description

    Farecompare CEO Rick Seaney explains why airlines are having difficulties passing on fare prices.

  • Duration 3:05
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Iowa last night and other airlines attempted to hike prices on domestic airfares for this -- this week.

Now this is up four attempts to hike prices in 2013 alone past three attempts have failed.

Our next guest fare compare CEO Rick see -- is here to tell us why these recent attempts haven't worked OK so what happens.

You get the old big guys they try to Jack races and then what basically people don't buy -- Well you got a couple things first of all airlines are probing the appetite of two constituencies one is they're testing consumers.

Who just got hit in.

They -- in their wallets early this year with their paychecks -- that are coming off of a rough.

And -- economy and then they're testing their competitors to see if they'll come along remember if you raise your prices by even one dollar.

You're gonna be on page twenty of shopping results she can't afford to be there very long before you start losing sales.

There's a fine line though isn't there between raising ticket prices these companies have to make revenue for their shareholders.

And sure -- people like me away who say I'm not spend that kind of money to -- my family.

What's a different business model for airlines and it was for five years ago before they get -- run their aircraft 4530%.

Empty today.

Not a five dollar -- barrel oil they have to completely fill every empty middle seat and because of that.

They still have to discount to some degree because people default by it middle seat tickets unless.

The price is right especially in a tough economy.

This is what's tampering prices right now we have a lot of mergers and consolidation occurring it's gonna affect prices down the road when he fifteen and beyond -- right now airlines are having a difficulty you know passing on fuel costs and a variety of other things.

Yeah because when you look at the pricing there's that -- attacks there's -- 9/11 -- -- FA AC I mean the list is a mile long.

Underneath what you thought was -- really good ticket price.

Yeah let me give you a couple examples right now what's driving the price of international tickets is.

The average fuel surcharges 450 dollars roundtrip the average tax is a 150.

That means you're paying 600 dollars before they charge for airfare -- charge 200 dollars each way.

To Europe right now you're looking at a thousand dollar ticket so right now international's being driven by fuel costs domestic is being.

The other prices are staying relatively low because people just don't have enough money to fill those empty middle seats right now.

Holy that's been the minutes are right so blessed are they are they airlines -- -- keep trying to raise prices are we gonna see.

You know each month a little somebody trying to nudge -- -- -- You know if you look at the last three years on average every three weeks they're trying to raise prices between foreign ten dollars roundtrip.

That's about 1%.

So they're batting about anywhere between 40500.

The last couple years.

I don't expect that to change much I think they're gonna try to raise prices every three weeks or so with limited success maybe five or six hikes this year.

Equivalent to about 5% increase this year.

-- -- me that was awesome although you bearer of bad news are you fare compare CEO thank you so much for all that insight.

-- thank you I'm --

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