4 Things the Airline Industry Doesn't Want You to Know

Source: Steven Depolo, Flickr.

It's perhaps one of the most universally hated industries. It's filled with long lines, occasional delays, a laundry list of optional fees, and both metaphorical and literal turbulence. Yet, we'd be lost without the airline industry.
 
In 2013, the Department of Transportation's Bureau of Transportation Statistics noted that more than 815 million passengers flew on domestic flights or foreign airlines entering or leaving the United States in the previous year. There's simply no better way to travel great distances more quickly or safely than flying -- at least until teleportation or the flux capacitor becomes a reality.

But there's plenty about the airline industry that it would rather its passengers not know. From what you'll really end up paying for a ticket to what you'll actually receive, here's a look at four things the industry doesn't want you to know.

1. That bargain-basement fare is just a teaser rate.
While it's tempting to brag to your friends about scoring a $79 ticket to a prime vacation destination, chances are that the price you pay for your flight ticket is just a starting point for what you'll wind up paying in the end.

Airlines need two factors to be successful: new customers and loyal customers. In order to draw in new customers, some airlines will dangle a carrot, like a really low fare to select cities. Spirit Airlines  (NASDAQ: SAVE  ) offers the best example of this, as its ultra-low-fare model targets the most cost-conscious consumers.


Source: Spirit Airlines.

But what passengers often don't realize is that those bare-bones ticket prices often don't include government taxes and optional fees, such as baggage check; all but two of the 14 domestic airlines currently charge for the first checked bag. Spirit, for instance, will hit passengers with fees of up to $100 for a first checked bag if you need to do so at the gate. Even plan-ahead types, who let the airline know in advance online that they're bringing a piece of luggage, have to shell out $45 to check a bag.  When all these extra fees are added in, you might be left wondering what sort of a deal you really wound up getting.

2. Racking up airline miles can cost you a pretty penny.
The benefits of signing up for an airline credit card can seem overwhelming at first. The bonus miles; the possible upgrades; and sometimes, a free domestic flight right off the bat! How could a passenger go wrong?

Well, those miles are more like golden handcuffs than manna from heaven. The real purpose of airline credit cards is to keep passengers loyal to the brand, because when they're loyal, they're less likely to shop around for a better price. In reality, it takes a lot of points for passengers to upgrade to a better seat, and the points system is structured in such a way that people will spend more than they originally wanted to in order to earn more points.

Delta Air Lines  (NYSE: DAL  ) and United both recently announced that they'd be ditching their old program of counting miles flown and, instead, replacing it with dollars spent. Therefore, unless you're a very frequent flier, or business customer who spends a lot, those points aren't likely to add up as quickly. 

3. Your plane may be from the last century.
Fuel is the biggest cost the airline industry faces. In order to counteract high jet-fuel costs, airlines have been ordering newer, more fuel-efficient planes from Airbus and Boeing  (NYSE: BA  ) at a record pace -- more than 8,200 new planes during the past five years, to be more precise.


Yet, Boeing and Airbus can only produce about 24 planes per week, combined, and the airline industry can only afford to pay for so many aircraft at once. This drawn-out replacement cycle means that, while you could get lucky enough and end up in a new plane that rolled off the assembly line last week, you might instead be flying on a jet that was built last century.

According to data courtesy of AirFleets.net, Delta's and Allegiant Travel's average fleet age is 16.9 years and 22.2 years old, respectively. 

4. Your seat is shrinking. 
If you think coach is cramped now, just give the airlines a few more years, and they'll show you what cramped really means.

Source: Spirit Airlines.

According to The Wall Street Journal, airlines both big and small are looking for ways to cram more seats on airplanes. Select airlines have requested that Airbus and Boeing utilize 17-inch seats moving forward, allowing a previously standard nine-seat row in economy class to now harbor 10 seats.

Seats won't be the final stomping ground in the race for space, either. Bathroom redesigns and door modifications could yield even more floor space that airlines could use to cram more passengers onto its planes. But should this really surprise anyone in an industry where capacity is everything?

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  • Report this Comment On August 23, 2014, at 11:05 PM, TourLooper wrote:

    1. Sites like Kayak include all the fees. Everybody knows Spirit and Frontier charge for carry-ons.

    2. Southwest has the best miles card. Plus they give you more miles when you renew it after one year. The other airlines charge a yearly fee but the best way around it is to get a card for one year to get all the miles and then cancel it at the end of the year. Then sign up for a new card with a different airline. You can get 2 free tickets doing this every year over and over. I do two cards a year...United and American one year and then switch to US Air and Delta. I always maintain my Southwest card though.

    3. Older planes are not a problem. Do they even make 747's anymore? I'd feel safer getting on one of those than a brand new Dreamliner.

  • Report this Comment On August 24, 2014, at 11:35 AM, pearljim wrote:

    You didn't do your homework, especially when it comes to Spirit Airlines. Even when purchasing options on Spirit, the total fare is generally 15-20% lower than the closest competitors. Lazy reporting - this is what gives journalism it's bad name.

  • Report this Comment On August 24, 2014, at 11:36 AM, pearljim wrote:

    Oh and FYI - stick to what you propose to know:

    Sean specializes in the health care sector, but also has a penchant for mining, retail, and automotive stocks, as well as personal finance and macroeconomic topics of interest.

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