The Economics of Airline Travel

The+Economics+of+Airline+Travel

Ian Wallace, Columnist
December 17, 2017

And Why “Flying Local” May Become a Viable Option for Consumers

 

The Boeing 737 is the most popular plane in America with more than enough range to reach Los Angeles from the east coast, but it’s too large to make flights from small airports profitable.

Over the break in December, many of you may be traveling in an airplane.  Whether you’re visiting relatives or traveling down South for vacation, the destinations will range far and wide – as well as the prices.  Buckle up, and get ready to see through the clouded secrets of the airline industry.

If you look on Google Flights to find a trip to Los Angeles (LAX) from Boston Logan International Airport (BOS), you’ll find the tickets cost anywhere between $350 to $500 in Economy Class for the nonstop flight, depending on how close to Christmas you want to leave.  However, if you want to fly from Burlington Vermont (BTV), the tickets will cost about $100 more, including a connection in Boston or at John F. Kennedy International Airport (JFK) in New York City.

One of the small planes currently used in the US Market, the Embraer 170, is small to fill a flight from Burlington to Los Angeles, but does not have enough range.

Such variation in convenience and price reflects the use of the Hub and Spoke Model, used by the major U.S. airliners.  The Hub and Spoke Model works in a way that directs planes towards major hub airports in which high demand routes can be handled by large planes to ensure that all seats on the route are filled.  The flight from Burlington costs more because it requires a connection; if a route runs straight from Burlington to LAX, a plane large enough to cover the range would almost certainly have empty seats and would not be profitable for the Airline.  As a result, the airlines run smaller planes on additional shorter routes from Burlington to Boston or New York City to cover the demand.  

Since Airlines are desperate to fill as many seats as possible, they are willing to give discounts to people who can fill them early.  If you were to shop for tickets in August, you would have paid up to $200 less for a flight than if you were to buy a ticket now.  Airliners don’t care if they profit less off of early birds because any money on a flight is better than an empty seat.  

The Bombardier C Series may allow long flights from local airports to become a reality due to its small size, fuel efficiency, and long range.

Recently, alternative methods have begun to replace the Hub and Spoke Model, primarily through the invention of smaller long-haul planes with unrivaled fuel efficiency.  A smaller Bombardier C-Series plane has recently passed aviation standards, and if it’s introduced to the US market, it could allow for cheaper, non-stop flights from Burlington to Los Angeles.  A plane with a long enough range but small enough to have its seats filled could make flying easier for millions of Americans, including most Vermonters; living near small airports could make “shopping local” a sensible choice in the airline industry.