Costs of flying
Date posted: April 11, 2011
As with many things, the cost of flying is going up. Obviously it takes fuel to fly planes, so is it higher oil and jet fuel costs that are pushing up airline ticket prices? N.C. Cooperative Extension economist Mike Walden weighs in.
“Certainly, that is a factor … but the cost structure of airline tickets is very, very interesting. … Certainly fuel costs are important to the airlines. It is actually one of the top three costs, (another) being labor.
“But the other third may surprise people, and its taxes. Airlines pay a lot of taxes, and, of course, we the flyer ultimately pay them. For example, there is an excise tax There is a facility tax that goes to local airports. And since 9/11, there has been a TSA tax that really pays for all those folks who check us as we are going through the line.
“The average profit on an airline ticket is a lot less, I think, than many people think. It is about 6 percent. So when you fly, yes, fuel is important, labor is important, profits are relatively small (and) taxes are very, very significant.”
Category: Economic Perspective