It’s basic economics: if demand for something goes up, so will the price – especially if the supply is limited.
The number of available airplane seats is limited approaching Thanksgiving and Christmas. But “Today” show reporter Tom Costello did not explain that principle of economics in an October 24 segment about rising holiday airfares.
Instead, after rattling off the cost of three destinations that would cost between $300 and $600, the NBC reporter said, “The bottom line: more people this year are trying to pack into the same number of seats as we had last year.”
While Costello reported relevant information saying “This holiday season is expected to be one of the busiest, most expensive on record,” he never connected the dots. "Busiest" and "most expensive" are related, especially when trying to purchase tickets close to the holiday, like the couple who were featured in the segment.
“It’s very hard to get the schedule that you want, the airline you want, the seat you want, at a decent price,” said a would-be ticket buyer.
Of course, the frustrated consumers could have enjoyed more options if they had booked flights earlier – and more people are doing that, as Costello pointed out.
“Average airfare up 10-15 percent from a year ago,” said Costello, “And the planes are packed. Advanced bookings up 30-40 percent.”
And while prices are up from last year, Frontier Airlines spokesman Joe Hodas said it is all about context. Over the years, that means adjusting prices for inflation. “The airfares that we see currently are actually not a whole lot higher than they were about 10 years ago, so if you put it in that context they’re really actually still a pretty good deal,” Hodas said.
Costello did note that increased demand for tickets was a much-needed boost for a troubled sector. “The fare hikes are welcome news to the airline industry,” he said. “2006 is looking like a profitable year for most airlines after having lost $40 billion since 9/11.”
He added that “low cost airlines are adding more seats and new planes” but didn’t frame that as a response to strong consumer demand.