Today’s fuel price musings - shhh, don’t wake oil prices

3 comments July 23rd, 2008

Oil prices dropped again, to below $125 a barrell for the first time in six weeks. I see gas prices below $3.90 at places in Rockford. This is weird, let’s tiptoe through the update…

Numbers courtesy of AAA’s fuelgaugereport.com:

Gasoline: Rockford dropped more than a cent to $3.95 a gallon, a 25-cent drop from last week’s record. We’re still tenth in the state in gas prices. The state average dropped almost two cents to $4.14, about 11 cents below Thursday’s record. The national average dropped more than a cent to $4.04, 7 cents below Thursday’s record.  Illinois has the 13th-highest gas prices in the nation (including the District of Columbia).

Diesel: Rockford rebounded a cent to $4.76, about 11 cents below the record set in May. We still have the seventh-highest diesel prices in the state. The state average dropped almost a cent to $4.82, down four cents from Thursday’s record. The national average dropped almost a cent to $4.80, down four cents from Thursday’s record. Illinois has the 20th-highest prices in the country (including the District of Columbia).

Allegiant: We can’t take credit for low leisure airport fares

Add comment July 23rd, 2008

Last post, I surmised that Allegiant might have something to do with the low fares at places like Las Vegas and Fort Lauderdale.

You’ll forgive my lack of intelligent analysis, I’m still relatively new to covering airlines.

Allegiant spokeswoman Tyri Squyres quickly explained, and in retrospect I shoulda known this:

“Leisure markets always have the lowest yields, because it’s almost all discretionary travel. By contrast, big business markets have some of the highest fares.
FLL and LAS are, of course, among the biggest leisure markets in the country. This long pre-dates Allegiant’s presence as a significant factor in Las Vegas (and of course we’ve been present in FLL for only a relatively short time and with quite a modest schedule).
Las Vegas, in fact, has long been notorious for its low fares.
The flip side of this is that it’s exactly the leisure markets that are being slammed by airline capacity cuts, and that makes sense too. When an airline is looking to cut capacity, it will do so first in the markets where its most marginal markets, and for most traditional airlines, that’s the big leisure markets like Las Vegas, Orlando, Hawaii, etc.”

Thanks, Tyri.

Average airfare up 4.4 percent this spring, slightly ahead of inflation

Add comment July 23rd, 2008

The U.S. Bureau of Transportation Statistics just released its quarterly look at airfare. Data is from first quarter 2008, so it doesn’t include the recent run-up in fares from April through now. Still, some interesting takeaways:

• Average domestic air fares in the first quarter of 2008 were up 4.4 percent from the first quarter of 2007 in the largest year-to-year increase since second quarter 2006. In the same time period, inflation rose 4 percent.
• However, average fares remained 4.6 percent below the January-to-March high set in 2001.
• Average fares increased 11.7 percent from the first quarter of 1995 to the first quarter of 2008, compared to a cumulative 41.0 percent inflation rate. So until recently, air fare wasn’t keeping up with inflation (hence the “era of cheap travel” as I’ve put it).
• The average domestic itinerary fare in the first quarter of 2008 of $332 was the highest average fare since the second quarter of 2006. The first-quarter 2008 average fare was up 10.1 percent from the post-9/11 first-quarter low of $301 in 2005. (Fares include taxes and fees.)
• Of the top 100 busiest airports, the highest average fares were in Cincinnati ($535) again. Madison, Wisc., was third at $455. That’s for round trips or one-ways with no return flight.
• Other airports in the area: O’Hare was 40th at $342, Milwaukee was 41st at $340 and Midway was 90th at $253.
• Airfare rose at Madison 8.4 percent in the past year and 13.4 percent since 2001. O’Hare airfare rose 10 percent in the past year, but dropped 16.7 percent since 2001, Milwaukee rose just 0.9 percent in the past year and dropped 11.1 percent since 2001 and Midway rose 13.3 percent in the past year and 12.3 percent since 2001. Midway had the fifth-highest increase in the past year.
• Atlantic City had the lowest airfare at $109, down a whopping 48.6 percent from the past year. Rockford favorite Las Vegas has the fifth-lowest at $241 (Fort Lauderdale is also pretty low, wonder if there’s an Allegiant Air effect? No, it’s just that leisure markets are generally cheaper.)

A lot to digest, I know, but interesting. Wonder how this will look when the next report comes out in three months.