Photo: Patrick T. Fallon/Bloomberg via Getty Images Airlines for America, the trade group for U.S. airlines, has been tracking the impact of the coronavirus on its member companies, and one statistic it’s estimating is called “breakeven load factor,” the percentage of seats airlines need to sell in order to break even. Before the pandemic, this was around 75 percent.
The main reason airlines need to sell more seats to break even is obvious: Fares have gone down a lot. Airlines are saving money because jet-fuel prices have fallen by nearly half since last year, but it’s not enough to offset the lower fares and the fact that the reduction in flight schedules means airline-wide costs now need to be spread over fewer flights and seats.
In normal conditions, if you’re a vacationer or you’re going to visit family, you benefit from the presence of business travelers on your flight. That’s because airlines use price-discrimination strategies to charge more to customers whose willingness to pay is higher — which allows airlines to charge each passenger enough to cover the incremental cost of carrying that person and to charge all passengers together enough to cover the total cost of operating the flight.
jbarro Good. We need much less air travel.
jbarro Ugh. That's true.
jbarro
jbarro Surely the airlines can use the immense bailouts taxpayers paid for to keep fares reasonable
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