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Comment by gumby | Hacker News Reader

> Last year, SNCF relaunched overnight services between Paris and Nice, with tickets starting as low as 19 euros, about $21, for a midweek low-season ticket. That compares with 31 euros, not including baggage fees or the cost of airport transfers, for a short flight on EasyJet

These prices are inconceivable in the US, where competition in air travel has essentially been eliminated.

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And yet US airlines (United/American/Delta/Southwest/Alaska/JetBlue) are barely profitable, if not losing money many years.

The most hated airline, Spirit, has the most consistent profit margin 10%+, but all the others are near 0% most years.

Air travel is expensive. Airframe maintenance is expensive and labor intensive. Pilots are highly skilled professionals and need to be paid as such. Jet fuel is expensive. Handling baggage is a logistical challenge. Due to the nature of aircraft, they have low limits on passenger capacity. The government subsidizes air travel into rural areas through the Essential Air Services with about 1/6th the budget it puts into Amtrak. The US government frequently "bails out" airline companies and spends more money than they do on the yearly budget of Amtrak. This ignores the bevvy of subsidizes city governments offer airports to stay in business.

Like most forms of infrastructure, American traveling preferences are driven mostly by a mixture of emotion and lobbying. Air travel doesn't make much economic sense and hasn't for years.

Why are airfares so much cheaper in Europe and Asia than they are in the US?

Asia often doesn't have any infrastructure in place of air travel. The US and Europe have large roadways and rail networks for transportation which means airfare is more expensive in relation. Much of Asia has no road or rail network in place that can support the capacity that air travel offers and many governments in Asia cannot fund a road or rail project of sufficient magnitude to offer a compelling alternative. In Europe jet fuel is mostly untaxed and distances in Europe are shorter so less fuel is spent moving passengers from city-to-city.

EasyJet from Dublin to Milan is so cheap, as are international flights like KL to Taiwan These are distances that aren’t feasible to drive even if they were on the same landmass.

And as you say europe also has a dense road network. The fuel tax is interesting, definitely, but in my US/EU comparison price delta is often a factor of five or more.

Flights between KL and Taiwan are cheaper because labor and maintenance is cheap thanks to the much lower wages in KL and Taiwan compared to Europe and the US (so everything from maintenance to refueling is cheaper).

As far as taxes are concerned, it would be interesting to do a cost breakdown of fuel to see how much of the delta comes from taxes.

The overall industry has been profitable since 2010, peaked at 15% average in 2015. 2020 was a slaughter for obvious reasons.

You have a weird definition of "barely profitable" given the average corporate profit margin in the US is 9% and your claim "others are near 0% most years" is an outright fabrication.

Yes, I was wrong about near 0% for the past decade, although a few of the airlines were near zero for many of the years. But given the volatility, it still does not seem like a big profit margin. Seems like the consolidation was necessary to make them viable businesses. In my lifetime (I am mid 30s), you would have had a really bad time owning a piece of the airline business.

https://www.macrotrends.net/stocks/charts/UAL/united-airline...

https://www.macrotrends.net/stocks/charts/AAL/american-airli...

https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa...

https://www.macrotrends.net/stocks/charts/ALK/alaska-air/pro...

https://www.macrotrends.net/stocks/charts/LUV/southwest-airl...

https://www.macrotrends.net/stocks/charts/DAL/delta-air-line...

https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlin...

This price isn't representative. To give you an idea, Lyon - Lille tomorrow is between $90 and $130 for a second class ticket. It's a three hours trip. For more context, the median salary in France is about $2000 after tax [1].

[1] https://www.lafinancepourtous.com/2021/06/28/salaire-median-...

Lyon - Lille flight on the other hand for tomorrow is 147 euros (cheap price compared to other days it seems). The flight takes a little bit over an hour, getting to Lyon airport from the city takes about an hour as well (18.20€ with public transport, 50+ with taxi/ride hailing). On the landing end transport to city is luckily cheaper and faster, 45 minutes with public transport, 15 mins and ~20€ with a taxi.

Paris to Nice is 900km car ride.

The 31 euro air travel “price” doesn’t include a fuel surcharge, airport fees, baggage fees, then a nice fat 20% VAT tax on top, etc, all of which can often exceed the “price” itself. Maybe you should start an airline and report back.

If air travel in the US was such a profitable biz as you say, airlines wouldn’t be constantly on the brink of insolvency.

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