Lets say that 10 years ago I wanted to fly to Chicago from Montreal -- I call my travel agent (in my case AMEX) and they would book a flight and I would be charged by AMEX. The rate was the rate and is in Sleepless in Seatle "no one knows what the airline charges". However, for inflation purpose, the data was available to the government's statistical office. Taking a large number of Flight Montreal to Chicago you got a price for the flight!
Now move the clock to 2018, you want to buy a flight from Montreal to Chicago, you take your phone and open Expedia and take the flight that fits your requirement! That data also goes into the government statistical office.
Now comes to fun part, you've got to provide additional information; at the same time the airline charges you for extra benefits: Want food on board, want a better seat, got luggage? All these are now additional fees (and sometimes for a substantial amount of cash). So a plane ticket that cost $300.00 is now looking more like $475.
Are these figures included in the travel costs? Funny enough they are not. So today when the CPI came out (for the US) two items saw price falls -- airline and hotel. The first made no senses since fuel costs have risen quickly and they account for nearly 30% of an airline's operating costs. The hotel is harder to figure out. Inflation on hotels turned negative 4% last month (annualized basis) which is the single largest drop --- no one has explanations for that.
However, if you go on the internet there are a lot of comments on how hotels have started charging for "extras" that were "free" in the past -- from parking to extra beds in the room. I don't know how much of this is an urban legend or a real shift int he business model. I know that's how cruise ship function -- giving you a 7-day package to which you add "goodies".
Anyway, fun stuff!
Now move the clock to 2018, you want to buy a flight from Montreal to Chicago, you take your phone and open Expedia and take the flight that fits your requirement! That data also goes into the government statistical office.
Now comes to fun part, you've got to provide additional information; at the same time the airline charges you for extra benefits: Want food on board, want a better seat, got luggage? All these are now additional fees (and sometimes for a substantial amount of cash). So a plane ticket that cost $300.00 is now looking more like $475.
Are these figures included in the travel costs? Funny enough they are not. So today when the CPI came out (for the US) two items saw price falls -- airline and hotel. The first made no senses since fuel costs have risen quickly and they account for nearly 30% of an airline's operating costs. The hotel is harder to figure out. Inflation on hotels turned negative 4% last month (annualized basis) which is the single largest drop --- no one has explanations for that.
However, if you go on the internet there are a lot of comments on how hotels have started charging for "extras" that were "free" in the past -- from parking to extra beds in the room. I don't know how much of this is an urban legend or a real shift int he business model. I know that's how cruise ship function -- giving you a 7-day package to which you add "goodies".
Anyway, fun stuff!
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