Originally Posted by
Beagle
Interesting anecdote about the old days of flying and the cost. When AIR turned 75 years old on 30 April 2015 I was in Wellington to attend the Summerset annual meeting so stopped by at Te Papa afterwards to visit AIR's excellent exhibition commemorating their anniversary. Firstly the interior of the old flying boats was vastly more spacious than you would expect and standard economy seats put the new business class seats of the Dreamliners on display to shame.
The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.
What I find most curious about the airline industry that gives a valuable insight into the pervasive culture of growth and expansion and ego driving it, is that as soon as some new technology or fuel efficiency measure comes available, airlines pass all the savings on to customers in their ravenous attempt to grow. Prices like $1,599 return to Europe on a quality carrier really are absurdly cheap.
Will this sort of pricing ultimatly be a thing of the past ? I doubt it. In time the same grow at all costs that seems to be all pervasive and endemic within the ego's of airline CEO's worldwide will raise its ugly head again. It seems the industry itself is systemically flawed so in terms of ever expecting long run return on equity commensurate with the risks involved, the sector is forever destined to be an underperformer. No doubt Warren Buffet is coming to the same conclusion after his very costly exercise in irrational exuberance.