I agree it does not. The question is how often are you going to fly to London to visit them? Once a year? Twice? How often do you do that now? (and I guess more importantly do you live where you would have to fly, say in the USA)
We can make some educated guesses around what happens. The numbers are knowable for the purposes of these guesses we'll just use guesses. Feel free to change them to suit your needs, (a spreadsheet model would be even better).
So lets take the population of the San Francisco Bay area of 7M, 77% of whom are of age to decide to fly to London (18+) of which perhaps 3M have the economic means to decide to do so on an annual basis.
If we assume the non-business travelers will travel with the same frequency they do now (this is the 'hold this variable constant' approach), and we further assume that the amount of revenue that an airline has to make from the route over the course of a year is the same as it is now (we base this on airlines attempting and not always succeeding in maintaining profitable air routes between cities), and we assume that half the passengers are currently travelling for business reasons (this is a simple guess, if you are building a model you should try 25%, 50%, and 75% as guesses, we know it is more than 0% and less than 100%, looking at the whole range as a surface is also interesting).
If our assumptions (guesses) were true (and we have wiggle room there) The cost of airline tickets between SF and LHR would have to nearly double to maintain the same revenue as before. This is because the other costs of the plane don't change as much with half as many passengers, somewhat less fuel (lighter), same maintenance costs, same crew costs, slightly less food cost, same entertainment costs, cleaning costs, airport taxes, etc. This argument sums to the fixed costs overwhelm the variable costs of carrying passengers.
If we assert that business people pay more to fly than tourists do (I think this is a reasonable assertion given that tourists who have the option of booking weeks ahead and adjusting for various things like saturday overnights etc) if the half business people were paying 'full fare coach' their ticket prices are 3 times the price of the tourist tickets. In a worst case scenario that all the tourists got bargains and none of the business travelers do, the revenue is more severely affected by the loss of a business traveler than it is by simply the loss of one ticket sale.
In that scenario the business traveler pays 75% of the revenue and tourists 25% for the year, requiring the tourists to pay 4x what they currently pay to make up the same annual revenue.
Now the zinger, airlines state that they lower prices to attract more passengers. If we look at the converse of this that raising prices would cause more passengers to not travel, we have to verify its not a fallacy. Looking at the complaints the airlines made about the high cost of fuel affecting ticket prices and thus reducing air travel, I'm comfortable believing the claim that higher prices reduces travel.
If the cost of flying to London goes up by 3-4x to account for the revenue lost by the business travelers staying home, it would seem to reduce the total number of passengers still further. Economics suggest that both actors, the airlines and the passengers, will adjust their behaviors to achieve equilibrium.
If we're prognosticating forty years into the future, we ask "Does an equilibrium position exist for recreational air travel?"
To be clear, I don't know if it does. What I was saying is that I can imagine reasons which I consider to be highly probable as to why it wouldn't. Its harder for me to imagine spending a significant amount of my salary to 'casually' visit someone.
I'm very interested in alternate ideas about where air travel is going.
We can make some educated guesses around what happens. The numbers are knowable for the purposes of these guesses we'll just use guesses. Feel free to change them to suit your needs, (a spreadsheet model would be even better).
So lets take the population of the San Francisco Bay area of 7M, 77% of whom are of age to decide to fly to London (18+) of which perhaps 3M have the economic means to decide to do so on an annual basis.
If we assume the non-business travelers will travel with the same frequency they do now (this is the 'hold this variable constant' approach), and we further assume that the amount of revenue that an airline has to make from the route over the course of a year is the same as it is now (we base this on airlines attempting and not always succeeding in maintaining profitable air routes between cities), and we assume that half the passengers are currently travelling for business reasons (this is a simple guess, if you are building a model you should try 25%, 50%, and 75% as guesses, we know it is more than 0% and less than 100%, looking at the whole range as a surface is also interesting).
If our assumptions (guesses) were true (and we have wiggle room there) The cost of airline tickets between SF and LHR would have to nearly double to maintain the same revenue as before. This is because the other costs of the plane don't change as much with half as many passengers, somewhat less fuel (lighter), same maintenance costs, same crew costs, slightly less food cost, same entertainment costs, cleaning costs, airport taxes, etc. This argument sums to the fixed costs overwhelm the variable costs of carrying passengers.
If we assert that business people pay more to fly than tourists do (I think this is a reasonable assertion given that tourists who have the option of booking weeks ahead and adjusting for various things like saturday overnights etc) if the half business people were paying 'full fare coach' their ticket prices are 3 times the price of the tourist tickets. In a worst case scenario that all the tourists got bargains and none of the business travelers do, the revenue is more severely affected by the loss of a business traveler than it is by simply the loss of one ticket sale.
In that scenario the business traveler pays 75% of the revenue and tourists 25% for the year, requiring the tourists to pay 4x what they currently pay to make up the same annual revenue.
Now the zinger, airlines state that they lower prices to attract more passengers. If we look at the converse of this that raising prices would cause more passengers to not travel, we have to verify its not a fallacy. Looking at the complaints the airlines made about the high cost of fuel affecting ticket prices and thus reducing air travel, I'm comfortable believing the claim that higher prices reduces travel.
If the cost of flying to London goes up by 3-4x to account for the revenue lost by the business travelers staying home, it would seem to reduce the total number of passengers still further. Economics suggest that both actors, the airlines and the passengers, will adjust their behaviors to achieve equilibrium.
If we're prognosticating forty years into the future, we ask "Does an equilibrium position exist for recreational air travel?"
To be clear, I don't know if it does. What I was saying is that I can imagine reasons which I consider to be highly probable as to why it wouldn't. Its harder for me to imagine spending a significant amount of my salary to 'casually' visit someone.
I'm very interested in alternate ideas about where air travel is going.
[1] http://www.bayareacensus.ca.gov/bayarea.htm