Airlines were the talk of Wall Street this week. United Continental (UAL), specifically, thanks to viral video of a 69-year-old man being forcibly removed from an overbooked flight out of Chicago on Monday.
This incident, not to mention the company’s multiple attempts to respond publicly to it, rocked the stock. Social media quickly exploded with photos of cut-up United MileagePlus loyalty cards. Just as quickly, the company lost close to $1 billion in market cap as traders rushed for the emergency exits.
However, we wouldn’t be surprised if Warren Buffett — who hasn’t been shy about the fact that he’s been accumulating airline stocks recently — doesn’t deserve at least some of the credit for the stock’s comeback. Shares had been down as much as 5% Tuesday, but rebounded to just a 1% loss … or "just" a quarter-million in lost market cap … by day’s end.
Now, shares are still trading lower than where they started the week. But with only four major carriers being responsible for the bulk of the country’s air traffic, Buffett and everyone else who bought UAL on a discount this week will likely be very happy that they made a first-class trade at coach prices.
Speaking of the friendly skies and the fares that get us there, there’s one group of people you WON’T find sitting in the cheap seats. And we’re betting they won’t get bumped from them anytime soon. And what should really outrage you … is the fact that you’re the one picking up their tab!
According to the Bureau of Transportation Statistics, some 31.8 million Americans flew overseas in 2016. That’s about 2 million more than the year prior.
Moreover, the Airlines Reporting Corporation (ARC) found that as additional flights became available and competition increased, the average ticket price fell for the third time last year. Here in the U.S, prices declined about 5% in 2016 for economy round-trips. So a ticket that cost $472 in 2015 cost $450 in 2016, a $22 decrease.
The average price for tickets for travel within a region declined, too — around 5% for economy round-trips. Africa experienced the largest decrease on economy tickets: a drop of 11%.
Those averages are for those of us who spend time shopping for the lowest prices on TripAdvisor (TRIP), Travelocity, Expedia (EXPE) and other travel-related sites. And you might pay more or less depending on where you’re traveling, when you travel and when you book the flight.
The ARC found that:
Generally, the lowest ticket prices can be found if you purchase on weekends. For instance, buying a ticket to Europe on Sunday could save you 16%.
Buying that ticket to Europe more than 21 days in advance could save another 34%.
Including a Saturday-night stay in your European trip might give you as much as 74% savings.
Bundling your travel products by booking more than one at the same time can save even more.
|Source: Airlines Reporting Corporation|
Certainly good news for us Average Joes who care about price and are willing to do a little work.
Many members of Congress aren’t like us Average Joes
They don’t have to fret about searching for the lowest fare when they travel abroad. That’s because you’re picking up the tab. In fact, some have spent thousands on airfares that you or I could have found for a fraction of that amount.
The Treasury Department reported that in 2016, we paid for 557 trips that cost more than $10,000 each for a member of Congress or a staffer. Pricey tickets like that make up less than 0.2% of those bought by us commoners. But for Congress, they equate to 40% according to the ARC.
Treasury also revealed that it paid more than $19 million in 2016 for congressional travel … a record amount and 27% more than in 2015. And that doesn’t include hundreds of other trips where the military provided the flights. However, even when Congress flies on military planes, there are other taxpayer-costs such as hotel rooms, security details and ground transportation.
For example, Rep. Jeb Hensarling (R-Texas), along with six other lawmakers and six staff members, burned through $98,613 of your money in October 2015. They went on a one-week trip to Germany, Switzerland and England — and that figure didn’t include airfare, according to the report in the Congressional Record.
Interestingly, Congress does not need to approve how much of our money they spend for foreign travel each year … there is no budget, and the sky is the limit.
When a Congressman wants to travel overseas, he has the State Department make the arrangements, and Treasury picks up the tab. No oversight, no questions asked. And no incentive to keeps costs down.
In May for instance, four congressmen with three staffers spent $90,000 on a five-day jaunt to Albania for a NATO summit.
Last summer, then-senator David Vitter (R-La.) and a staff member took $37,000 of your money to travel to England.
And late last year, Sen. Joe Donnelly (D-Ind.) spent $24,000 for a trip to Georgia, Slovakia and the Ukraine. The airfare alone was $13,000.
The Senator’s spokesperson said,
“The Army, in coordination with the State Department, made all of the Senator’s travel arrangements, including selecting and booking his flights to Ukraine, Slovakia and Georgia. The State Department paid for the trip.”
I realize that $19 million is a pittance to our elected officials in Washington. It’s about the amount our government spends in 23 minutes to service our nation’s debt. So in the grand scope of things, it’s hardly worth mentioning.
But let me ask you this:
When was the last time you spent $10,000 for a plane ticket?
If you are like 99.8% of Americans, your answer is probably: “Never.”
So why in the heck should professional politicians travel like kings and queens at our expense?
They’re sitting in big, comfy seats at the front of the plane … sipping champagne and sticking us with the tab. Meanwhile we’re crammed in coach, hoping for a bottle of water and a pack of pretzels.
We should insist that these politicians do what we do to save our hard-earned money: fly economy class and plan ahead. After all, they’re supposed to be working for us taxpayers!
Efforts to block first-class travel
Back in 2014, a Bill was floating around Washington that would bar Congress from flying first class …
“Members of Congress are public servants of the people and should not be considered a privileged status.” — Rep. Paul A. Gosar (R-Ariz.)
The sponsors titled it: If Our Military Has to Fly Coach Then so Should Congress Act.
Only eight of our Representatives cosponsored the Bill. And H.R.4632 died in the House Committee on House Administration.
Then in 2015, another one came along:
The Coach-Only Airfare for Capitol Hill (COACH) Act was to mandate that lawmakers and staffers could only fly first-class with personal funds.
One of the sponsors, Paul A. Gosar (R-Ariz.), said at the time:
“Currently, there exists a loophole that allows members of Congress to fly first-class at the expense of hardworking taxpayers. Members of Congress are public servants of the people and should not be considered a privileged status. Elected leaders must be judicious in the travel expenses that are paid for with federal funds.
“Luxury airfare accommodations utilizing taxpayer monies would be inappropriate in any fiscal climate, but at a time of soaring deficits and with a federal debt in excess of $18 trillion, such expenditures are especially wasteful.
“Furthermore, if current regulations prevent men and women serving in the U.S. military from flying first-class, there is absolutely no reason members of Congress should be given a special exemption not offered to our nation’s heroes. It’s time to end the double standard and rein in this abuse.”
H.R.2210 got support from 23 cosponsors. But like its predecessor, it died in committee.
With our nation’s debt now approaching $20 TRILLION, it’s time Congress show that they’re looking closely at every dollar of our money that they spend. And eliminating first-class travel would be a small step in the right direction.
Good luck and happy trading,
The Uncommon Wisdom Daily Team