Business
Airlines are going premium. Prices are rising. Will cheap tickets be harder to find?
In the midst of holiday shopping and travel, Colorado resident Tom Pipes didn’t want to spend extra money on a plane ticket. He flew from Colorado to Los Angeles on Southwest, the grandfather of budget-friendly airlines.
“If there was a first-class option, I wouldn’t use it,” Pipes said this week after arriving at Los Angeles International Airport. “I fly for the price.”
Unfortunately for Pipes and travelers like him, inexpensive tickets probably are going to become increasingly difficult to find.
Over the last year, the average cost of a domestic U.S. flight increased more than 4% to $269 in November, U.S. Bureau of Labor Statistics figures show. It is a trend line that is expected to continue as budget airlines stumble due to rising costs and a crowded field of competitors, while the industry’s major carriers press ahead with strategies focused on pricier, premium ticket options.
“You can expect to see pricing across the board firm up and move higher,” said Tom Fitzgerald, an industry analyst at TD Securities. “If you’re really price sensitive, there may not be as many deals for you.”
American, Delta and United are the world’s three largest airlines and are projected to account for 97% of the industry’s operating profit in the U.S. this year, according to a Deutsche Bank report. In an attempt to catch up, low-cost carriers are rolling out more expensive options for seats that come with perks such as early boarding and extra legroom, leaving less room on the plane for the lowest priced tickets.
Spirit, which filed for Chapter 11 bankruptcy in November, rolled out its version of first class this year. Frontier will offer a first-class option in late 2025 and JetBlue announced this month that the airline will add first-class seats to domestic flights by 2026.
“Budget airlines are trying to find ways to boost their revenue and they know that people are willing to pay more for a better product,” said Michael Linenberg, an airline equity researcher at Deutsche Bank. “The average price is going to be higher and we may see a net reduction in seats that are allocated to the lower-fare price buckets.”
As budget airlines try to recast themselves, major airlines are catering more to higher-paying travelers with premium ticketing options, which is reducing the proportion of seats in the cheapest category, industry analysts said. United, for example, offers five tiers of tickets ranging from basic economy to first-class, giving customers the option to pay more for a refundable ticket or a ticket that comes with free bags.
The price listed Thursday on United’s website for a basic economy ticket from Los Angeles to New York on Saturday, Jan. 4, was $347, which allows the traveler to carry on only one small item such as a purse. Of the nine flights from Los Angeles to New York that United operates that day, basic economy tickets were still available on only two.
For $50 more, a customer could select a seat and bring a carry-on bag, but they would have to shell out $55 more to get a fully refundable ticket. A premium economy seat on the same flight was priced at $724 and a first-class ticket cost $1,643.
Similarly, Delta offers main cabin tickets and “comfort plus” tickets, as well as an option above first class dubbed Delta One. While a first-class Delta ticket from Los Angeles to New York on Jan. 4 cost $1,059, a Delta One ticket was priced at $1,599 and comes with lie-flat seats. Spirit’s cheapest fare to New York from Los Angeles on Jan. 4 is $246, while its most expensive option is $416.
Sophy Chang, 32, recently flew Delta from New York to Los Angeles and chose the cheapest ticket option. Although her seat was toward the back of the plane, she said she was comfortable enough and grateful to be on a direct flight. She’s a regular Delta customer and said she typically has a good experience.
“I definitely wouldn’t mind extra legroom,” Chang said. “I care about it more on longer flights.”
Further widening the gap that has developed in the industry are conveniences and high-end perks offered by larger carriers that budget airlines can’t match. Low-cost carriers have fewer direct flights to fewer destinations and lack the luxurious airport lounges that other first-class travelers have access to.
Delta recently completed a renovation of its two terminals at Los Angeles International Airport, including the addition of a Delta One lounge with private check-in and fine dining options. By the end of the year, Delta plans to offer customers more than 700,000 square feet of lounge space across 56 Sky Clubs and three Delta One lounges.
“Demand for travel on Delta remains healthy with continued preference for our premium offerings,” said Delta President Glen Hauenstein during the company’s most recent earnings call. “Our new Delta One lounges in New York and L.A. with dedicated check-in and private TSA security truly differentiate Delta’s premium offering.”
So far this year, 57% of Delta’s revenue has been generated through sales other than main cabin tickets, Hauenstein said. The focus on higher-priced tickets reflects changes in consumer preferences, including a post-pandemic shift toward spending on experiences over tangible goods, experts said.
“Since COVID-19, there are more people not wanting a miserable travel experience who are willing to pay more for a more comfortable journey,” Fitzgerald said. “It’s been an arms race for the airlines to offer more of a premium product.”
No-frills airlines that lack these perks are built to have lower ticket prices than the major carriers, but rising operating costs have made that difficult to achieve. Budget airlines need to pay the same prices for airport space, jet fuel and labor as the big players do, said Mike Boyd of Boyd Group International, an aviation consulting firm.
“The pilot flying for Frontier, he or she wants the same money that the American Airlines pilot is getting because they’re flying the same airplanes,” Boyd said.
Budget airlines are also struggling in part because there are too many of them, including six publicly traded carriers such as Allegiant and Sun Country, Deutsche Bank’s Linenberg said. The companies will have to consolidate in order to survive, leaving fewer ticket options for customers.
“Many of them are losing money because they’re all competing with each other for that same price-sensitive customer,” Linenberg said. “Part of the industry is going to restructure, and at the end of the day, the consumer will be facing higher fares.”
According to a Deloitte holiday travel survey, 49% of Americans plan to travel between Thanksgiving and mid-January. That number jumps to 66% among those with household incomes of $100,000 or higher, and falls to 34% among those who make $50,000 or less. Twenty-nine percent of travelers this holiday season will upgrade their airfare this year compared with the type of ticket they purchased last year.
There will always be a market for low-fare tickets, but prices may never return to pre-pandemic levels, according to Fitzgerald at TD Securities.
“There were good days of bargains that people were used to over the 2010s,” he said. “I don’t think those are coming back anytime soon.”
Business
Amazon strike hits Southern California warehouses during holiday rush
Workers at several Amazon warehouses across the country went on strike early Thursday morning, part of an effort by the Teamsters union to pressure the e-commerce giant to recognize burgeoning unions at its facilities.
The work stoppage comes in the final stretch of the holiday shopping crush when customers are banking on Amazon to deliver last-minute gifts. The company released a statement claiming the strike would not affect its ability to deliver packages on time.
The International Brotherhood of Teamsters announced the strike would affect seven warehouses, including three in Southern California — in Victorville, Industry and Palmdale — and one in San Francisco. It was unclear how many workers had gone onto the picket lines.
“What we’re doing is historic,” said Leah Pensler, a warehouse worker at the San Francisco facility, according to a news release from the Teamsters. “We are fighting against a vicious union-busting campaign, and we are going to win.”
Frustrations over pay and working conditions have fueled sporadic organizing efforts among workers at Amazon warehouses in recent years, and the effort has picked up speed among the company’s vast network of delivery drivers.
The Teamsters announced a nationwide campaign to unionize Amazon’s warehouse and delivery workers in the summer of 2021. The effort was aimed not only at growing its ranks but also protecting the wages and workplace standards of its members who work at UPS and other companies that are under competitive pressure to replicate Amazon’s methods.
In all, the Teamsters said roughly 10,000 Amazon employees and contracted workers at various Amazon facilities have pledged to affiliate with the union, a small slice of the 800,000 workers employed in Amazon’s U.S. warehouses. But the Teamsters have not held formal union elections, and the proposed bargaining units at these facilities have not been recognized by the National Labor Relations Board, which has the authority to order Amazon to come to the bargaining table.
Amazon spokesperson Kelly Nantel accused the Teamsters of falsely presenting their union as formally representing many of the Amazon employees and subcontracted drivers since they had not completed the process for recognition by the National Labor Relations Board.
“For more than a year now, the Teamsters have continued to intentionally mislead the public — claiming that they represent ‘thousands of Amazon employees and drivers.’ They don’t, and this is another attempt to push a false narrative,” Nantel said in an emailed statement. “What you see here are almost entirely outsiders — not Amazon employees or partners — and the suggestion otherwise is just another lie from the Teamsters.”
In early December, the union gave Amazon a deadline to come to the bargaining table. The union said Amazon’s refusal to meet its demand to negotiate a labor agreement set the strike in motion.
The strike, which includes workers at warehouses in New York, Atlanta and other cities, is the largest labor action to date against Amazon, the union said.
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it,” said Teamsters President Sean M. O’Brien, according to the news release.
Patricia Campos-Medina, executive director of Cornell University’s Worker Institute, said the walkouts were an opportunity for the Teamsters to demonstrate the depth of support for unionizing in warehouses and to draw in more workers.
She said that because Amazon is a large employer with a vast network, potential disruptions would be limited. Nonetheless, she said, “it’s a time when Amazon would like to shine and not have distractions. It’s a moment of high leverage for workers.”
The e-commerce giant has waged a long, largely successful battle to discourage unionization efforts at its facilities, and has been accused repeatedly of engaging in anti-union tactics in violation of federal law — accusations the company denies.
The federal labor board has ordered a union election by workers at an Alabama warehouse to be repeated several times because of allegations of interference by Amazon.
In 2022, Amazon Labor Union, an independent labor group, won a watershed union election at the JFK8 facility on Staten Island in New York — the first successful unionization effort at any of the company’s U.S. warehouses. The union, however, struggled to secure other wins, losing an election at the neighboring facility and another in Albany soon after.
Amazon Labor Union helped Amazon workers at a fulfillment center in California’s Moreno Valley to launch a union drive at the facility in 2022, but the effort stalled soon after with the group withdrawing the election petition it filed with the National Labor Relations Board.
After being hampered by internal division, Amazon Labor Union agreed to affiliate with the Teamsters, which provided more stable financial footing and resources.
The labor push received a boost this year from the NLRB, which has called into question Amazon’s model of relying on a network of independent companies to employ tens of thousands of delivery drivers. An initial ruling this summer by an NLRB regional director in Los Angeles determined that Amazon was a “joint employer” of drivers who delivered packages out of the company’s Palmdale warehouse. After that decision, the NLRB office in Atlanta determined Amazon should be held liable for allegedly making threats and other unlawful statements to drivers seeking to unionize in the city.
Business
Snapchat announces changes to the way creators can earn money on the app
Top Snapchat creators will soon have more ways to make money on the social media app.
The Santa Monica company introduced an expanded monetization program Monday, saying it would soon begin placing ads within longer Spotlight videos. Under Snapchat’s current revenue-sharing arrangement, the company pays influencers some of the money it earns from ads it places within Snapchat Stories.
Beginning Feb. 1, eligible creators will be able to make money from Spotlight videos that are longer than one minute. Spotlight is a tab that showcases the most entertaining Snaps on the platform; the feature becomes more tailored to each user over time based on their preferences and favorites.
“With Spotlight viewership up 25% year-over-year, there is a unique and growing opportunity for creators to monetize this format in the same way they do with Stories,” Snap said in a statement. “We remain committed to evolving and expanding the total rewards available to creators.”
Snap, Instagram, TikTok and YouTube have all been vying for content from popular influencers as the number of people who turn to social media apps for entertainment has soared. With TikTok facing a potential ban in the U.S. next month, many creators have been focusing on other platforms just in case and say they’re finding the moneymaking opportunities even more lucrative.
“I feel like the fastest-growing right now and the best algorithm is Snapchat. They made a comeback,” said Theodora Moutinho, a fitness creator and actor from Glendale who has 426,000 followers on the app. The 25-year-old said she is always evaluating where to post her content, and “right now, I think the biggest one for me is Snapchat.”
Creators have to meet certain criteria to be eligible for Snap’s new revenue-sharing initiative, including having at least 50,000 followers and posting at least 25 times per month to Saved Stories, which are collections of photos and videos that can be added to a user’s profile, or Spotlight. They also have to post on Spotlight or Public Stories on at least 10 of the last 28 days.
And in the last 28 days, they have to achieve 10 million Snap views, 1 million Spotlight views or 12,000 hours of view time. The current Spotlight Rewards Program will end Jan. 31.
Snap said that in the last year, the number of creators posting publicly has more than tripled.
Business
A comeback for California manufacturing? Trump 2.0 raises hopes — and some worries
WASHINGTON — Miriam Mesina de Gutierrez was 19 years old when she got hired at Paulson Manufacturing in Temecula. It was the summer of 2001 and the job was only part time: on an assembly line, applying an anti-fog, anti-scratch coating to face shields for workers in other industries.
Never in her wildest dreams could she have imagined where that $6.75-an-hour job would lead. In 2009, Mesina de Gutierrez became Paulson’s human resources manager. Two years later, she moved to international sales. Two more years and she was promoted to vice president of operations.
Then, last fall, Mesina de Gutierrez went all the way to the top: president of the 200-employee company that had been headed by a member of the Paulson family for 75 years.
“Oh, it was a big deal,” said the 42-year-old, who came to California as a middle schooler from her native Colina, Mexico. And to Roy Paulson, 66, the company’s longtime president who sold the business last year and stepped down to be its technical director, Mesina’s elevation spoke volumes about manufacturing’s unique value:
“It offers job opportunities at every level in society, and for people to rise up in the organization,” he said.
American manufacturing had its heyday in the 1950s when workers making things accounted for more than 30% of all employees. But despite Mesina de Gutierrez’s meteoric success story, the landscape is vastly different today. Beginning decades ago, corporations found cheaper places to produce around the world, China turned into an exporting giant, and machines took over hundreds of thousands of well-paid human jobs.
Today, manufacturing’s share of all U.S. payrolls is just 8%. In California, it’s only 7%, though the Golden State is still home to 1.3 million factory workers — the most in the nation — who make products as diverse as computer chips and tortillas, blockbuster drugs and ordinary nuts and bolts, electric vehicles and toy cars.
Now, President-elect Donald Trump has vowed that his return to the White House will bring about a resurgence of blue-collar work across the country. As in his first term, Trump has promised to gear his “America first” policies to spur domestic production and jobs, whether by changing foreign trade rules, imposing tariffs, cutting taxes and government regulations, or all of the above.
“If we want to return to higher levels of growth and innovation, more broadly distributed prosperity, higher wages, so forth, we’re going to have to get that right,” said Oren Cass, founder and chief economist of the right-leaning think tank American Compass, referring to efforts to reindustrialize the U.S. economy.
Exactly what Trump does, and whether it succeeds, will probably have dramatic consequences for the nation’s economy, its politics, its workers and almost everyone else in the country.
Although most economists don’t see domestic manufacturing as likely to prove a major source of new jobs, it still provides among the best opportunities for people without college degrees.
Manufacturing, on average, offers more hours of work and better wages and benefits than private-sector jobs overall, although the pay premium isn’t as big as it used to be. In California, the average earnings for all manufacturing workers was $42 an hour in October, about 5% more than for employees overall.
Expanding the “Made in USA” economy would be especially important for Trump and other Republicans, who have sought with some success to rebrand themselves as the party of the middle class and working people.
“Democrats have been terribly out of step culturally with the working class,” said Harry Holzer, a Georgetown University public policy professor and chief economist in President Clinton’s Labor Department. “They have got to let go of these crazy identity politics and go back to practical issues like creating good jobs and building more houses.”
That realization may be one factor in Gov. Gavin Newsom’s announcement this week of a blueprint for creating better job opportunities for Californians without a college degree.
“Since the election, both the governor and the Democratic state legislative leadership have talked mainly of a new commitment to blue-collar California,” said Michael Bernick, an employment attorney in San Francisco and former director of California’s Employment Development Department.
California’s blue-collar woes and hopes
Over the last half-century, California’s manufacturing employment has fallen more sharply than in the nation as a whole. The end of the Cold War erased more than half of the state’s 200,000-plus aerospace jobs in the 1990s. The next decade saw a similarly steep decline in electronics manufacturing, as China and other Asian countries moved up the value chain.
On the lower end of skills and pay, apparel employment shriveled as Southern California garment makers focused on fashion and small quantities, eliminating tens of thousands of manual labor jobs. California’s furniture industry followed a similar path.
Manufacturing employment overall has been more stable since the end of the Great Recession in 2009, although the last year has seen further cuts,because of layoffs at corporations such as Boeing, Intel and Tesla.
Today, computer-related and electronics producers, including semiconductors and navigational equipment, make up the state’s largest manufacturing sector, employing about 285,000 people. That’s followed by food manufacturing, with 175,000 jobs; and fabricated metal companies, which employ some 120,000 workers who forge, stamp and make products such as cutlery, hand tools, boilers and springs.
All told, more than 30,000 manufacturers operate in the state, mostly small firms, many of them family-owned, according to the California Manufacturers & Technology Assn. The larger ones have business offices in California but tend to manufacture elsewhere, including in low-cost, less-regulated states such as Texas and Arizona.
MGA Entertainment, the Chatsworth-based maker of Bratz dolls and Little Tikes toys, sources mainly from China. In recent years it’s moved some production to Vietnam and elsewhere. And it closed its Mexico operations because of infrastructure issues, said Isaac Larian, MGA’s billionaire founder and chief executive.
The company has one U.S. manufacturing plant in Hudson, Ohio, with about 700 employees. With automation, Larian said, MGA has cut the production cost difference in Ohio from China 8% to 10%. “But even with that,” he said, “we’re having difficulties. We don’t get the skilled labor. They work for two to three months” and leave.
Larian is hopeful that the incoming Trump administration will be good for business. He said Trump generally was in his first term. Lowering taxes again will help, Larian said, as they did after Trump’s 2017 big tax cuts. His biggest concern is what will happen if Trump follows through on his proposal to slap 10% to 20% tariffs on all imports and raise the levy on Chinese goods to 60%, from 10% to 25% that Trump imposed in his first term. Those tariffs were kept in place by President Biden.
(Trump last month threatened 25% tariffs on Canada and Mexico, and an additional 10% on imports from China, saying he wanted them to curb the inflow of drugs and migrants.)
Toy makers and importers such as MGA were exempt from Trump’s first-term tariffs. “I believe common sense will apply,” Larian said. If not, he said, he would have no choice but to pass on the higher costs to consumers. Annual sales at Larian’s company, which he founded in 1979, have reached $2.5 billion.
Economist Jerry Nickelsburg, director of UCLA’s Anderson Forecast, also is generally bullish on manufacturing, noting that “California has a deep pool of technical talent.”
Paulson’s new boss, Mesina de Gutierrez, is optimistic too. Though trade friction would probably crimp the company’s exports, she wouldn’t talk about what may come down the pike. Instead, she said: “My team is strong.”
Paulson has benefited from multiple patents and its occasional research and development partnership with UC Riverside and other universities. Skilled workers have sustained burgeoning industries such as space exploration, advanced chips and electric vehicles despite recent slumps in tech and aircraft manufacturing and a flight of some businesses, including the headquarters of Elon Musk’s Tesla and SpaceX.
Northrop, Raytheon, Boeing, Lockheed, Tesla and SpaceX have thousands of employees in the state.
What will Trump do?
In his first term, Trump pressured individual manufacturers planning to move production out of the U.S., ultimately with little success. And he often threatened countries with tariffs, sometimes as a bargaining chip, though the tactic often upset financial markets and created uncertainty about what might happen next.
Trump’s tariffs on China prompted many businesses, including Chinese-owned ones, to shift production elsewhere, and the overall U.S. trade deficit didn’t shrink. Trump targeted steel and aluminum imports, which gave a small boost to the domestic metal industry but hurt other American manufacturers, including makers of beer, bicycles and other goods; they ended up paying more for raw materials.
This time will be different, say Trump’s current and former advisors. They say policy won’t be so chaotic as key members of the incoming administration are more aligned and have a more skeptical view of corporate power. Trump backers say they expect him to do what he said in imposing universal tariffs and increasing taxes on China to thwart transshipments of Chinese goods to the U.S. and spur manufacturers to open plants and create jobs on American soil.
Most economists, however, say across-the-board tariffs of 10% to 20% will almost certainly prompt reciprocal measures by other countries, resulting in slower trade and economic activity and higher prices for businesses and consumers.
“The disruptive force of a tariff is much greater today than even in the early 1930s,” said Douglas Irwin, an economics professor and trade historian at Dartmouth College, noting how much bigger and more connected trade and supply chains are today. Broad-based tariffs on imports deepened the Great Depression.
“If we’re trying to reshore manufacturing, tariffs are very blunt and they raise costs for other industries,” he said. “And you have to think about other policies that won’t adversely affect exports to help out manufacturing.”
Whatever Trump does, he will be starting out with a strong American economy and may get a good jobs boost as new semiconductor factories, electric vehicle and parts plants and other green energy projects come online, thanks to the Inflation Reduction Act and the CHIPS and Science Act enacted during the Biden administration. Intel, for example, is getting billions to help pay for a pair of new leading-edge chip factories in Ohio and other projects.
Such government subsidies will help, but it’ll take a lot more to reinvigorate manufacturing, such as cutting red tape and supporting skills training for workers, especially at the state and local level.
“What we know from our and others’ research is that manufacturing is most likely to get a boost from customized assistance to workers and firms rather than large-scale, blunt federal policies,” said Brad Hershbein, a senior economist at the Upjohn Institute for Employment Research in Kalamazoo, Mich.
Hershbein isn’t counting on a resurgence of manufacturing jobs.
“Manufacturing is important for the American consciousness, more so than it may be for the American economy,” he said. “I think a lot of people had in mind that for a large number of people, it was an accessible job [that] you didn’t need that much education or training for that paid relatively well. And there aren’t that many jobs like that available today. People yearn for that.”
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