A couple of days ago, Thrifty Traveler broke news about how US airlines are sometimes charging more for solo travelers vs. those traveling as a group of two or more. Presumably this was another way to try to price discriminate between leisure travelers and business travelers, which is fair enough, since airlines use all kinds of methods to do that.
This ended up becoming national news. I suppose that’s for good reason, because it’s a practice many of us weren’t familiar with, and the media loves airline stories. In fairness, this wasn’t a terribly widespread practice, which is to say that these fares were only in a relatively small percentage of markets. Given the bad press airlines have received over this practice, we’re seeing airlines pull these fares. Is that good news, though?
In this post:
Airlines update fares, now punish all travelers equally
Thrifty Traveler has declared victory, writing that “After Blowback, Delta & United Dump Fares That Punish Solo Travelers.” The claim is that “Delta and United both nixed the fares that hit solo travelers with significantly higher prices.”
However, unless I’m missing something, exactly the inverse is true (as @xJonNYC flagged) — airlines have simply eliminated the fares that offer discounts for those traveling as a party of two or more. So now everyone pays more, and perhaps the more accurate reality is “After Blowback, Delta & United Start Charging Everyone More.”
Let’s look at the examples that were provided to show this price discrimination:
- A June 13 United flight from Chicago to Peoria cost $269 for one person or $181 per person for two or more people; now everyone pays $269
- An August 31 United flight from Chicago to Lexington cost $214 for one person, or $112 per person for two or more people; now everyone pays $214
- A September 10 Delta flight from Minneapolis to Miami cost $199 for one person or $118 per person for two more people; now everyone pays $199
Just to give a concrete example that will illustrate this, United has pulled its discounted pricing for solo travelers, while American hasn’t. If you want to travel from Chicago to Lexington on the flight mentioned above, both airlines now charge $214 for one traveler.
Meanwhile American now charges $215 total for two travelers, while United now charges $427 total for two travelers. Should we celebrate that change on United’s part?
Thrifty Traveler was absolutely right to bring up this pricing quirk, as I think it was worth pointing out. However, I wouldn’t consider airlines pulling cheaper fares for those traveling as a group of two or more to be something to celebrate, since now everyone pays more, and I think it’s important that we call out the current reality.
On the plus side, airline pricing is really fluid
As of now, I’d consider these developments to be negative. Over the course of a week we’ve gone from airlines secretly offering lower fares to those traveling as groups of two or more, to no longer offering a discount to those travelers, and charging everyone more.
The good news, however, is that airlines have seats to fill, and ultimately airline pricing isn’t determined based on airline costs and what margin they need to be profitable, but instead, based on what consumers are willing to pay.
So the airlines still have the same number of seats to fill, and over time, you can expect fares to reflect that. The thing is, I wouldn’t expect fares to get anywhere as close to the two-person pricing for solo travelers, at least on a regular basis, since not many people even knew about these fares.
Anyway, it’s funny how the internet can frame things. The cheaper pricing for two or more travelers was an awesome discovery, and if we had just said “cool, look at this opportunity to get a discount,” we’d have access to these fares.
But then there was outcry about discrimination and unfairness, without people realizing that airline pricing is literally “unfair” and discriminatory in every way, to segment out the market as much as possible… and that’s why so many low fares exist.
Bottom line
In recent days, there was widespread coverage of how some airlines were charging significantly lower fares to those traveling as groups of two or more. It was a fascinating discovery, though it was largely framed in a negative light.
Delta and United have now pulled these fares. But make no mistake, this isn’t a victory for travelers. Airlines haven’t eliminated fares that punish solo travelers, but instead, they’ve eliminated fares that offer discounts to those traveling as parties of two or more. Now everyone pays more.
What do you make of this airline pricing development?
It isn’t fare to be charged because your solo. However, cruise lines do it, and some other tours and excursions in the travel industry also charge for solo travel.
How is this different to “buy one get one 50% off” or SW “companion fly free”? I’m surprised it made its way to the news.
Now if they can sort out discriminatory pricing practices for residents who happen to live near fortress hubs, that would be nice too.
Yours, a solo traveler who happens to live in Charlotte who gets hosed twice.
If you are going to call out the airline industry why not call out examples of other industries and companies that do the same thing. It is quite common that when paying for two people or more the relative price per person is less than one. There are many travel industry examples of this.
A big problem with airline reservation systems is that although they will allow me to book for others at the same time, and will allow me to specify another traveler's information such as frequent flyer numbers, it won't allow me to access that person's miles, even with permission. So if I find a fare that's good, is a combination of dollars and miles, and I'm traveling with a companion, there's no easy way to take...
A big problem with airline reservation systems is that although they will allow me to book for others at the same time, and will allow me to specify another traveler's information such as frequent flyer numbers, it won't allow me to access that person's miles, even with permission. So if I find a fare that's good, is a combination of dollars and miles, and I'm traveling with a companion, there's no easy way to take miles from each of our accounts. That's the biggest reason that I'm likely to book trips for one person at a time.
If they really want to differentiate business travel from leisure travel, they don't have to go so far as pooling miles. But they should allow family members to link accounts so they can use miles from the respective passenger's account.
Maybe someone now needs to write an article about how unfair airline pricing is for groups. If there are only 2 tickets left in a 'fare bucket', and your reservation is for 3 passengers, you end up paying the higher cost for all 3 tickets.
I despise all airlines sine they have a monopoly on the way of fast travel. No other options like high speed trains.
I think that you’re looking at this backwards. The problem isn’t the public backlash against predatory pricing, it’s the airlines’ ongoing policies of secrecy, predatory pricing, and generally treating the passenger like dirt that’s the problem.
If the airlines treated passengers fairly and were open about what they do and why they do it then they could simply have announced with much fanfare a great new 2 for 1 sale in limited markets. The...
I think that you’re looking at this backwards. The problem isn’t the public backlash against predatory pricing, it’s the airlines’ ongoing policies of secrecy, predatory pricing, and generally treating the passenger like dirt that’s the problem.
If the airlines treated passengers fairly and were open about what they do and why they do it then they could simply have announced with much fanfare a great new 2 for 1 sale in limited markets. The goodwill would have been enormous. The rapacious, inept, or both CEO’s of the Big 3 would have been cheered. Instead the airlines acted with characteristic stupidity and shortsightedness and everyone hates or distrusts them.
Disagree with the take here. While airlines have responded to the PR backlash by withdrawing the cheaper fares, this is only because they’d look guilty of “overcharging solo travellers” if they removed the fares and then dropped the average price. In the longer term, prices will stabilise at a midpoint which, while likely not in the middle, will benefit solo travellers.
Not going to happen. Keep dreaming.
I go to Costco for the same reason.
Kind of agree with Ben's take here. There are all kind of price reductions and discounts when one buys things in volume. Hardly any one complains that there is a discrimination when I buy 1 unit of thing X at a higher price per unit as opposed to multiple units of X. In this case, as Ben pointed out, the framing in the media was about discriminating against single traveller rather than reduced prices for...
Kind of agree with Ben's take here. There are all kind of price reductions and discounts when one buys things in volume. Hardly any one complains that there is a discrimination when I buy 1 unit of thing X at a higher price per unit as opposed to multiple units of X. In this case, as Ben pointed out, the framing in the media was about discriminating against single traveller rather than reduced prices for 2 people traveling together.
I guess a major difference is that when most other businesses give discounts on volume they often spell it out openly (though in many businesses one can bargain for volume pricing) while in this case (because of the nature of airline pricing) it was not spelled out openly, and was discovered and framed as a discrimination rather than as a discount.
Volume discounts make sense when it makes sense for a customer to buy in bulk. Most anyone can do that with groceries, even for perishables if they can store them appropriately. It saves customers money and moves inventory. Airline tickets don't work like that. You usually only want one and there's no way to save a second for later. Comparisons with most other purchases are irrelevant.
It is weird how some folks consider volume discounting "unfair." It's been around forever with goods that will expire. Banker's dozen punishes single people over families or communities is from the medieval times. Costco will give you a deal if you buy a huge amount. I guess it's good cover to raise prices and call it "restoring fairness" or some such nonsense.
Yes, but it's disclosed. You have a choice. You can accept it or not. This was not discounting for bulk. This was targeting higher yield flyers who are traveling for work,
You cannot say Airlines now punish everyone, just the day after they pull these fares. Airline pricing is very dynamic. The long term effect is what matters.
@ TC -- Fair, we don't know the long term effect. My point is simply that as of now, Delta and United haven't dumped the fares that punish solo travelers, but instead, they've eliminated the fares that offer discounts to group travelers. Presumably only a tiny percentage of passengers were taking advantage of these fares (since we collectively only found out about this now), which is why I don't think we're going to see some...
@ TC -- Fair, we don't know the long term effect. My point is simply that as of now, Delta and United haven't dumped the fares that punish solo travelers, but instead, they've eliminated the fares that offer discounts to group travelers. Presumably only a tiny percentage of passengers were taking advantage of these fares (since we collectively only found out about this now), which is why I don't think we're going to see some big downward adjustment in fares.
If 0.1% of passengers were booking the cheaper fares, we're not going to see the airline just suddenly halve fares for everyone.
Fun fact from my Psychology undergrad days: in studies where a person is offered $1 but the other participant gets $2, or everyone gets nothing, most people offered $1 prefer to get nothing.
Why? Because if we are getting screwed then everyone gets screwed. For those of us who always fly solo, this outcome feels pretty good.
Would be curious if this hold true across cultures. Obviously, Americans are huge assholes, so this doesn’t surprise me at all.
Get your diarrhea of the fingers taken care of.
Hmm I don't think a huge penalty for solo travel was a good thing- we singles suffer enough various forms of effective discrimination already- but the arbitrary nature of their pricing now is a separate issue.
Hmm I don't think a huge penalty for solo travel was a good thing- we singles suffer enough various forms of effective discrimination already- but the arbitrary nature of their pricing now is a separate issue.
It is difficult to believe the regular or market price is $214 rather than $112. Their attitude is to shut people up for complaining. Best thing to do is boycott one airline at a time and make the others to behave moving forward....Start with United, then Delta......
Boomers and breeders are always complaining about their lack of advantage when society bends over backwards for them. "How dare you impact the privilege i have done nothing to earn?" We will be better off when that failed generation has moved on. As for the breeders, i guess we are stuck with their ignorance and privilege.
Couples and those with children think they deserve special treatment. It ain't a Boomer thing (but yes some older folks are greedy, just like X, Y, and Z will be). Boomers are going to make their children tremendously better off financially when they die. They saved and lived on the cheap, but you give them hate. But, I'm a good guy, so I won't hope you get treated the same in your old age.
You must then really hate your local public school. I wager many of the students have parents that pay very little in taxes comparatively. Why should their kids get a free ride?
There's another factor in the "higher fares for solo travelers" story that Ben Schlapigg and other travel writers have forgotten about. That is the ability of airlines that are not legacy carriers to not charge solo passengers higher prices with an eye toward filling their unsold seats. This is especially true of Southwest which has almost as many aircraft as each of the legacy carriers and has to be hurting right now because on that...
There's another factor in the "higher fares for solo travelers" story that Ben Schlapigg and other travel writers have forgotten about. That is the ability of airlines that are not legacy carriers to not charge solo passengers higher prices with an eye toward filling their unsold seats. This is especially true of Southwest which has almost as many aircraft as each of the legacy carriers and has to be hurting right now because on that airline, bags are no longer flying free. There's also competition from JetBlue, Alaska, Spirit, Frontier, Allegiant and Sun Country
With AI, someday airlines will ask you if the trip is for business. Speak in your comouter mic. AI would then use a lie detection algorithm. The fare would then display. Oh no!
There is a simple explanation for this. They got busted on what could be considered a questionable practice. If the airlines lowered the single fares to the couples pricing it would demonstrate that they were unfairly targeting solo travelers (who are often on work travel) and setting themselves up for a fairly massive class action suit. Now they have a defense that they were simply allowing for discounts for "bulk buying" but eliminated it -...
There is a simple explanation for this. They got busted on what could be considered a questionable practice. If the airlines lowered the single fares to the couples pricing it would demonstrate that they were unfairly targeting solo travelers (who are often on work travel) and setting themselves up for a fairly massive class action suit. Now they have a defense that they were simply allowing for discounts for "bulk buying" but eliminated it - which could be argued in their favor.
Much of this is way off base, but I’ll just say that any theoretical class action from this would’ve gone nowhere.
I'm not so sure.
1. Company charges more to target solo travelers who are often business oriented in their purchasing.
2. Company stealthy charges less to traveling pairs who are often leisure.
3. There is no offer or transparency as to discounted travel for two tickets. Thereby not disclosing the difference.
4. When discovered companies remove it quickly and say nothing in response.
Seems pretty clear. They got busted and there is...
I'm not so sure.
1. Company charges more to target solo travelers who are often business oriented in their purchasing.
2. Company stealthy charges less to traveling pairs who are often leisure.
3. There is no offer or transparency as to discounted travel for two tickets. Thereby not disclosing the difference.
4. When discovered companies remove it quickly and say nothing in response.
Seems pretty clear. They got busted and there is clear price gouging and targeting segments without regard to consumer fairness. It's like a shoe store seeing a perceived high roller coming in and removing quickly a "two for one" promotion sign and not informing them of this deal. It's shady af.
If you want cheaper flights the inputs need to be cheaper. It’s the opposite that’s happening now. Planes are getting more expensive, staff, food, maintenance, parts…
Tarifs are not going to help (no matter how you feel about them).
All people flying should be able to pay the lowest offered price. Your familial or group status should not discourage or encourage anyone to travel. One seat one person , why should anyone be charged more or less. A large group takes up more space why should they have a discount especially for popular routes?
As a single person living in a world of couples, This is still a victory. Everything from a pool visit down to grocery pack quantities is geared toward more than one person. If everyone has to pay more to make things fair, then so be it. I'm not trying to say this is the last bastion of discrimination in the world today, because there are plenty of other holdouts , many more egregious, still to be addressed, but I'll take this small victory.
“The Choice of Life” …. “The Prince of Abissinia”, First or Second Edition that is the question for you rass?
Your life must be hell. Maybe get some cats.
Get rid of federal regulations stopping the building of airports or expanding airports.
This is a supply issue and it's due to the same issue that causes housing to be too expensive: too many regulations, period.
Deregulating allows competition to thrive and we really need all of the old airlines to go bankrupt and wiped from existence. New airlines will take their place with no debt and new methods to lower prices.
Thanks for your take from remedial economics for Republicans.
Airports in the United States are actually heavily subsidized compared to their counterparts in other countries. Airports are incredibly expensive to build and incredibly expensive to run, and it's not simply a matter of too many regulations.
Land alone is an extraordinary expense. In many locations, airports are not a constraint on new service, and in the places where airports are a constraint, land is extraordinarily costly. Passengers in the New York market have shown...
Airports in the United States are actually heavily subsidized compared to their counterparts in other countries. Airports are incredibly expensive to build and incredibly expensive to run, and it's not simply a matter of too many regulations.
Land alone is an extraordinary expense. In many locations, airports are not a constraint on new service, and in the places where airports are a constraint, land is extraordinarily costly. Passengers in the New York market have shown themselves to be unwilling to fly from EWF, unwilling to fly to TTN and unwilling to fly from ISP. But where, exactly, would you put an airport closer than that to New York? Nowhere that could pay for itself running an airport.
Internalizing the full costs of airports (which I think we should do!) would likely result in a smaller domestic aviation market, more similar to that in Canada.
(I would also just point out that the major airlines all went through a major round of bankruptcies less than two decades ago, and what you predict didn't happen.)
I'm so old I remember before Carter's deregulation (of everything, not just airlines), schedules had fares printed in INK. The CAB regulated both fares and schedules to provide service that had a reasonable margin for airlines. Carriers competed on service quality, imagine that!
It has been a race to the bottom ever since. How many carriers went belly-up? Sure, inflation adjusted fares are cheaper but service is abysmal. You are nickel and dimed for seating,...
I'm so old I remember before Carter's deregulation (of everything, not just airlines), schedules had fares printed in INK. The CAB regulated both fares and schedules to provide service that had a reasonable margin for airlines. Carriers competed on service quality, imagine that!
It has been a race to the bottom ever since. How many carriers went belly-up? Sure, inflation adjusted fares are cheaper but service is abysmal. You are nickel and dimed for seating, food, changes, bags, etc. And IROPs for any reason strand thousands of travelers for days without compensation. Industry consolidation reduced competition and yields an oligopoly of take-it-or-leave-it attitude of executives, management and workers.
Deregulation of everything is crapification.
You can't simultaneously argue that fares are (adjusted for inflation) considerably lower and then criticize fees when the net-of-inflation cost with fees is still a crazy bargain to old prices. Was service/meals/pitch better? Heck yes. But offer 1970 service/meals/pitch at 1970 prices, adjusted for inflation, you'll sell, what, 10% of your seats.
Airlines must be re-regulated.
@ Alecta -- How would that benefit consumers?
Wider seats maybe.
I am not sure that more transparency in fare pricing is a bad thing. In this case, perhaps they eliminated the 'discount', but I am always going to be for MORE transparency in pricing.
@ bitterproffit -- What specifically does transparency in airfare pricing look like to you? Regulating fares, and having airlines publish them, with no variability?
Transparency would look like disclosing that there are discounts for buying 2 or more tix.
I have no problem with the different prices, I have a problem with the airlines acting like they got caught doing something wrong when their pricing strategy was made public.
I don't see a role of the government in this. I think bloggers helping make pricing MORE transparent is a good thing.
Why? Would single passengers really buy two tickets if they saw? Unlikely. This is the kind of “transparency” that causes information overload and buries the information people actually care about and would benefit most from knowing.
This is literally why we coined the term "bloggers killed the deal".
Eskimo, please help me to understand your post …. seriously, I have a genuine interest in this subject and therefore would value your opinion.
Just get divorced, you'll thank me later.
Really rass, you would advocate ending a healthy love/hate relationship? Are you after Eskimo too …. :-)
Compared to most I am very naive when it comes to the U.S. commercial airline industry. The one thing which I have picked up from this website is just how fragile the industry appears to be. Am I missing something or is my assumption altogether wrong?
@ AeroB13a -- I'm not sure what part of the industry you're specifically referring to, but yes, businesses don't get much more fragile than the US airline industry!
Thank you Ben, it is the U.S. airline industry to which I was referring.
I wonder if it's a temporary issue - as someone who has no idea how fares get published/updated but a knows bit about similar types of systems, if the airlines are trying to pull the fares as fast as possible, I could see it being easier to just 'delete' the fares with the restriction than having to update the fare to remove the restriction. Could also be they are removing the fares and once that...
I wonder if it's a temporary issue - as someone who has no idea how fares get published/updated but a knows bit about similar types of systems, if the airlines are trying to pull the fares as fast as possible, I could see it being easier to just 'delete' the fares with the restriction than having to update the fare to remove the restriction. Could also be they are removing the fares and once that is done, replacing them with identical fares that don't have the restriction.
@ BeeDazzle -- Fares are constantly updated, so you're right that it's possible these fares were just pulled for now.
I think the bigger point is that clearly almost no one knew about there being cheaper pricing for two or more travelers, which is why this became national news. So let's (very generously) say that 1% of travelers were actually benefiting from this trick.
I wouldn't expect that the long term response will be that...
@ BeeDazzle -- Fares are constantly updated, so you're right that it's possible these fares were just pulled for now.
I think the bigger point is that clearly almost no one knew about there being cheaper pricing for two or more travelers, which is why this became national news. So let's (very generously) say that 1% of travelers were actually benefiting from this trick.
I wouldn't expect that the long term response will be that airlines halve fares for 99% of passengers, rather than just eliminating the discount for 1% of passengers.
Too bad that I didn't get to test it out but wonder what would have happened if I bought 2 tickets with discount and cancel one of them in 24 hours.
Would that have allowed the same discounted pricing for a single traveler?
@ Kair -- I don't have any firsthand experience, but given that it violates the fare rules, I suspect those fares couldn't be repriced in that way, as it would trigger a fare change. Someone correct me if I'm wrong.
you are probably right. Only if the 2 tickets together were less than a single ticket would the airline care if you only flew one of the 2. the second would have no value.
and you are right that it is bad news that some form of discount is being lost even temporarily for some passengers.
the big 3 esp. are very sensitive to public criticism and this was a very minor fare product but apparently largely used in their hubs, so easy to remove.
Almost certainly the 24-hour cancel rule would have meant you could cancel the entire reservation, not just one ticket.
But I was thinking that, if you teamed up with another traveler and waited until cost to the flight, then cancelled one ticket for credit, whether that would work.
As a single person, the prior “discount” was an unfair business practice, in my opinion.
Let’s imagine the following hypothetical: airlines somehow gather the data that from 8-10pm on Tuesdays, a particular demographic group (to which you don’t belong) disproportionately purchases more tickets during this time. Would you be just as cool if fares tended to dip a bit on Tuesdays from 8-10pm?
@ Simon -- I hear you, but literally everything about airline pricing is discriminatory. It's not like a restaurant, where everyone more or less pays the same for a particular meal. On an airplane, you could have 100 people onboard, and every single person paid a different amount, with some people paying 1000% more for the same seat than the person next to them.
Is it fair that someone could pay more to fly from...
@ Simon -- I hear you, but literally everything about airline pricing is discriminatory. It's not like a restaurant, where everyone more or less pays the same for a particular meal. On an airplane, you could have 100 people onboard, and every single person paid a different amount, with some people paying 1000% more for the same seat than the person next to them.
Is it fair that someone could pay more to fly from TPA to MIA than from TPA to MIA to LAX, with that first flight being exactly the same? Yet we accept that as a standard practice.
Yeah, that's fair. By the way, what happens if there's only 1 seat left in the lowest fare class? For 2 tickets, whether the system sells both seats from the next fare class or one from the lowest and the other from the next available, either way the per-ticket-price is going to show up higher for 2 tickets vs 1.
@ Simon -- The airline wouldn't sell two tickets if there were only one seat left in the fare class, so it would be priced at the higher fare level.
I'm a single traveler, so, of course, I'm not thrilled with this practice. But, this is just price discrimination that makes sense, just like senior discounts in other areas. It also explains why that double burger is only 20% more when the food costs nearly double. I've taught the economic logic of price discrimination; I'm hard pressed to be offended at its use.
Traitor. Go get married or something.
The problem is those dumb enough to marry me have a conservator.
"airline pricing isn’t determined based on airline costs and what margin they need to be profitable, but instead, based on what consumers are willing to pay".
I think I understand what you wanted to say here, but that phrasing is very clumsy. We're talking a low-margin business- if consumers aren't collectively willing to pay the operating costs of a flight, the route will end up getting axed.
Overall , the fact that airlines haven't...
"airline pricing isn’t determined based on airline costs and what margin they need to be profitable, but instead, based on what consumers are willing to pay".
I think I understand what you wanted to say here, but that phrasing is very clumsy. We're talking a low-margin business- if consumers aren't collectively willing to pay the operating costs of a flight, the route will end up getting axed.
Overall , the fact that airlines haven't fully adjusted their pricing models immediately after canning the 'stealth' companion fares is neither here nor there. They can't get away with a profit margin of 40% or whatever, so they'll inevitably correct any anomalies once they have tinkered with the pricing algorithms.
@ Throwawayname -- "We're talking a low-margin business- if consumers aren't collectively willing to pay the operating costs of a flight, the route will end up getting axed."
I'd disagree with that take, and that's the point I was trying to make. After all, look at the number of US airlines that have negative operating margins year after year. Spirit had a negative operating margin of 20%+ last year.
My takeaway from what @throwawayname said was that the quick reversion to the single traveller fare was just their immediate reaction to the pressure. Given more time they will rework all their fare algorithms removing the number of travellers as one of the variables. They may introduce an openly advertised discount for group bookings, perhaps only available selectively, even for groups of two. The covert nature of the previous policy seems to be the main...
My takeaway from what @throwawayname said was that the quick reversion to the single traveller fare was just their immediate reaction to the pressure. Given more time they will rework all their fare algorithms removing the number of travellers as one of the variables. They may introduce an openly advertised discount for group bookings, perhaps only available selectively, even for groups of two. The covert nature of the previous policy seems to be the main issue with it.
@ Mike C -- It's entirely possible you're right. The only thing I'd say regarding the restriction being "covert" is that I think just about all airline price discrimination works that way.
It's not like airlines advertise "hey, you're going to pay more money for a nonstop flight, and if you add a segment to an itinerary, it will probably lower the fare."
@Ben, US airlines cross-subsidise their flight losses through selling miles, and various state-owned airlines around the world live on the taxpayer dime, but generally operating commercial flights is a low-margin business.
The important distinction in my view is that price discrimination isn't a proverbial licence for airlines to print money, but an essential way of ensuring the financial sustainability of routes for which demand is constrained either because of the type of person who...
@Ben, US airlines cross-subsidise their flight losses through selling miles, and various state-owned airlines around the world live on the taxpayer dime, but generally operating commercial flights is a low-margin business.
The important distinction in my view is that price discrimination isn't a proverbial licence for airlines to print money, but an essential way of ensuring the financial sustainability of routes for which demand is constrained either because of the type of person who typically needs/wants to fly (e.g. you're not going to get a huge amount of people with a burning desire to fly between Canada and Sweden for leisure- if you want to start a nonstop service you'll need to recover the flight costs by getting those travelling for work to pay a premium for it) or the seasonality of travel patterns (not many French people are interested in going to Greece in February).
I don't think that anyone could disagree with what @Dave W has written.
Ben, let's be honest with the readers here. Flying planes isn't the profitable part of the business for the big three airlines these days. These guys are just banks disguised as airlines. It's fair to just say that this is a negative margin business.
I feel like this is the same issue as grocery stores requiring you to buy a minimum number of 12 packs of soda to get a discount and you just so...
Ben, let's be honest with the readers here. Flying planes isn't the profitable part of the business for the big three airlines these days. These guys are just banks disguised as airlines. It's fair to just say that this is a negative margin business.
I feel like this is the same issue as grocery stores requiring you to buy a minimum number of 12 packs of soda to get a discount and you just so happen to not have a car. I get that you need to go low to get folks in the door, but any restriction on the consumption of the product is discriminatory by nature against a specific population.
The fastest way to drive fares down is to make the ULCC's bottom lines great again.
It's not about being a low-margin business (i.e., "profits" as a percentage of sales is low). It is the marginal cost of an additional customer on flight 1862 is near zero. You would experience near the same costs if the flight flew with 1 or with every seat filled. So, essentially the airline can simply act to maximize the revenue they receive for that flight. This is true for sellers of software. It is not...
It's not about being a low-margin business (i.e., "profits" as a percentage of sales is low). It is the marginal cost of an additional customer on flight 1862 is near zero. You would experience near the same costs if the flight flew with 1 or with every seat filled. So, essentially the airline can simply act to maximize the revenue they receive for that flight. This is true for sellers of software. It is not the case for automobile msnufacturers, who must consider marginal costs and revenues.