Re: destination versus routing pricing

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Go back to Economics 101.  Competition (i.e. the marketplace) DOES force
airlines to charge the same, in any business.

Example:
Two cities have a large number of passengers flying between them. Airline A
flies nonstop between them while Airline B needs to send them through their
hub, which happens to be 200 miles out of the way. Airline B would be shooting
itself in the foot if it decided that the competition didn't matter and charged
a higher fare due to the longer distance using the hub.

So competition DOES force Airline B to charge the same if it wants the
passengers who are flying between the two cities.

David R
> Competition doesn't *force* the airlines to charge the same, but they
> do. (Unless of course, that without the business their seats would be
> empty.. which of course is not really competition forcing them, but
> rather inflexible labour contracts!... but we digress.)
>
> Airline 1: Boise, ID to Kansas City, MO - $100
>
> Why would Airline 2, who's never going to offer such a direct flight,
> match the price?  In many cases they do.
>
> Airline 2 is going to fly your through Denver (more miles = more
> expensive) but likely do it with more expensive operating costs (making
> it even MORE expensive.)
>
> It's a pissing war that unless Airline 2 offers a direct flight, or has
> labour costs so much lower than Airline 1 that dragging you through
> Denver makes it worth their while. Neither which I think is going to
> happen.
>
> Someone might argue that Airline 2 needs to only have a competitive
> price but can rely on the loyalty factor due to their FF program. But
> I'm guessing that loyalty on airlines will only sway for a small
> difference in price.
>
> Ugly..
>
> Matthew
>
>
>
>
> On Thursday, September 18, 2003, at 10:45  AM, damiross2@xxxxxxxxxxx
> wrote:
>
> > a) competition forces airlines to charge the same between 2 cities,
> > regardless
> > of routing
> >
> > b) Southwest does if you chose to fly between 2 cities on flights that
> > are not
> > shown in the timetable.  For example, if you want to fly from Oakland
> > to
> > Dallas, you would have to chose your own connecting flights as this
> > routing is
> > not shown in the timetable.
> >
> > David R
> >> Never understood this:
> >>
> >> Airlines can price their airfares based on either:
> >>
> >> a) Origin and Destination (regardless of routing)
> >> b) By actual legs.
> >>
> >> Why do most airlines choose a) ?
> >>
> >> Which ones follow b)?
> >>
> >> I get the "got-to-steal-those customers" angle, but why would any
> >> business (especially a capital and operating cost intensive one) want
> >> the revenue model to be completely disconnected from the cost
> >> structure?
> >>
> >> Matthew

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