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Airline ticket pricing probably seems like a crapshoot.
The numbers change seemingly arbitrarily every week, day, or hour
but there’s some real science behind these prices
People spend their whole lives figuring out what to charge you to fly
Let’s take a look at one flight on one route by one airline to understand
American Flight 33 leaves New York’s JFK airport every day at 7 a.m.
and bound for Los Angeles arriving at 10:51 a.m. Pacific time
This transcontinental route is one of the most competitive in the world
with over 3.5 million yearly passengers,
and five major airlines connecting the country’s two largest cities
There’s nowhere where pricing strategies are more important for airlines than here
Looking at three months of fares for this flight,
there are eight distinct prices for economy
ranging from $129 to $472
These all get you on the exact same flight in the exact same seat
but each and every price has a purpose and place
The lowest price $129, is the most competitive price
在三个月内 这个价格只出现过三次 每次都出现在周二
This fare only shows up three times in our three month span, each time on Tuesdays
Now, Tuesdays are very often the cheapest days of the week to fly
Business travelers tend to make up much of the demand during the week
and they most often want to fly out on Mondays,
and return on Thursdays or Fridays
So Mondays, Thursdays, and Fridays,
tend to be the most expensive travel days
or Tuesdays and Wednesdays are often the cheapest
The average ticket price for this flight shows this:
Tuesdays average $ 182 and Wednesdays $173
Even if the demand is lower
American airlines run this flight anyways
and they have to fill seats to break even
so they sell this flight at rock-bottom prices
The next price $144,
actually demonstrates a very interesting phenomenon
Whenever American prices their flight at $144, they are not alone
Take March 6th for example
美国航空 达美航空 维珍航空 捷蓝航空 及美国联航
American, Delta, Virgin America, JetBlue and United
all have flights from New York to L.A
at around 7 in the morning selling for $144
They’re doing what is called the price matching
Because this is one of the most competitive routes in the world
and because the number one determinant for travelers
on which airline they take is price
all five airlines flying this route match each others’ prices
This way, travelers make their decision
based off the reputation of each airline rather than the price
The price stays at $ 144
because it’s in each airlines the best interest to keep it there
In a normal market, if Delta for example,
dropped their price to $ 119
they would get more travlers since they were the cheapest
but in this price matched market all the other airlines
would drop their prices as soon as Delta drops theirs
如此一来 吸引的旅客数量与之前一样 但利润却少了很多
so all of them would get the same amount of travelers as before while earning less money
But there are some cases where it can make business sense for airlines
to drop prices to below even being profitable
Around the year 2000,
WestJet and the now defunct CanJet airline
started flying from central Canada to Newfoundland
These routes were historically operated exclusively by Air Canada,
and they were expensive
A one-way flight from Montreal in 1999 cost over $ 600
But when the budget airlines WestJet and CanJet started flying the route,
prices dropped dramatically and Air Canada was threatened
So they dropped their prices even lower
The $600 Air Canada fares then cost $89
Now, it wouldn’t make sense for anyone
to fly a buget airline over Air Canada at the same price
So WestJet and CanJet were almost driven out of business on these routes
until Canada’s Competition Bureau stepped in
They concluded that Air Canada was engaging in the uncompetitive action of predatory pricing
since they were pricing flights below what it cost to operate them
So they were forced to stop
Airlines in the US, with some newly strong budget competitors,
are engaging in similar actions nowadays
United airlines for example,
is matching Frontier’s $ 40 fares on many days
from Denver to Chicago, among other routes
in order to maintain their market stronghold in Denver and Chicago
Even though their cost to operate the route is drastically higher than Frontier,
so they are almost certainly loosing money on those fares
But back to the New York to LA route
$159 is the lowest regular fare for this flight
The $ 129 and $ 144 price points were both basic economic fares
the most restrictive type with no seat selection,
no carry on bags and no changes or refunds.
Every flight has a bunch of different booking classes each with a fare code
For example, the basic economy fare code for the $ 129 and $ 144 price is “B”
but the $ 159 price books into fare code “N”
These different booking classes are sometimes known as fare buckets
Essentially the airline decides it’s going to sell a certain number of tickets
at the $159 price with fare code “N”, let’s say 10
Then when those “N” tickets are sold,
the airline then sells economy at fare code G for 204
而当这些票售完之后 航司继续出售运价代码为V 售价为269美元的机票
then when those are sold, it sells economy at fare code V for $ 269
然后是运价代码为L 售价为318美元的机票 以此类推
and then fare code “L” for $ 318 and so on and so forth
There are also some cases
where a ticket will default to a more expensive fare bucket
because of reasons other than a lower fare selling out
Many fares, including each mentioned so far,
have advance purchase requirements meaning that
even if a flight is not full at all,
the price will increase closer to departure
All the fares below $ 204 have an advance purchase requirement of two weeks
meaning that you can only purchase them more than two weeks before departure
While the $ 269 fare for example,
has an advance purchase requirement of only one week
Although the cheapest fare without an advanced purchase requirement at all
that is, the cheapest fare that you could buy day-of for this flight is fare class K at $ 472
which happens to be the most expensive economy class fare
And now for some caveats,
Not every fare for this flight is going to be priced at one of these eight prices
Airlines have mechanisms to adjust fares from these buckets
In the short-term, they can adjust things like the fuel surcharge to raise the price
if other factors, like oil prices increase
In the long term, they can adjust the actual prices
of the different fare buckets.
Airlines often increase the base fares for busy seasons like summer
American Airlines does exactly that
on this New York to LA route where their fare class “M” for example,
increases from $357 to $410in August
But so far we’ve looked at this
on a micro level—how prices differ on one flight—but
we also have to consider in the macro level
Why if you leave on Tuesday February 6th
and fly 2469 miles to the west LA
and you pay $ 129 while if you fly 3,442 miles
to the east to London—only a thousand miles further
than LA—you pay $2,772.
Well, the second figure is a bit deceptive
because that’s the price of a one-way ticket.
If you switch the LA flight to a
round-trip ticket returning a week later it will cost
$ 257—exactly double—while
if you turn the London flight into a round-trip returning
a week later the price will drop to $ 602—almost five times less.
This is understandably confusing—a one-way ticket
more expensive than a roundtrip
but the reason this is goes back to the fare codes.
Embedded within each fare code are a bunch of
little restrictions that dictate when you can use that fare.
On the New York to LA trip
those restrictions are just things like blackout dates for the fare
and advance purchase requirements,
but the New York to London ticket has loads more restrictions and
the ones that make one-ways more expensive than round-trips
are the minimum stay requirements.
These requirements dictate how soon your return flight can be
in order to get a particular fare.
The idea is to price discriminate—business
travelers should pay more because they can pay more.
Meanwhile, airlines try to give the lowest prices to leisure travelers since
they’re the ones paying for their own tickets and therefore they’re the ones
that are the most price sensitive.
Business travelers often want to be home for the weekend,
so many of these minimum stay requirements,
比如运价代码为Q N S 的机票
like with fares Q, N, and S,
just require a Sunday at your destination.
Others, trying to accomplish the same thing,
require seven days, a full week, which would
also require a traveller to stay the weekendat their destination.
Now as the prices go up the requirements go down
so once you get to paying around $ 2000
you can stay for as few as three days,
but the cheapest roundtrip base airfare
with no stay requirement at all is $ 5,544 in fare class Y
—exactly double the one way price.
So that explains this—the one way ticket is so expensive because,
since the airline doesn’t know how long the traveller will stay at their destination
the one-way fare has to be booked
into the least restrictive fare class
without the minimum stay requirement.
You’ll see this idea of price discriminationall over ticketing structures.
It’s a genius pricing concept that
allows different people to buy products at the prices
they can afford and therefore
it allows businesses to sell the same product to more people.
Tickets increase in price closer to departure
because leisure travelers buy tickets far-out
and business travelers buy their tickets close to departure
and flexible tickets are more expensive
because that’s what business travelers need,
but there’s another pricing difference
going on that’s less fair—between routes.
It’s all about competition.
Different routes of the same distance
cost different amounts generally not because
they cost different amounts to operate,
but because of how much the competitors are charging.
This is part of why flights into small airports are so
expensive—because they lack competition.
You can fly the 240 miles from Detroit to Pellston,
Michigan on a CRJ 200 for $ 242 or
you can fly the 170 miles from Detroit to South Bend,Indiana
on a CRJ 200 for $ 76.
唯一的区别是美国联航 达美航空 忠实航空均有航班
The only difference is that South Bend Airport has flights
from United, Delta, and Allegiant
while Pellston only has flights from Delta.
The same phenomenon happens over the Atlantic.
There’s more competition on the six hour flight
from New York to LA than on the six-hour flight
from New York to Dublin
so you can fly to LA for $ 250 round trip
while Dublin cost $500 round trip.
Of course, travelers from New York to LA can drive,
take the bus, take the train,
or take a flight connecting halfway there
但前往都柏林 旅客只有一个选择 坐飞机
or travelers to Dublin only have one choice—to fly.
In all, the truth is that prices reflect what people will pay
and so people will pay what flights are priced.
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