Airline Ticket Prices
Airline Ticket Prices
Jodie L. Hebner
Grantham University
An airline’s ticket price is determined by several factors to include time of day a consumer wishes to travel, day of the week such as Tuesday’s and Thursday’s are usually the most affordable days to travel, popular versus non-popular destinations, first class costs more than general class, cost of fuel, competition from other airlines, special factors such as discounts for military, government or corporate personnel, (How Stuff Works, n.d.) Airlines are constantly analyzing how much consumers are willing to pay and pushing consumers to pay more.
Airlines have used numerous models and computer programs to manage revenue throughout time. These models and computer programs have become increasingly complex and expensive, over a million dollars. However, these older models and computer programs have been phased out due to the low-fare program that many airlines switched to for a while. “Low-fare carriers do have models to manage revenue, but they’re very simple: Prices tend to step up steadily as a flight date nears, and travelers who want flexibility — a refundable ticket, perhaps — pay more.” (NBC News, 2008) The problem with this marketing of tickets is that “locking buckets of seats into specific fares — left airlines with empty seats, losing money.” (NBC News, 2008) More airlines are using bidding wars to sale their tickets, increasing the price of the ticket over time. The highest bidder wins the ticket proving that people will pay for what they want. “The new system accommodates the proliferation of new ways to buy plane tickets, including discounters and online markets such as Priceline and Hotwire, which sell “distressed inventory” that airlines would otherwise write off.” (NBC News, 2008)
Now to compare why an airline ticket costs the same from Casper, Wyoming to Denver, Colorado, and from Denver, Colorado to Orlando, Florida. Logically this makes no sense considering the difference in distance
Jodie L. Hebner
Grantham University
An airline’s ticket price is determined by several factors to include time of day a consumer wishes to travel, day of the week such as Tuesday’s and Thursday’s are usually the most affordable days to travel, popular versus non-popular destinations, first class costs more than general class, cost of fuel, competition from other airlines, special factors such as discounts for military, government or corporate personnel, (How Stuff Works, n.d.) Airlines are constantly analyzing how much consumers are willing to pay and pushing consumers to pay more.
Airlines have used numerous models and computer programs to manage revenue throughout time. These models and computer programs have become increasingly complex and expensive, over a million dollars. However, these older models and computer programs have been phased out due to the low-fare program that many airlines switched to for a while. “Low-fare carriers do have models to manage revenue, but they’re very simple: Prices tend to step up steadily as a flight date nears, and travelers who want flexibility — a refundable ticket, perhaps — pay more.” (NBC News, 2008) The problem with this marketing of tickets is that “locking buckets of seats into specific fares — left airlines with empty seats, losing money.” (NBC News, 2008) More airlines are using bidding wars to sale their tickets, increasing the price of the ticket over time. The highest bidder wins the ticket proving that people will pay for what they want. “The new system accommodates the proliferation of new ways to buy plane tickets, including discounters and online markets such as Priceline and Hotwire, which sell “distressed inventory” that airlines would otherwise write off.” (NBC News, 2008)
Now to compare why an airline ticket costs the same from Casper, Wyoming to Denver, Colorado, and from Denver, Colorado to Orlando, Florida. Logically this makes no sense considering the difference in distance
References: Consumerism (2011, March 4). Supply and Demand Goes Both Ways - Beating Broke | Beating Broke. Retrieved May 14, 2013, from http://www.beatingbroke.com/supply-and-demand-goes-both-ways/ How Stuff Works (n.d.). HowStuffWorks "How Airlines Work". Retrieved May 14, 2013, from http://science.howstuffworks.com/transport/flight/modern/airline4.htm Kons, A. (n.d.). Understanding the Chaos of Airline Pricing. The Park Place Economist, 8, 15-29. Retrieved from http://www.iwu.edu/economics/PPE08/alex.pdf McCartney, S. (2010). Decoding Airline Ticket Costs. The Wall Street Journal. Retrieved from http://www.etopaz.com/news/3/57/Decoding-Airline-Ticket-Costs-WJS-com NBC News (2008, May 8). Inside the mysteries of airline fares - Business - US business - Aviation | NBC News. Retrieved May 14, 2013, from http://www.nbcnews.com/id/3073548/ns/business-us_business/t/inside-mysteries-airline-fares/#.UZLPd5UylUQ Smith, A. (2011, March 4). Rising airfares could overtake their 2008 peak - Mar. 3, 2011. Retrieved May 14, 2013, from http://money.cnn.com/2011/03/03/pf/saving/rising_airfare/index.htm