Price Discrimination

Good Essays
Price Discrimination in Airline Industries
Jennifer Solomon
University of Maryland University College

In many cases we run into industries that charge various customers different values for an identical good. These industries find that they intensify their revenues by using this method. Those industries that aid by this structure of moneymaking have participated in price discrimination. When you are boarding a flight I am sure you know that the passengers around you have not paid the same price as you. Is price discrimination suitable or unsuitable for airline passengers? While still analyzing your surrounding son the plane I am sure you may come to realize that there may be some passengers who paid up to five times as much as you. This is sometimes based on the date they purchased their ticket. Price discrimination is based on the charging of various values to different consumers. The seller does have some control over the price, buyers have different price elasticity’s of demand, and resale of the ticket by the buyer is not possible. (Airline Industry Ideal for Price Discrimination) Each ticket can be sold at a different rate; each and every ticket that is sold through these airlines varies on a number of different reasons. Price also depends on the way the tickets are booked and when the travel will take place. Is price discrimination suitable or unsuitable for airline passengers? The consumer buys the best deal they can find which may come with flying restrictions. If they want extra luggage or food, they may have to pay a little more to have a satisfying flight. Taking a closer look at the competitive market we will analyze the affects the competition may have on price discrimination. As stated in the article published by FRBB, “ The more competitive the market, the greater the price discrimination on the route” (Stains). As a market experiences more competition it is essential for airlines to lower their airfare. Price



Cited: “Airline industry ideal for price discrimination.” ETN Global Travel Industry News. (4-10-2011) 12 Apr. 2012 Stavins, Joanna. “Price Discrimination in the Airline Market: The Effect of Market Concentration.” Federal Reserve Band of Boston. 15-Apr. 2012 “When price competition heats up, we pay for it in hidden fees.” Pioneer Press. 15 Apr. 2012

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