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The US used to have a fixed prices for flights, set by the Civil Aeronautics Board. There ended up being a lot of gimmickry with how airlines competed with each
by codekansas 3y ago
The US used to have a fixed prices for flights, set by the Civil Aeronautics Board. There ended up being a lot of gimmickry with how airlines competed with each other - for example, airlines would do stuff like fly more flights than they needed to, so they could point to all the empty seats and ask the CAB to raise prices for their route to offset the money they were losing.
But maybe this time price controls will be different.
- lr1970 3y ago> so they could point to all the empty seats and ask the CAB to raise prices for their route to offset the money they were losing. Strange market logic. Normally you lower the prices to increase demand and fill those empty seats. Raising prices will only make more seats go empty.
- codekansas 3y agoWell prices for those customers were relatively inelastic (think, business flights being comped by the employer, airlines having quasi-monopolies on routes) so the airlines knew they could raise prices without impacting demand. Conversely lowering prices likely wouldn't impact demand either. The sensible thing to do under normal market conditions would be to fly fewer flights, but when a central planner is setting your prices it changes the logic.