4 ms·

Why do the airlines care? They got their money. Or is it just that they missed the opportunity to gouge you?

larrydag 12y ago
maximizing profit per passenger I suppose. There seems to be so much competition that even improving 10% on profit can mean a lot to airlines. One reason why we are seeing baggage fees now.
- fennecfoxen 12y ago
  I believe I've read that baggage-handling expenses are estimated to run somewhere around $10 for the typical bag. Instead of giving that service away for free, they can ask for that $10 as baggage fees, reducing the price of the ticket on a price-comparison website by ($10 * avg_bags_per_pax) and attracting more business.
TeMPOraL 12y ago
Because flying a jet is much more expensive that an average traveller thinks. From what I read somewhere (can't find the source right now, but the math sounds right), the total value of collected fares for a plane full of typical passengers is not enough to even tank a jet and pay the pilots and the crew. Airlines operate at a loss. Flight fares are an extremely sophisticated kind of segmented pricing (done by machines, not humans), and people cheating like this screw with the airline's ability to keep flying some-what affordable to everyone. For a detailed explanation of airline ticket pricing, take a look at this ITA presentation: https://static.googleusercontent.com/media/www.itasoftware.com/en//pdf/ComplexityofArlineTravelPlanning_Carl_Sep-03.pdf https://static.googleusercontent.com/media/www.itasoftware.c...
- nmjohn 12y ago
  > and people cheating like this screw with the airline's No. That is not cheating. The airlines offer something for sale and I buy it. If buying a third ticket makes my entire trip cheaper - it would be illogical for me not to buy it. And whether or not I use it is entirely up to me. The problem is the airlines are using inefficient and illogical pricing - for a whole host of reasons including incompetency and unwillingness to adapt to a changing marketplace. > to keep flying some-what affordable to everyone. Saying this keeps flying affordable for all is a "feel-good" argument - it has no substance.
  - fmx 12y ago
    No, you are not buying what they are offering. They are offering a ticket on certain conditions, which include not doing this. If you do not accept those conditions then you are not allowed to buy the ticket.
    - nmjohn 12y ago
      > No, you are not buying what they are offering. They are offering a ticket on certain conditions, which include not doing this. If you do not accept those conditions then you are not allowed to buy the ticket. They can state whatever conditions they want - that doesn't mean anyone has to follow them, they are legal, they are enforceable, or they can do anything about them. Moreover, what if I have a three-leg trip and after the second flight learn that my sister who happens to live in city #2 is in the hospital with a 50% chance to live? I'm not taking that third flight, I'm going straight to the hospital and will consider myself lucky I ended up in that city. There are far to many extenuating circumstances that an airline could not possibly be aware to actually have this policy.
  - TeMPOraL 12y ago
    > The problem is the airlines are using inefficient and illogical pricing - for a whole host of reasons including incompetency and unwillingness to adapt to a changing marketplace. Please read the presentation I linked to before asserting that the pricing is "illogical" and a result of "incompetency".
    - ufmace 12y ago
      I read through it. What strikes me is that the airlines have intentionally created a system so complex that the most basic task of getting a price to fly from one city to another at a given time is apparently provably impossible to do properly. This isn't some part of nature that's complex because that's the way that it is, this is a system entirely designed by humans. It's kinda like putting somebody in a life-threatening situation, then saving them from it, then claiming that you saved their life. Through the whole creation of this system, and whatever steps it went through to end up being this complex, did nobody ever say "Guys, this is all just too freakin' complex. Why don't we simplify it so that we don't need a bunch of geniuses to figure out a way for a person to buy a ticket on one of our flights?"
fennecfoxen 12y ago
The airlines care because they are attempting to engage in price discrimination -- charging different prices for the same product to different people, roughly in line with these peoples' ability and willingness to pay. It does feel dirty, but it's worth tempering that emotional evaluation with the knowledge that, in those places where two or more airlines are competing for customers, they are very competitive indeed, and tend to operate on razor-thin margins (sometimes even negative margins! Airline profitability has been a recurring problem for those who have attempted to invest in them as businesses.) A system which is more predictable and feels less exploitative may in fact end up substantially more expensive and less convenient for all fliers (especially those now buying the cheapest tickets) and less profitable for the airlines as well. (In Econ 101 terms, this is to say that fare regulations would have the potential of making the market less efficient and creating a deadweight loss to society.)
- avz 12y ago
  I wonder whether this assessment of the market efficiency and benefits to society brought on by price discrimination would change if we account for the time and effort people spend on trying to game the system.

maximizing profit per passenger I suppose. There seems to be so much competition that even improving 10% on profit can mean a lot to airlines. One reason why we are seeing baggage fees now.

fennecfoxen 12y ago
I believe I've read that baggage-handling expenses are estimated to run somewhere around $10 for the typical bag. Instead of giving that service away for free, they can ask for that $10 as baggage fees, reducing the price of the ticket on a price-comparison website by ($10 * avg_bags_per_pax) and attracting more business.

TeMPOraL 12y ago

Because flying a jet is much more expensive that an average traveller thinks. From what I read somewhere (can't find the source right now, but the math sounds right), the total value of collected fares for a plane full of typical passengers is not enough to even tank a jet and pay the pilots and the crew. Airlines operate at a loss. Flight fares are an extremely sophisticated kind of segmented pricing (done by machines, not humans), and people cheating like this screw with the airline's ability to keep flying some-what affordable to everyone. For a detailed explanation of airline ticket pricing, take a look at this ITA presentation: https://static.googleusercontent.com/media/www.itasoftware.com/en//pdf/ComplexityofArlineTravelPlanning_Carl_Sep-03.pdf https://static.googleusercontent.com/media/www.itasoftware.c...

nmjohn 12y ago
> and people cheating like this screw with the airline's No. That is not cheating. The airlines offer something for sale and I buy it. If buying a third ticket makes my entire trip cheaper - it would be illogical for me not to buy it. And whether or not I use it is entirely up to me. The problem is the airlines are using inefficient and illogical pricing - for a whole host of reasons including incompetency and unwillingness to adapt to a changing marketplace. > to keep flying some-what affordable to everyone. Saying this keeps flying affordable for all is a "feel-good" argument - it has no substance.
- fmx 12y ago
  No, you are not buying what they are offering. They are offering a ticket on certain conditions, which include not doing this. If you do not accept those conditions then you are not allowed to buy the ticket.
  - nmjohn 12y ago
    > No, you are not buying what they are offering. They are offering a ticket on certain conditions, which include not doing this. If you do not accept those conditions then you are not allowed to buy the ticket. They can state whatever conditions they want - that doesn't mean anyone has to follow them, they are legal, they are enforceable, or they can do anything about them. Moreover, what if I have a three-leg trip and after the second flight learn that my sister who happens to live in city #2 is in the hospital with a 50% chance to live? I'm not taking that third flight, I'm going straight to the hospital and will consider myself lucky I ended up in that city. There are far to many extenuating circumstances that an airline could not possibly be aware to actually have this policy.
- TeMPOraL 12y ago
  > The problem is the airlines are using inefficient and illogical pricing - for a whole host of reasons including incompetency and unwillingness to adapt to a changing marketplace. Please read the presentation I linked to before asserting that the pricing is "illogical" and a result of "incompetency".
  - ufmace 12y ago
    I read through it. What strikes me is that the airlines have intentionally created a system so complex that the most basic task of getting a price to fly from one city to another at a given time is apparently provably impossible to do properly. This isn't some part of nature that's complex because that's the way that it is, this is a system entirely designed by humans. It's kinda like putting somebody in a life-threatening situation, then saving them from it, then claiming that you saved their life. Through the whole creation of this system, and whatever steps it went through to end up being this complex, did nobody ever say "Guys, this is all just too freakin' complex. Why don't we simplify it so that we don't need a bunch of geniuses to figure out a way for a person to buy a ticket on one of our flights?"

fennecfoxen 12y ago

The airlines care because they are attempting to engage in price discrimination -- charging different prices for the same product to different people, roughly in line with these peoples' ability and willingness to pay. It does feel dirty, but it's worth tempering that emotional evaluation with the knowledge that, in those places where two or more airlines are competing for customers, they are very competitive indeed, and tend to operate on razor-thin margins (sometimes even negative margins! Airline profitability has been a recurring problem for those who have attempted to invest in them as businesses.) A system which is more predictable and feels less exploitative may in fact end up substantially more expensive and less convenient for all fliers (especially those now buying the cheapest tickets) and less profitable for the airlines as well. (In Econ 101 terms, this is to say that fare regulations would have the potential of making the market less efficient and creating a deadweight loss to society.)

avz 12y ago
I wonder whether this assessment of the market efficiency and benefits to society brought on by price discrimination would change if we account for the time and effort people spend on trying to game the system.