Airline Ticket Pricing

[AV8TOR]

I took a couple of classes online @ UVSC, about how the airline come up with pricing there seats, and I kinda, sorta, not really understand it a little bit

My Question is why are the tickets still so expensive right before the flight leaves? I called to see what a last minute ticket is to Dallas was, and they wanted $538 one way. If you would have called about a month to 2 months ago. You could have gotten 2 round trip tickets for that price.

They know they aren't going to get any money at all for that seat and it's considered 'spoiled fruit' They could at least make something on it.

But I'm pretty sure a lot of people would do that as well, wait until the last minute to get a ticket.

I just think it's dumb they rather not have the seat filled, while if they wanted they could get a few hundred dollars for that seat.......

 

[Chris_Ford]

Because if you're buying a ticket at the last second, chances are you really need to get there and you're willing to pay the price.

Side note: airline fares when adjusted do not figure in costs as much as you'd think, it's primarily just competition's airfares.

 

[C150J]

Chris couldn't be more correct... yield management at its finest. Businesses are notorious for last-minute scheduling ("I need you here ASAP"), and airlines take advantage of this inelastic demand. Airlines also know that liesure travelers generally plan their vacations months out, and are much more price sensitive.

 

[Cav]

The idea is to sell the ticket at a certain price at the right time to a targeted group of people to maximize the amount that is in the "basket" before the flight departs. Each fair class is offered at a certain time to target those who are most likely to be purchasing tickets at that time. Keep in mind this is done over 1000's of flights so the hope is total revenues exceed costs over a large number of flights in a given period. In other words a profit does not necessarily need to be made on each and every flight as long as a premium is made on others to make up for it. This is the problem we have today, too many flying for too little.

I would think that airlines see a benefit in selling only a few seats at premium to people who must travel in the short period leading up to a flight rather than sell a lot of seats for a little. The reason being, revenue earned is probably the same, but more weight is added with more people and fuel consumption increases therefore costs increase for a given flight.