Why are commuter flights so expensive?

"Jay Honeck" wrote in message
news:fIspd.85397$V41.82999@attbi_s52...
Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say,
30
minutes before departure, to drop the price until the plane was full?
This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Their actions seem to defy logic. In the lodging industry, you're going
to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no
airline
seems to do it this way, at least on the short hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!

There must be something else in play here -- anyone know?
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"



Lack Of Usage Of Basic "Econ 101" in GA Aviation will be its downfall,
Happens to flight schools all the time. Look at the Crooks at Columbia
Flight Center they lose instructors, & customers because they put profits
before service. They order parts with out your permission ect. They charge
way to much for their rental aircraft you never know what the rates are
going to be tomarrow. They were so cheap they did not want to spend $6.00 to
develop my solo photos because there was still 5 exposures on the camera. 6
months later even after offering to pay for the development they refused and
then said they lost the camera. 1 Moment in history lost for ever, 1 Page
blank in my scrap book, 1 customer lost for life and no word of mouth
advertizing. All they get from me Stay AWAY.

"NW_PILOT" wrote in message
...

Lack Of Usage Of Basic "Econ 101" in GA Aviation will be its downfall,


And this relates how???

Jay Honeck opined

Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

I don't know about Cedar Rapids, But I'm told that Colgan Air gets a hefty per
seat subsidy to fly into Rockland Maine.

Their actions seem to defy logic. In the lodging industry, you're going to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no airline
seems to do it this way, at least on the short hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!

There must be something else in play here -- anyone know?
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"




-ash
Cthulhu in 2005!
Why wait for nature?

"Jay Honeck" wrote in message Question: WHY do the airlines that fly into
Cedar Rapids insist on flying back and forth with mostly empty planes?
There must be something else in play here -- anyone know?

If half of the rooms in your hotel were pre-paid in advance wether or not
they were being used, would you still care about dropping the price? While
there may be few passengers, 50% of the seats or more are already paid for.
The rest is gravy. Mainline code-share partners and the government's
Essential Air Service contracts keep the commuters in business.

D.

I'm guessing the thought process is held in two parts:

1) They have to charge a higher price to fly to Cedar Rapids because
there will always be fewer people demanding that flight than a flight to
Vegas. Presumably, there will be 3 times as many people flying to Vegas
than to Cedar Rapids, and so the Cedar Rapids price is three times that
of the Vegas Flight.

2) If they drop the price 30 minutes before flight time, I doubt they
will make more money, since it takes an hour to get through security and
all. Figure there is a cutoff time - maybe the noon before, as an
example - when heavily discounted fares would be picked up and consumed
by last minute fare customers who otherwise would have driven. However,
at the same time, we all know that premium-priced last minute business
trips make up the most profitable ticket sales for the airlines.

I'm guessing that someone in management of the airline has evaluated
(read: gut feel) that it would generate less profit to offer 5 last-minue
$100 deals, than to get 1 jacked-up last minute $500 deal.

Not sure what the right answer is, but the bottom line is, as I'm sure
you know, pricing is not just about covering overhead, it's about
maximizing profit...

What I'm surprised more airlines DON'T do is offer inexpensive upgrades
for already-paid passengers. The upsell is such a big profitmaker!


"Jay Honeck" wrote in
news:fIspd.85397$V41.82999@attbi_s52:

Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into
Cedar Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on
flying back and forth with mostly empty planes? Would it not make
sense, say, 30 minutes before departure, to drop the price until the
plane was full? This is basic "Econ 101" -- if empty, lower the price
until demand matches supply.

Their actions seem to defy logic. In the lodging industry, you're
going to find rooms are discounted much more aggressively after 10 PM
than they are at 3 PM, simply because no innkeeper wants to sit empty,
and the odds of being able to charge full-rate at that time of day are
slim. Yet no airline seems to do it this way, at least on the short
hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks
than nothing!

There must be something else in play here -- anyone know?

"Jay Honeck" writes:
Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Unfortunately, that logic only applies with a liquid market, where
there are plenty of potential customers to actually fill the supply.
It also assumes that if the airline did that then customers would not
just wait for the cheaper prices before buying. There is not an
unbounded supply of people who want to fly to Cedar Rapids if they are
just given the right price.

Let's say there are 50 people per day who want to go there, and they
are willing to pay $300. Let's say there are an additional 50 people
who are willing to go if the price was dropped to $100. If you keep
the price at $300, you take in $15000. If you drop the price to $100,
you take in $10000, and have the hassle of dealing with 50 more
passengers. There is no easy way of making sure you charge the first
50 people the higher price, and the second 50 people the lower price
(although the airlines certainly try to do this).

I suspect the airline folks watch demand very carefully, and try to
choose prices which maximize profits, and not the number of passengers
flown.

Chris
--
Chris Colohan Email: PGP: finger
Web: www.colohan.com Phone: (412)268-4751

Jay Honeck wrote:

Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.


snip


There must be something else in play here -- anyone know?

The only way to understand airline ticket pricing is to think about it in
terms of how much a person needing to go to destination X will pay vs. how
many competing airlines go there.

--
Frank....H

Are you referring to the Freddie Laker and People Express models?
The problem is having sufficient capacity to accommodate those you still
do not have seats for after you have filled the first airplane.
That was People Express' downfall. They didn't have the ability to have
the right equipment at the right airport to meet the demand.

Jay Honeck wrote:
Here's a mystery that I just cannot answer:
To fly to Las Vegas from Chicago costs $99.00. (For example.)
To fly to Cedar Rapids from Chicago costs $300.
Naturally, at that price practically no one flies on that plane into Cedar
Rapids.
Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.
Their actions seem to defy logic. In the lodging industry, you're going to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no airline
seems to do it this way, at least on the short hops.
If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!
There must be something else in play here -- anyone know?

Clearly airline prices - commuter or otherwise - are the product of a
black art, probably involving the sacrifice of small critters to arrive
at a price. A couple of years ago I needed to fly from Chicago to
Jackson Hole (ORD - JAC). I had to go one-way - I was driving back with
an old friend. One way air fare was about $800. Round trip was $500!
How's that for logical?

JJF

Jay Honeck wrote:
Here's a mystery that I just cannot answer:

To fly to Las Vegas from Chicago costs $99.00. (For example.)

To fly to Cedar Rapids from Chicago costs $300.

Naturally, at that price practically no one flies on that plane into Cedar
Rapids.

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say, 30
minutes before departure, to drop the price until the plane was full? This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Their actions seem to defy logic. In the lodging industry, you're going to
find rooms are discounted much more aggressively after 10 PM than they are
at 3 PM, simply because no innkeeper wants to sit empty, and the odds of
being able to charge full-rate at that time of day are slim. Yet no airline
seems to do it this way, at least on the short hops.

If it were MY airline, I'd sure as hell rather make a hundred bucks than
nothing!

There must be something else in play here -- anyone know?

"Jay Honeck" wrote in message
news:fIspd.85397$V41.82999@attbi_s52...

Question: WHY do the airlines that fly into Cedar Rapids insist on flying
back and forth with mostly empty planes? Would it not make sense, say,
30
minutes before departure, to drop the price until the plane was full?
This
is basic "Econ 101" -- if empty, lower the price until demand matches
supply.

Nobody goes to or from Cedar Rapids for the heck of it. Either you live
there or are going for business. If you're a resident then you've made plans
weeks in advance, and if you're on business you'll go regardless of price
(more or less). In fact last-minute prices are usually exorbitant because
people who buy last-minute tickets mroe often *need* to get there and thus
are willing to pay a lot more. If you're planning a vacation six months from
now and tickets to Vegas are $99 and Tampa are $500 then you'll go to Vegas.
OTOH if your client in Tampa is threatening to give the account to your
competitor then you'll pony up thousands without a second thought, so the
airlines take the opportunity to stick it to you.

What's destroying this is the presence of low-cost carriers with very simple
price models where you don't see 5-1 or 10-1 price disparities between
day-of and advance-purchase tickets.

FWIW in Europe I see a lot more of these "last minute bargain" deals in
Europe. The travel agents at the airport frequently sell all kinds of
super-cheap seats on flights leaving literally that day. I think this is
more popular there because (1) they have less money to spend and (2) they
take a lot more vacations so they're willing to "take a chance" and wing it.

-cwk.