OUTRAGEOUS airfare!!!!

[RedsDrew]

Drive time from WDW to TPA is about 1.5-2 hours (and can be more depending on traffic/time of day). Then you do the airport dance (drop off car, walk to terminal, check-in, go through security, etc).

Airfare pricing is very logical, but it is not very predictable, unless you can see the actual sales to available seats, aircraft rotation data, seasonal patterns, maintenance requirements, weather predictions, airport traffic window assignments, gate availability projections, and other variables.

Airlines use a pretty complicated set of algorithms to make predictions, then begin tweeking the pricing model based on customer purchase activity, business contract demand, and a few other customer focused metrics. Seat prices rise and fall based on when we buy, what routes we are willing to take, and the time of year.

Like all business, the airlines want to sell a seat as high a price as possible, so they release their mid-level and a few low level seats way in advance (for legacy carriers), then introduce discounted pricing as the time gets closer to the flight, based on sold inventory.

Ever wonder why WN (Southwest) and B6 (JetBlue) release their schedules in groups six to nine months out? Since they rely on leisure travelers more than business, they don't need to have as much forward thinking and flight stability as demanded by business travel. Since leisure travelers rarely plan vacations more than nine-months out and purchase tickets any earlier, these carriers can afford to wait until some of the metrics settle into predictable patterns. The low-cost airlines release a set of low fares about the same time as the legacy carriers, and once the low fares are taken, they are gone unless the flight continues to sell poorly.

In the end, just because airline pricing is not very predictable to the leisure customer base, doesn't mean it isn't logical and set to gain the highest price possible for each seat. In fact, it is a very elegant dance of many variables that generate the volatility we witness.

While I get what you are saying, I still believe the scenario I've encountered of a one hour flight between Columbus and Cleveland or Columbus and Cincinnati should not cost more than a flight to Las Vegas, Nevada that utlizes the same flight between either city as part of a travel itinerary. That is not logical and cannot be backed up with any logical explanation. Logic says the price of a flight should be comparable to the cost incurred by the airline for such flight plus the calculation of supply and demand. But if the same exact flight is used in both scenarios - one as a stop on a las vegas bound flight and one as a one-leg flight to the other city as a final destination, if any thing the price should be the same. Not have the 45 minute flight using less gas as more expensive. Also, why is it sometimes cheaper to book two one-way tickets on the same airline for the same exact flights than it is buying round trip? That happens occassionally too. No sensible logical explanation (I don't consider greedy profits made on unsuspecting customers as logical).

 

[Greysword]

While I get what you are saying, I still believe the scenario I've encountered of a one hour flight between Columbus and Cleveland or Columbus and Cincinnati should not cost more than a flight to Las Vegas, Nevada that utlizes the same flight between either city as part of a travel itinerary. That is not logical and cannot be backed up with any logical explanation. Logic says the price of a flight should be comparable to the cost incurred by the airline for such flight plus the calculation of supply and demand. But if the same exact flight is used in both scenarios - one as a stop on a las vegas bound flight and one as a one-leg flight to the other city as a final destination, if any thing the price should be the same. Not have the 45 minute flight using less gas as more expensive. Also, why is it sometimes cheaper to book two one-way tickets on the same airline for the same exact flights than it is buying round trip? That happens occasionally too. No sensible logical explanation (I don't consider greedy profits made on unsuspecting customers as logical).

This is actually quite easy to answer, I think.

First, WN (Southwest airlines does exactly as you say. They charge per segment, and if you require a connection, your flight costs more than a non-stop.

Now onto the good bits.

To start, the cost of a flight from any destination has a fixed and variable set of costs to it. The fixed costs, such as labor (both air crew and ground staff), aircraft maintenance, aircraft lease (or purchase), gate and airport fees, food, in-flight entertainment, lavatory upkeep, ticketing, etc. The flight also has variable costs like fuel. All of these are bundled together to make the whole cost.

Second, airlines figured out that people want to pay a fixed price from point A to point B, and not pay for the diversion to a hub (like WN does), since it adds to the cost of the flight. Also, many times the hub is not the final destination of the flight; rather, it is an intermediate point along a direct itinerary (Columbus to Las Vegas via Cleveland). As such if someone takes a short flight to a hub as the final destination, they are occupying a seat that could have been used to fly someone a longer distance, thus the short hop should be priced the same as the longer direct flight, since otherwise it is lost revenue.

Third, it really depends on the flight in question. US Airways has multiple short flights between DC and New York, and these "shuttle" flights get pricy due to supply and demand, more so than actual cost. However a short flight from Colorado Springs to Denver (1.5 hour drive) has a high price, since the hopper takes a seat away from a *** flier going to another destination.

In the aggregate, legacy airlines would love to charge people per segment, like WN, but they have been stopped whenever they try due to the actual pricing it presents. A flight from Columbus to Cleveland takes up a seat that may ferry a passenger to Paris or Los Angeles, so the airline charges a sizeable amount for this "shuttle" type flight, since they are not receiving the same airfare they would from the longer haul.

In summary, I disagree with this:

Logic says the price of a flight should be comparable to the cost incurred by the airline for such flight plus the calculation of supply and demand.

Logic in business says get the most money possible for the goods or services provided based on the price threshold customers are willing to pay. Covering expenses are important, but making a profit is the real logic in this scenario.

In general, business travelers are willing to pay a higher price for the seat on the CMH to CVG (Cincinnati) flight, since the drive time is too slow for them. This sets the price threshold high, plus it is likely a seat is on a regional jet, with significantly limited inventory (30-50 seats?). Thus, the seat could be occupied by someone traveling further (incurring a higher ticket price than expenses dictate for the shuttle).

It makes logical sense, from the point of view of the airlines, and they likely have actuarial staff that noodle through this constantly (along with the pricing engine we deal with online).

Not to say your logic is wrong; rather, it is the incorrect point of view to answer the question.


Oops, I grazed over this point:

(I don't consider greedy profits made on unsuspecting customers as logical).

It sounds like you have an axe to grind . Not sure why you think making a profit makes a company greedy . Profits a very thin in the airline industry, which is why their stock is trading sub-$20 range. The amount of profit is minus salaries and bonuses, and goes to those people who invest their personal income in the company hoping for dividends based on profit (like all those 401k retirement plans everyone has).

Profits are a good thing, since it means the business has a popular product to offer that people are buying in large enough numbers to cover salaries, equipment, taxes, and interest paid on loans. The more profit the better the company is doing and people can feel secure about their jobs. Little to no profit makes people antsy, since the company may not make enough to cover their salary, and they may be laid off. Also the greater the profit, the more cash a company has and instead of paying dividends, they may upgrade machinery, give line staff a bonus, or hire new people to expand/cover the current workload. These are all good things, no?

Different perspective from yours, I think, but I wanted to offer it as a counter-balance.