RT is less than 1-way... WHY?

[twinklebug]

Can anyone explain to me why airlines insist on charging less for RT airfare then 1 way.

Example, using the best prices found:
GSP->PVD 1 way $309
RT $295


DS (returning from school) doesn't need the return ticket - the seat will go to waste if I buy it.

 

[Alice Sr.]

Did you check Southwest? You could pay a friend of his $100 to take him to Nashville and still come out ahead.

 

[winterman]

I am familiar with this situation. It is easier to fly the first leg and then throw away the return portion than to try to understand the logic behind this pricing. And one wonders why the airlines are in desperate financial situations or bankruptcy!

 

[Disneyjosh229]

I am familiar with this situation. It is easier to fly the first leg and then throw away the return portion than to try to understand the logic behind this pricing. And one wonders why the airlines are in desperate financial situations or bankruptcy!

The airline wants to fill the seat. The more seats that are filled, the more chance they have to make money on overweight baggage, beverage services, etc. Logically, it makes no sense what so ever, but the airlines are in a situation where they can give you a free return seat (and cash) just to get you back on the aircraft (its like disney offering you a free night if you stay 3 or something to that extent. The room costs them next to nothing, but the profit off of the meals, the souviners, the tickets, etc.. make up for the small cost they are loosing by letting you have the room for free...)

 

[manning]

Ain't it wonderful what they can get away with. And if they catch you not using the return portion of a ticket they will charge you the higher rate, even if they fill that return seat with a standby.

No wonder they are all going belly up.

SouthWest runs their business differently than the others and they are making money.

 

[bicker]

Airlines learned that business travelers are less price sensitive than leisure travelers. The challenge, therefore, was to determine how to effectively segment the market, so that they can offer leisure travelers the low fares they desire, and offer business travelers the higher fares necessary to keep the airline profitable. There was one way effectively to differentiate business travelers from leisure travelers: Round-trip tickets with a Saturday night stay-over. Business travelers liked to sleep in their own bed Saturday night.

9/11 changed everything. Business travel evaporated, and when it finally did return, many businesses forced their travelers to buy leisure fares, or not travel. The market segmentation fell apart, and combined with skyrocketing fuel costs, the airlines now cannot remain profitable.

Incidently, even Southwest would be losing money if they were paying today's prices for jet fuel. They will be paying current-day prices for jet fuel next year, so if things don't change in the industry, Southwest will join the ranks of the unprofitable airlines soon. From CNN:

And Southwest Airlines, by far the most profitable during the downturn, is still dependent on long-term contracts that give it fuel at below-market prices for its profits. But as time goes on and fuel prices remain near historically high levels, Southwest will see less advantage from those contracts.

"In 12 monthswe'll be talking about the problems with the low-cost carriers, not the (old line) carriers," said Michael Boyd, an industry consultant.

He predicted that the upstart, low-fare carriers will have trouble finding new markets for expansion, while old line carriers are well positioned to take advantage of continued growth in business and international travel.

Southwest's best hope is to expand into an international airlines. In doing so, they'll gain many of the burdens that plague the legacy airlines today. Combine that with a seniority system that is coming into maturity over the next ten years ...

 

[Lewisc]

Probably not losing money, but SW customers would be paying higher fares. SW is partially hedged for more than just this year.

Incidently, even Southwest would be losing money if they were paying today's prices for jet fuel. They will be paying current-day prices for jet fuel next year, so if things don't change in the industry, Southwest will join the ranks of the unprofitable airlines soon. From CNN:
Southwest's best hope is to expand into an international airlines. In doing so, they'll gain many of the burdens that plague the legacy airlines today. Combine that with a seniority system that is coming into maturity over the next ten years ...

 

[bicker]

Probably not losing money, but SW customers would be paying higher fares.

Would Southwest's passengers be willing to pay higher fares?

 

[Lewisc]

Would Southwest's passengers be willing to pay higher fares?

SW doesn't book a year in advance. SW makes money. You're asking the wrong question. Would Southwest be willing to transport passengers below their cost in order to run a profitable airline into bankrupty? Lowering fixed costs by reducing the number of flights is an alternative strategy to pricing seats below variable costs.

Right after 9-11 SW was the only airline that made virtually no flight reductions and remained profitable.

SW is currently raising fares. It's becoming increasingly difficult to get the deeply discounted fares on peak flights. I understand discounted fares from LAX to LAS are all but impossible to get on Friday for example. The RR progam has added capacity controls. SW reduces the number of flights on routes that don't have the right yield factor. If you watched Airline SW actually makes parents of lap babies provide proof of age or pay for a seat.

 

[salmoneous]

SW was making money before 9/11 and before they had favorable fuel contracts. The legacy carriers were having trouble before 9/11. SW isn't doing well because they have gotten a couple good breaks. They have been a well run airline for a long time now, and I don't think that is going to change. Oh, and there's about a 0% chance they will enter the international markets anytime soon.

 

[Lewisc]

SW was making money before 9/11 and before they had favorable fuel contracts. The legacy carriers were having trouble before 9/11. SW isn't doing well because they have gotten a couple good breaks. They have been a well run airline for a long time now, and I don't think that is going to change. Oh, and there's about a 0% chance they will enter the international markets anytime soon.

SW just added life vests to all their planes and added some type of overwater certification. Although I don't see them going to Europe any time soon they could certainly add PR or the Bahamas. I'm not sure they went to that expense just so the NE to FL planes could travel further over water.

 

[bicker]

I believe you're mistaken, sal. While they are a well-run airline, so were many of the legacy carriers. The problems the legacy carriers had came from obligations to their unions and aging aircraft fleets, not poor management. And Southwest will be facing both these challenges in the years to come, as their seniority system matures, and their fleet gets older.

Also with regard to what you've said:

In a response to a question at a recent session with students at UNLV last week, Gary Kelly, chief executive of [Southwest Airlines], said the airline—the busiest at McCarran International Airport—has begun the preliminary work of developing computer software to handle some of the transactions that would occur with flights to international destinations.

 

[Lewisc]

I believe you're mistaken, sal. While they are a well-run airline, so were many of the legacy carriers. The problems the legacy carriers had came from obligations to their unions and aging aircraft fleets, not poor management. And Southwest will be facing both these challenges in the years to come, as their seniority system matures, and their fleet gets older.

Also with regard to what you've said:

Also from a pricing system that was based on "gouging" the business flyer.
The business flyer learned about back to back ticketing, hidden city and throw away tickets. BTW fuel hedging wasn't something SW invented. Any of the "well run" legacy airlines could have done the same.

 

[Alice Sr.]

From a consumer point of view rather than the business analysis point of view. I feel like I was pushed to SW. I searched for flights out of Chicago and many surrounding airports and the flight times/costs were not something I was willing to pay for. I have never had this much difficulty finding a decent fare at the time that suited my schedule. I was a loyal AA and United flyer and would pay a little more to fly with them, but I'm not paying more than double for a similarly acceptable itinerary. I question how there are better rates and flight times out of Chicago to Jacksonville FL than Orlando FL.

 

[twinklebug]

From a consumer point of view rather than the business analysis point of view. I feel like I was pushed to SW. I searched for flights out of Chicago and many surrounding airports and the flight times/costs were not something I was willing to pay for. I have never had this much difficulty finding a decent fare at the time that suited my schedule. I was a loyal AA and United flyer and would pay a little more to fly with them, but I'm not paying more than double for a similarly acceptable itinerary. I question how there are better rates and flight times out of Chicago to Jacksonville FL than Orlando FL.

Hi Alice - you're right - time to get back to the consumer view, all the other talk is great but honsestly is in a holding pattern over my head waiting for processing.
Thank you for your suggestion of flying from Nashville. I checked it out and you are right, I could save $50. Problem is however he won't have the ride.

The more I research rates the more miffed I get by it all. It really looks like the airlines are setting themselves up for a big fall legally if their motivation is to charge folks taking the RT flight for just one way. I don't buy the notion that they "give away" the second half of the journey just to get you on board to buy the $1 headphones or drinks (most folk don't anyway). Only USAir seems to have it's pricing depicting RT airfare higher than 1-way, although we're talking by a mere $18.

What really makes me scream is a 1 way flight from Greenville->Atlanta (less than an hour flight) is $400 and UP across the board.

I think the days of flying the boy home are over... Amtrak might be the way to go.

 

[Disneyjosh229]

What really makes me scream is a 1 way flight from Greenville->Atlanta (less than an hour flight) is $400 and UP across the board.

It all goes back to the principle foundation of business, Supply and demand. Apparently, the airlines are having no problems selling out flights to ATL, so there in no hurry to give away the seats.

 

[bicker]

Things should get a little clearer over the next few years. Fares will most likely go up significantly, and so the strange aspects of fare pricing will become less of an issue.

 

[Alice Sr.]

It all goes back to the principle foundation of business, Supply and demand. Apparently, the airlines are having no problems selling out flights to ATL, so there in no hurry to give away the seats.

I totally get Econ 101 - supply and demand, but from what I have seen as of late the Econ 102 (read legacy carriers) airlines are trying to manipulate the market to their best interest. And that is fine they are more than welcome to try to redirect their clientele to what works best for them, but when the Econ 101 (read micro upstart carriers) airlines pick up a larger share of the market I'm going to have a hard time feeling sorry for them.

 

[DebbieB]

I had to fly from Pittsburgh to Richmond for work in Feb, fly down Monday and return Tuesday afternoon. They wanted $900 for non-stop (USAirways)! Of course, that was not acceptable to my boss (can't blame him), so I had to connect through Charlotte for around $400. Twice the mileage for 1/2 the price. However, if I would have flown non-stop Monday and retuned Friday, it would only have been around $200. This was about a month in advance, so it wasn't last minute. The fact that I was only staying 1 night is an indication of a business trip, so they sock it to you. This wasn't the first time this has happened. I'm flying PIT/MSP on Monday (return Tuesday), it's over $700.

 

[bicker]

How will you feel, Alice, when your taxes go up to pay for the debt obligations of the legacy carriers, and your airfares go up when the upstart carriers raise their fares due to higher costs they'll incur as they mature?