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Airlines are charging solo passengers higher fares than groups

thriftytraveler.com

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Re: Airlines are charging solo passengers higher fares than groups

#381

Post by jmward01 »

arp242 wrote: post #335
p1necone wrote: post #269

I feel like people are suspending their reasoning in order to maximally shit on airlines in this thread (because yes, they do have a history of predatory pricing practices). The problem with this isn't the difference in prices - charging less for buying in bulk is a normal thing that's probably been done by merchants since the invention of money. The problem with this is the lack of communication. There's no advertis…

I once tried to book a flight with the same-day return; the price for the return flight was mad expensive. The same return flight was a few hundred euros cheaper if you booked the initial flight a day earlier. My theory is that most same-day travel is for business, and businesses are far less price-sensitive than consumers and will just pay whatever. I suspect this is what's going on here. Most solo travellers are fo…

The only real question here is why hasn't competition driven this 'discount' away? In a perfect market it shouldn't be possible for this to exist, right? I am not a fan of airlines because, among other reasons, it often appears that demand and competition aren't driving price.

Re: Airlines are charging solo passengers higher fares than groups

#382

Post by arcticbull »

arp242 wrote: post #335
p1necone wrote: post #269

I feel like people are suspending their reasoning in order to maximally shit on airlines in this thread (because yes, they do have a history of predatory pricing practices). The problem with this isn't the difference in prices - charging less for buying in bulk is a normal thing that's probably been done by merchants since the invention of money. The problem with this is the lack of communication. There's no advertis…

I once tried to book a flight with the same-day return; the price for the return flight was mad expensive. The same return flight was a few hundred euros cheaper if you booked the initial flight a day earlier. My theory is that most same-day travel is for business, and businesses are far less price-sensitive than consumers and will just pay whatever. I suspect this is what's going on here. Most solo travellers are fo…

> I once tried to book a flight with the same-day return; the price for the return flight was mad expensive. The same return flight was a few hundred euros cheaper if you booked the initial flight a day earlier.

Minimum stay durations, like advance purchase restrictions, are a common part of fare construction.

> That's also why none of this is advertised: it's not a discount, but a "we think you can pay more, so we'll charge you more" type of thing.

A surcharge for X vs a discount for ~X is the same thing, it's just how it's presented.

Technically all of this is advertised, it's published in GDS. People just don't really want to read the fare rules because it's boring and a ton of reading.

Re: Airlines are charging solo passengers higher fares than groups

#383

Post by fn-mote »

amrocha wrote: post #373
ncruces wrote: post #274

Earlier quoted context omitted.

> Why am I forced to understand your made up currency and status system to get the full value of my money. You're not forced. This allows them to make extra money from people who don't bother, and offer discounts to price conscious people. Time is money. Convenience too.

They make extra money from fools thinking they can beat the system, not from the people that avoid it. If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket.

> If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket.

It sounds like you believe the losses are coming from the people who _have_ the points? That doesn't seem likely to me.

It would be a better analysis to say "it's complicated" -

* Business travelers earn personally-owned points on their company spending. In this case, the company might be paying higher prices but the individual is being incentivized to continue that because the miles are essentially a kickback.

* Personal travelers have an incentive to travel with the same airline for more points, so a kind of lock-in for either (1) those who are not as sensitive to price differences or: (2) those for whom the benefits of the points are high enough to outweigh some higher costs acquiring them.

* In the same vein, a points system that encourages a traveler to stay with the same airline can give _that airline_ greater profits from _that consumer_, even if on a per-flight basis the airline might hypothetically be making less. It's like Costco selling stuff for a cheaper unit price.

Re: Airlines are charging solo passengers higher fares than groups

#384

Post by yosito »

p1necone wrote: post #269

I feel like people are suspending their reasoning in order to maximally shit on airlines in this thread (because yes, they do have a history of predatory pricing practices). The problem with this isn't the difference in prices - charging less for buying in bulk is a normal thing that's probably been done by merchants since the invention of money. The problem with this is the lack of communication. There's no advertis…

Airline ticket prices have been highly individualized for at least a decade. I live a nomadic lifestyle and I'm often traveling with friends from various countries. We can sit next to each other in the same café and search for the same plane tickets on the same website at the same time, and get entirely different price offers. This is one of the reasons that I never buy plane tickets without using incognito mode or some sort of private browsing, but even doing that affects the price that you're offered.

Re: Airlines are charging solo passengers higher fares than groups

#385

Post by arcticbull »

jmward01 wrote: post #381
arp242 wrote: post #335

Earlier quoted context omitted.

I once tried to book a flight with the same-day return; the price for the return flight was mad expensive. The same return flight was a few hundred euros cheaper if you booked the initial flight a day earlier. My theory is that most same-day travel is for business, and businesses are far less price-sensitive than consumers and will just pay whatever. I suspect this is what's going on here. Most solo travellers are fo…

The only real question here is why hasn't competition driven this 'discount' away? In a perfect market it shouldn't be possible for this to exist, right? I am not a fan of airlines because, among other reasons, it often appears that demand and competition aren't driving price.

> I am not a fan of airlines because, among other reasons, it often appears that demand and competition aren't driving price.

First off airlines are an extremely low margin business.

AA's net margin is 1.26%, Delta's net margin is 5.91%, United's net margin is 6.43%, Alaska's net margin is 2.86%. These aren't exactly blockbuster SaaS numbers.

Demand and competition absolutely drive price reductions - competitive routes have much lower revenue per available seat mile - and adjusted for inflation air travel is wildly cheaper than it used to be. Since 1995 the cumulative inflation-adjusted price of domestic air travel is down almost 37%. [1] Thanks to competition you can fly from SFO to NYC for $99, non-stop, next month. On the other hand SFO to GUM is $1662 ($1100 on a half round trip basis), because there's no competition.

Airlines with both a domestic and international route network tend to lose money on their domestic routes and make up for it on their flagship international routes, but even still, they make most of their money on frequent flier programs and credit card relationships.

St Louis Fed has a good write-up on the economics of air travel. [2]

[1] https://www.bts.gov/content/annual-us-domestic-average-itine...

[2] https://www.stlouisfed.org/publications/page-one-economics/2...

Re: Airlines are charging solo passengers higher fares than groups

#386

Post by krick »

postalrat wrote: post #280
p1necone wrote: post #269

I feel like people are suspending their reasoning in order to maximally shit on airlines in this thread (because yes, they do have a history of predatory pricing practices). The problem with this isn't the difference in prices - charging less for buying in bulk is a normal thing that's probably been done by merchants since the invention of money. The problem with this is the lack of communication. There's no advertis…

Are these discounts compared to prices before the change or did they raise the price for individual travelers?

There hardly is such thing as "discounts" in airline pricing. I mean, formally, there is, there's a lot of them, but, well, it's complicated…

In all honesty all this thread is people complaining about something they don't have a clue about. Airline pricing is insanely complicated, and this is for a reason. Airlines are not a luxury business, they barely manage to survive. If not all this dynamic pricing, special contracts with agencies, etc, they'd have to charge so much for a seat that you wouldn't pay and all this travel industry you are accustomed to simply wouldn't exist. The whole business is built on making somebody who crucially needs to fly pay as much, as he can, and then to make price attractive enough for the rest of us so that you can sell the rest of the tickets, so that flight can make any profit. And in the end, margins are super thin in this business.

Also, your question implies that you imagine that there is some simple enough "true price for a seat", which is so far from the truth, you have no idea. If you actually look at the price breakdown for a given ticket, there are literally dozens of components in it. It's not unusual that so called "fare" of a ticket (which is, like, "just price") may be literally $1, and the rest of $300 is various taxes, surcharges and payoffs I won't even try to start to explain here.

I mean, really, people here truly have no idea what they are complaining about. Airline pricing is not a thing you should hate.

Re: Airlines are charging solo passengers higher fares than groups

#387

Post by JoshTriplett »

amrocha wrote: post #371
JoshTriplett wrote: post #351

Earlier quoted context omitted.

> They also have the poorest who have cheap credit cards subsidize the richest who have the best cards and receive most of the rewards. This is false. https://x.com/patio11/status/1902555603534295115

It’s not false. Patrick disagrees with it. The atlantic doesn’t. The general consensus is with the Atlantic, but it’s not a clear cut subject.

You are interpreting "demonstrates to be false by citing sources and providing evidence" with "disagrees with". The thread I linked to is an instance of the former, not the latter. See the citations and graphs from that thread, showing the data that credit card companies make much more money from wealthy people than they do from poor people, and neither one is subsidizing the other.

If you're going to claim "the general consensus", [citation needed]. A more likely claim is "more people have read the misinformation from the Atlantic than have read the correct refutation from a domain expert on credit cards", which is sadly probably true.

Re: Airlines are charging solo passengers higher fares than groups

#388

Post by parsimo2010 »

arp242 wrote: post #335
p1necone wrote: post #269

I feel like people are suspending their reasoning in order to maximally shit on airlines in this thread (because yes, they do have a history of predatory pricing practices). The problem with this isn't the difference in prices - charging less for buying in bulk is a normal thing that's probably been done by merchants since the invention of money. The problem with this is the lack of communication. There's no advertis…

I once tried to book a flight with the same-day return; the price for the return flight was mad expensive. The same return flight was a few hundred euros cheaper if you booked the initial flight a day earlier. My theory is that most same-day travel is for business, and businesses are far less price-sensitive than consumers and will just pay whatever. I suspect this is what's going on here. Most solo travellers are fo…

> Is that a good/bad/ethical/predatory thing?

It is a natural result of our economic system. Economists call it "extracting consumer surplus," and there are several mechanisms companies employ to get the population to pay them the maximum amount of money. Airlines indeed use the information they have about you and the flight you're booking to guess the maximum amount you'll pay- and that's the price they show you.

Obviously we, as consumers, feel taken advantage of because we wish we could pay less (and keep the surplus to ourselves). But this is going to happen in any capitalist system.

Re: Airlines are charging solo passengers higher fares than groups

#389

Post by arcticbull »

margalabargala wrote: post #245
b112 wrote: post #231

Earlier quoted context omitted.

The entire point behind reward cards, is to track every purchase you make. They're the original evil tracking device, so the airline makes money with those points. They do it by selling data, by points expiring, and by often only allowing points when seats would be empty otherwise. And often retailers pay more at POS terminals! This all ties into any rewards program. It's part of the package, even if points are grant…

> And often retailers pay more at POS terminals! This is really the whole point. The sale of data is much less lucrative than the purchases by the customers themselves, especially for the "nicer" cards. If you are a CC company with wealthy clientele, they tend to spend more. This means that retailers are willing to offer deals/rewards to attract those clients, and also that you want to offer rewards to keep those cli…

> This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more.

At the high end it actually diminishes. Rewards cards targeting middle of the distribution are more lucrative, generally. Citi Double Cash gets you 2% cash back on purchases whereas the Amex Platinum gets you 1X on all spend worth at most 1.25% (and 5X on airfare).

Re: Airlines are charging solo passengers higher fares than groups

#390

Post by fireflash38 »

JumpCrisscross wrote: post #343
MentatOnMelange wrote: post #329

Earlier quoted context omitted.

There is absolutely an ethical problem with charging people different prices for the same exact product/service

> There is absolutely an ethical problem with charging people different prices for the same exact product/service One, there isn’t. One party undercutting another for the same product is how competition generates consumer surplus. Two, it isn’t the same product. When I fly with my family, we check in together. We board together. I collect their docs on my phone and double check they have them on theirs. I turn down u…

Mm, it feels unfair. I was trying to reason through why I think it's an ethical problem and that's what I've come up with. You're not treating people equally - whether it's in person bartering where you make assumptions about them based on snap judgements or via airlines seen here.

There's an even bigger fairness issue when there's such a huge data knowledge gap between the parties, both knowing that there is this hidden price structure as well as knowing a ton about you. So there's privacy implications too.

Edit: it's not undercutting. It's price discrimination. You know the thing people fucking hate when trying to buy a car. Half the reason people liked buying Tesla is cause the price is the price is the price.

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