Dear MEL Topic Readers,
Is it worth it to fly an ultra-low-cost
airline?
One of the most mysterious prices is
airfares. When you fly from A airport to B that is serviced only by one carrier,
you most likely pay a standard economy-class fare, which costs like a first-class
fare. But when you search for a lower fare well in advance in a route where multiple
airlines compete, you may have a better chance to find a heavily discounted ticket,
like below $200 from London to New York. However, the fare goes up as high as
the standard fare if you book closer to the departure date. Does the cost to
fly an airplane change so much? In fact, the only cost variance airlines have
to bear for the same route is fuel, whose prices change time to time while other
costs, such as staffing, operation, and depreciation are almost fixed. So, what
makes airfares different so much is competition and demands. Low-cost carriers
offer bargain prices to pack as many passengers as possible and charge baggage fees
and sell in-flight meals and drinks during the flight. If no one checks in
baggage and buys any drink or meal, the airline makes no money or lose some. Big
airlines have upper-grade seats that generate most of their revenues. So, if there
are no business class passengers or generous economy class passengers booked their
seats at the very last moment, they are in trouble.
Enjoy reading the article and learn about airlines’
dynamic pricing mechanism for competition.
No comments:
Post a Comment