Why airlines have crazy pricing?

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2 years ago

Canadian Dash 8 airplane in Zagreb — Croatia — leaving for Frankfurt, Germany

First and foremost question should be: why are airlines jerking us around when it comes to the airfare tickets?

Straight answer: because they can!

That explanation is enough to stop 99% of the people from poking further into the hornet’s nest. Not me. I am in that 1 % that can’t just take such a laconic answer as a definitive truth.

Let me clear about something: I am not an economist or I have any connection with the air travel industry or anything. I am simply paying customer who doesn’t like to be taken for a fool.

One of the main mantras of capitalism is “Charge as much as you can”. Airlines sure took that golden rule to the heart and are all beating same drums, or are they? Further below we’ll find out more.

If airlines sold paint

There was an article by Alan Hess in 1998 called something like “If airlines sold paint”. Search the Internet and you will find it instantly. I found it very amusing and Hess managed to point out many wrong things with airlines pricing on a single page. Today, 20 years after an initial write up everything said still stands true, maybe even more than at that time.

It goes something like this, a phone call where a person calls the airline and wants to buy paint:

> How much is a paint?
> There is no simple answer to that question. Depends on many factors

> Isn’t paint a paint? OK, give me an average price
> We have $10 and $30 per gallon

First strike. This would not be a difference between business class and economy class, but really range of prices between lowest cost and highest cost ticket for the economy class.

> What is a difference?
> There is no difference. It is all same paint
> WTF?

Right, that is the second strike. Basically, costs for the same seats cost vary wildly. If you would ask each person in an airplane how much exactly they paid for the ride it would be an appalling mix of numbers.

Toronto — Munich flight ready to leave

> I want $10 paint
> Price depends on many factors, for example, which day you are going to use it?

> How that can make any difference, but I want to start tomorrow
> It is $30

You heard it right, the closer you come to departure more expensive ticket becomes. Wait for a second, that means there is unsold seats and airline is making even more expensive?

This one beats my logic every time. How is it better to fly with empty seats if you could sold them for at least “regular” price? But airlines do actually opposite of that. Instead of selling out what is left they raise prices and let unsold airplane go.

> I called on Tuesday and could not wait on hold anymore, could the price be different?
> Definitely, it changes not only by day but by a time of the day

Yeah, you heard it right. Price doesn’t only depend on where and when you are going to but also when you are buying tickets. Internet sources say that best time to buy airfare tickets is on Tuesday or Wednesday morning, definitely before noon. Don’t hold me up on that, none of it makes any sense so that may be BS by itself as well. Check for yourself.

> What if I start painting on Saturday?
> That is definitely different than painting on Wednesday or some other day. It costs more … actually price just gone up to $15.00

Here I kind of can understand the price point. Most of the people want to travel on weekend, so why not make them pay more? What a hell?

> What do you mean price went up, we are still talking?
> Prices change all the time, you should buy paint immediately, may go up again at any moment

Somewhere in the middle of Atlantic — 3 AM

It is crazy how airline ticketing computers are rigged. Prices change many times per day, seemingly erratically but that is never the case. Computers don’t make errors, they follow programs that instruct them to do something and that is exactly what happens. Maybe another 5 people who want to buy the same ticket showed up and the computer goes for the kill and increases a price of a ticket. You are bidding against machine and machine will always win.

It happened to me many times, even during checkout online.

> This is crazy, more expensive by the minute. I better buy some cans right away. I’ll give it to my brother if I can’t do it on that stupid day
> What?! That is not allowed. Only you must paint, nobody else can take your place

Here is another mystery of the world. It is an electronic record but it seems like passenger list is chiseled into the granite. Cannot be changed under any circumstances. In my mind, you paid for a person to be transported in safety and comfort from New York to Los Angeles. Doesn’t matter who that person is, won’t make any difference to the airplane, costs, crew really anybody, right? Wrong.

It may be a non-issue if you travel by bus or train but it’s no no for air travel. Anyway, quite hard to comprehend.

> ?? Not transferrable?
> No

> Don't tell me that it matters who paints, me or my brother?

> Exactly right, it does!
> OK, but if I can’t paint that day I will have to return a can of paint for the refund!
> No
> How no? If I see that I can’t make it I’ll call in advance for return
> You have to pay extra and buy insurance for that possibility

No refunds. If you don’t take a flight money is wasted. And ridiculous as it sounds you have to pay insurance for a possibility to exchange the ticket for another day. Plain and simple a full refund does not exist in airline vocabulary.

> All this is a nightmare. I may skip first room and paint only second one
> What? That also is not allowed. You MUST paint first room first and second room second. If you skip first room you are not allowed to use paint on the second one!
> Khhhh (caller choking)

It is much easier to explain UFOs, life on Mars, quantum physics or women than airline rules

Let’s say you are flying from Toronto to Sarasota with a layover in Atlanta and back the same way. In their eyes, it is perfectly normal that if you don’t board an airplane in Toronto a whole trip is forfeited. I had situation myself where friends asked me to drive with them to Sarasota and go back on the already purchased ticket. I thought it was a great idea until I told them about my ticket. “Luckily” they knew about “airline rules” and told me outright that ain’t happening. If I showed up in Sarasota in 10 days they would tell me that there is no flight for me. I would have to buy a new ticket.

Morning in Munich

There are more rules

We just skimmed over very basic scenarios. There are tons of other ways airlines (over) charge their services. Lately, you buy a ticket at the price you consider reasonable and proceed with seat selection page. Surprise, surprise! Little airplane plan reveals that every seat has a premium attached to it. As you move a mouse around the small pop up balloons reveal +$40, +$70 and + whatever amount they think of. It’s not like you can seat on the floor. You must hunt for the least expensive, unoccupied seat.

Then there is charging for the bags

This one is old as air travel. Bags can be up to allowed size and weight. That much we can understand. A friend of mine flew to Halifax by West Jet and there was a charge for having luggage brought onto an airplane. That is a new one.

The price difference between airline and airline

Airlines have seemingly plenty of customers. Still, they have to watch the competition in order to stay realistic. Still, there is no real life comparison. This boggles my mind. A few days ago in my other article, I used the following example, USD shown

>> Flying in Europe with a distance of 400 kilometers, Airbus A-320, ticket one way = $58.70

Let me expand here with few more rates:

>> Toronto to Ottawa with a distance of 400 kilometers, A-320 or similar, ticket one way = $175.00

>>Boston to Washington DC with a distance of about 640 kilometers, A-320 or Bombardier Regional Jet, ticket one way = $296.00

>> New Delhi to Mumbai with a distance of 1400 kilometers, Boeing 737, ticket one way = $40.77

I think you are catching my drift. Something stinks here!

How the hell is even possible that a ticket price difference is range from 1 to 5 up to 1 to 7.4 for the worst case scenario?

Yeah, you will say, but that is in Europe or even India and this is America! That’s it? That is best you got? Only because of that, a price should be more and that is perfectly justified? Let me burst that bubble with a street logic.

You noticed that I mentioned exact types of airplanes used. Everybody on the list has the same airplane and shelled out tens of millions for it. It’s not like in India or Europe they have wooden airplanes.

The distance was about the same but with exception of Indian flight which was 3.5 longer than other flights. They used more fuel and incurred more costs. Still, their ticket was the lowest by a far margin.

Maintenance costs are about the same, expensive. Maintenance, parts, and procedures are prescribed by the manufacturers of the airplanes and international standards. There are no ways around it. Airlines must comply with all regulations. Maintenance is costly for everyone.

Fuel costs. Our jets run on jet fuel and theirs on water so it’s cheaper for them to fly around? Ain’t happening. It is very possible that they pay for gas much more than US or Canadian airlines do.

Crew costs. Short range crew is 2 pilots and 2 stewardesses (attendants). It is possible that the US crew gets 40% — 50% bigger paycheck than the same crew in India or Austria but that is chicken change considering that 160 passengers are transported in all examples. Meaning if one crew costs airline 800 dollars or 1200 dollars for that flight it is a chicken change.

There is a matter of airport fees and ground handling. There may be a 2 thousand dollars difference for that single flight. OK, we’ll allow for that.

“But, but those travelers in India can’t pay tickets we pay in North America!” you could say. Remember answer at the beginning of this article? They charge that much because they can. People will pay inflated prices because seemingly they don’t have other choice. The fact is airline in India has jets, crews, pay all bills and fly people around for 4–7 times less than in NA. And they are profitable otherwise would be long gone.

I think I proved my point. Everybody and his dog can see that we are getting ripped off. Air travel does not have to cost arms and legs.

Empty your wallet for the best rum there is — Duty Free shop in Montego Bay — Jamaica

A difference in price from economy to business and first class is exorbitant

You can fly to Germany and back for about $1200 economy.

A business class is about $4000 — $5000 so about 4 times more.

A first class comes at $8000+ premium. That is about 7 times more than economy.

I find it fascinating. Is that service really 4 or 7 times more valuable? Seats are bigger, champaign instead of Coke, lobster instead of chicken and rice. I wish I am there, but I am not. Rather behind in row 34 cramped in my child sized seat.

Who pays for those expensive flights? Rich and famous. Managers of successful companies. Politicians that are not crazy about mingling with their voters.

Here there are no grounds to a complaint. Toronto to Sydney first class — $40000. You can buy a mid-sized car for that money. Yes, it is awfully expensive but there are people who want to pay it so can’t blame airlines to charge a lot.

Traveling by bus, train or ferry

Buying those tickets may be a refreshing experience. Prices are fixed and published for maybe a year ahead. They may have season pricing, first class, and economy and that’s about it. No surprises or smoke and mirrors. Straightforward prices are the least they can do for their customers.

Ferry in the port of Split

Make no mistake, trains cost millions, ferries also cost millions, buses cost maybe 200000 dollars a piece and they all burn expensive fuel. They pay people, pay maintenance, pay port or station fees. Pay insurance, administration and what not. It is not cheap or simple to move people around. Still, everybody else except airlines has no big problem publishing fare pricing.

Train Split — Zagreb, Croatia taking a 20 minutes break in Gracac

We are sure taken for a ride by airlines, literally and figuratively.

Read other two travel articles:

Travel by air Nazi style — Part 1 of 2

> Travel like a King (or Queen) and it’s not by air — Part 2 of 2 (coming up soon)

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