Airline Pricing

4 April 2015
A discussion on the multitude of interconnected issues of airline pricing.

The following paper discusses how there is no one aspect that stands out as a single determining factor of price per passenger or per flight. The writer examines how the air carriers act with the interest of maximizing revenue, whether that maximization occurs over time or with each flight. The condition of the company itself is also a major consideration in how the price analysts approach their job, which is also discussed in this paper.
“Is the company struggling on the brink of or within bankruptcy? Do they need to break even or come out far ahead of their competition in the market? Also, the conditions of airports themselves can be a determining factor, especially in the long run: “failure to expand capacity (of airports) will result in spilled demand and place an upward pressure on prices,” (“Economics FAQs”). Because major hubs are experiencing a vast increase in air traffic, the resulting delays and decreased quality of service adversely affects demand. Decreased demand implies an increase in prices to compensate for lack of revenue. The Law of Demand is probably the key factor in determining price of air travel; its ancillary clauses including Demand Elasticity are also primary factors. Finally, we must consider the day-to-day decisions made by the airlines to determine what price changes to put into effect. These day-to-day tactics, described in Wells, involve the different fare levels and rules and restrictions placed on tickets. Significant variables influencing these decisions include peak/off peak seasons and other load-determining factors.”

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Airline Pricing. (2015, Apr 23). Retrieved September 24, 2020, from
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