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Airline Seat Prices

Posted on the 28 February 2013 by Charlescrawford @charlescrawford

Read this fine article at by Derek Thompson at The Atlantic on how the cost of flying has fallen so far over the decades:

... consumers have enjoyed an amazing (and unsustainable) three decades in cheap flying while the price of fuel, which accounts for more than a third of airfare costs, has gone up 260 percent since the turn of the century.

Part of it is down our good friend deregulation. Competition creates choice and expands the market. Plus it drives out the weak or ineffective:

Between falling prices, 9/11, and fuel inflation, there have been 47 airline bankruptcies since 2001. Some companies died. Others merged. Others survived with leaner contracts. Through attrition and consolidation, a less crowded marketplace for flying is inevitable.

But the price plunge is also down to fiendishly competitive and sophisticated prcing strategies:

Continental launches about 2,000 flights every day. Each flight has between 10 and 20 prices. Continental starts booking flights 330 days in advance, and every flying day is different from every other flying day. Monday is a different kind of day than Tuesday; the Wednesday before Thanksgiving is different from the Wednesday before that. At any given moment, Jim Compton and Continental may have nearly 7 million prices in the market...

In other words, when you buy a seat on a plane you think you are buying a seat on a plane. You are indeed getting that. But you are also buying the certainty of that seat and escaping the risk of delaying buying it for a few hours or days or weeks when the prices certainly will change.

Thus the other day I was looking at flights to Croatia via Expedia. As luck had it, after my first look then mulling over dates and exploring other ideas (some 20 minutes) I went back to that option and the price had fallen by 30% or so. I just happened to be there when the algorithm twitched in my favour.

The magic of capitalism.


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