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Video answers: How Airlines Price Flights

Here are the answers to last Friday’s video, enjoy!

Suggested ICAO level for video: 5+

  1. It was chosen because it’s one of the most competitive routes in US and thus one where pricing strategies are very important.
  2. The cheapest fare is $129 and it’s this cheap because Tuesdays are less popular for business travellers and thus have to be cheaper for leisure travellers.
  3. It’s interesting because there is price matching going on with this fare. When this price is available it’s because other airlines are also charging this price and each one is matching each other to remain competitive.
  4. They would do this as a way to drive another airline off that particular route, as when a bigger carrier drops the price significantly on one of their routes that has recently been taken up by a another, often, low-cost carrier. The bigger carrier can absorb the loss on this route for much longer, while the smaller one has to stop operating the route to remain profitable.
  5. A certain number of tickets are sold at each price point, when that number of tickets are sold, the price point increases to the next category. Sometimes though, the price will increase automatically because the of the proximity of the departure date, regardless of how many tickets have previously been sold. There can also be seasonal variations for these prices.
  6. The return flight is cheaper because it includes a minimum stay requirement of seven days at the destination, while the one-way ticket has no minimum stay requirement. This minimum-stay requirement policy allows airlines to discriminate against business travellers and require them to pay more for their fares.
  7. They have very different prices depending on the competition on the route, with more competition, the route becomes cheaper.

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