August 29, 2014
Why would two large airlines fly the same route but sell tickets for very different prices? Perhaps the easiest way to explain is by using the analogy of gas stations on opposite corners of the same intersection.
Scenario No. 1: The price gap
One station owner looks out his window and notices the other guy’s prices are lower, so he hurries outside to move the numbers around on his sign so prices match (this, of course is the pre-digital, electronic signage era).
Airlines also tweak ticket prices. When one notices another has dropped prices, the first one quickly matches, because just as a gas station owner doesn’t want traffic to bypass his corner, no airline wants to end up on page ten of a search query while a rival flying the same route is on page one. There can be a time lag while ticket costs are getting aligned, though, and that’s when a shopper could see a price gap.
Scenario No. 2: The empty pump
A station owner’s pump runs out of gas and he has to put a bag over it (“Use next pump”). His competitor has plenty. Which station is in the better pricing position?
This happens with airlines too, as the business of managing prices and capacity is a complex one.
Scenario No. 3: When prices go up
When a gas station or airline raises prices, the competition usually scrambles to join and match the higher fares. But not always. Maybe the rivals feel a higher price will hurt demand so they sit it out.
Which puts the hike initiator, Airline A, in a difficult position since it may be all alone out there with the new higher prices for a day or so, waiting (in vain) for others to match. Meanwhile, a traveler who only shops Airline A’s site during this wait-and-see period figures all tickets on the route he wants cost the same, buys a ticket and winds up paying more than he had to.
Scenario No. 4: That little something extra
Call this the great intangible: Some corners are mysteriously better at pulling in gas station customers, while some airlines may do better with some customers even if they cost more. It may come down to strong loyalty programs or seatback TVs or maybe it’s the perception of good people and good prices (I’m looking at you, Southwest).
Another way to put it: Sometimes an airline charges more but you don’t care. What does matter is knowing all your airfare options.
Bottom line: Always compare prices
You can never be sure which airline has the cheapest ticket prices because no single airline always has the lowest prices. Maybe it’s worth it to you to pay a little more for certain extras but you need the whole picture right from the start to see the best deals available. That’s why you have to compare prices for air travel, just as you would in deciding which gas station gets your business.
Know of any other ways to save on airfare? Well then, by all means, share them in the comment section below so your fellow readers can start comparing and saving!
Let’s continue to shine, Everyone!
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