Different Fares, Different Languages

Alex Tabarrok of Marginal Revolution notes some interesting tidbits about airlines today.

For one, he mentions the practice of advertising different prices in different languages, targeting poorer communities with lower fares. Similarly, consolidators serving low income communities may have lower fares than other agents. Just price discrimination, like requiring Saturday night stays and advance purchases for lower fares, or requiring a higher fare to qualify for a frequent flyer upgrade.

Actually, different people can buy the same flights for a whole bunch of reasons. While it’s already well known that two people sitting next to each other on a plane will likely have paid a different fare, many folks don’t realize that flights from Australia to the U.S. are often far cheaper than flights from the U.S. to Australia. Same thing happens with flights to and from Europe. And sometimes this depends on the month or season, where low prices can reverse.

Various regulatory structures, market conditions, and currency regimes make purchasing tickets from Cairo and Tripoli the cheapest in the world. You can buy a US$2000 “Round the World” ticket that will carry you in international first class on a combination of carriers for 30,000 flown miles.

Catch is — you have to make it to Cairo or Tripoli first. Not only would your journey have to start there, you actually have to physically purchase the tickets there. This sort of ticket is known as SITI for “Sell Inside, Ticket Inside.” (SITO means Sell Inside, Ticket Outside which means you could have a Libyan travel agency mail you your tickets. Won’t work for this kind of fare.)

For all this talk of various airfares, Tabarrok offers a tidbit that may be a bit of an exaggeration:

    American Airlines changes some 500,000 prices a day.

This seems a bit much if only because American doesn’t quite sell 500,000 tickets a day.

I suspect the claim rests on a misperception, though.

The fares themselves don’t change nearly so often. A certain number of seats on each aircraft are designated to be sold at a given fare, and when those run out it’s on to the next fare. And each fare has a variety of rules that restricts who can purchase it.

So depending on when someone is flying, and in combination with what other flights, the price will vary. But while prices are constantly being loaded into computer systems, there aren’t 500,000 new prices being loaded into American’s systems every day.

Although if I’m wrong I’m sure someone with the Airline Tariff Publishing Co. will email me…

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