Which US Airports have the Most Unfair Fares? (incl. Ranking Tables)
Apr 7, 2011, 2:15 am
#1
Original Poster
Join Date: Jun 2005
Posts: 8,527
Which US Airports have the Most Unfair Fares? (incl. Ranking Tables)
http://fivethirtyeight.blogs.nytimes...-unfair-fares/
What we need is an approach that distinguishes airfares that are high because of monopoly pricing from those on routes that are legitimately expensive to fly.
...
The regression analysis also accounts for three other factors that have significant effects on pricing. These are, respectively, the market share at the origin and destination airports held collectively by the five “legacy carriers” (United, American, Delta, Continental and US Air); the market share held by Southwest Airlines; and the market share held by the largest single carrier at that airport (for instance, Delta and its affiliates are responsible for about 66 percent of all traffic at Atlanta).
¶Prices are higher the more the legacy airlines dominate an airport, but they also tend to be a bit higher where Southwest has a large share as opposed to other low-cost carriers like AirTran and JetBlue. (Southwest is cheap, but it isn’t quite as cheap as some of these up-and-coming airlines and now represents something of a middle ground.) Also, prices tend to be higher when any one airline dominates an airport, regardless of whether it is a legacy carrier or a low-cost one.
...
The regression analysis also accounts for three other factors that have significant effects on pricing. These are, respectively, the market share at the origin and destination airports held collectively by the five “legacy carriers” (United, American, Delta, Continental and US Air); the market share held by Southwest Airlines; and the market share held by the largest single carrier at that airport (for instance, Delta and its affiliates are responsible for about 66 percent of all traffic at Atlanta).
¶Prices are higher the more the legacy airlines dominate an airport, but they also tend to be a bit higher where Southwest has a large share as opposed to other low-cost carriers like AirTran and JetBlue. (Southwest is cheap, but it isn’t quite as cheap as some of these up-and-coming airlines and now represents something of a middle ground.) Also, prices tend to be higher when any one airline dominates an airport, regardless of whether it is a legacy carrier or a low-cost one.
Apr 7, 2011, 6:19 pm
#2
Join Date: Dec 2009
Location: WAS
Posts: 3,010
I think one of the commenters has it right:
All of your arguments suggest that the perfect price is the cost of production plus a reasonable profit. Can you give me an example of any (unregulated) business that prices this way?In fact the right price, in a free market, is the price that the customer is willing to pay. Too high, and you spill traffic. Too low and you lose opportunity (and risk the wrath of your shareholders). The end price may not be 'fair' but so what.Nice work, but purely academic. No relation to the real world.
Apr 7, 2011, 8:37 pm
#4
Join Date: Apr 2007
Location: Australia
Posts: 6,338
I think that comment was spot on too...
It's fascinating in fact to see the radically different views many folks hold on such matters when you turn the talk from airfares/Doctors fees/etc to... say... the business THEY are in...
"That's different"!!!!
It's fascinating in fact to see the radically different views many folks hold on such matters when you turn the talk from airfares/Doctors fees/etc to... say... the business THEY are in...
"That's different"!!!!
Apr 9, 2011, 12:10 am
#5
Original Poster
Join Date: Jun 2005
Posts: 8,527
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Apr 9, 2011, 4:17 pm
#6
Join Date: Jan 2011
Location: Oklahoma
Programs: MR LT Platinum, HH Diamond, WN A-List,
Posts: 478
Not surprised at all to see Oklahoma City - my home airport on this list.
I am slightly interested that Tulsa did not make the list as well since the prices out of each airport seem to be about the same.
I am slightly interested that Tulsa did not make the list as well since the prices out of each airport seem to be about the same.
Apr 9, 2011, 7:38 pm
#7
Join Date: Jan 2011
Location: SJC, SFO
Programs: UA, AA, SPG
Posts: 439
I can only base my opinion on a small personal sample size, but I was surprised not to see SNA on the list of expensive small airports. But maybe it just seems expensive when compared to LGB and LAX.
Apr 10, 2011, 12:04 pm
#8
A FlyerTalk Posting Legend
Join Date: Apr 2001
Location: PSM
Posts: 69,232
The stats may be impeccably calculated but they are based on assumptions that are so ridiculously erroneous that the entirety of the conclusion is suspect. Too bad, because he's apparently a smart guy on some topics. He just doesn't understand air travel.
Apr 17, 2011, 7:09 pm
#9
Join Date: May 2009
Location: CID, MSN
Programs: UA, AA, Delta
Posts: 245
Yeah. Iowa is a notoriously expensive market -- since de-regulation that is.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Apr 17, 2011, 9:31 pm
#10
Join Date: May 2009
Posts: 314
Yeah. Iowa is a notoriously expensive market -- since de-regulation that is.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Apr 17, 2011, 9:37 pm
#11
Join Date: May 2009
Posts: 314
Apr 18, 2011, 10:02 am
#12
FlyerTalk Evangelist
Join Date: Feb 2007
Location: Los Angeles / Basel
Programs: UA 1K MM, AA EXP, Hyatt Globalist
Posts: 26,926
Yeah. Iowa is a notoriously expensive market -- since de-regulation that is.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Before it was priced according to economic reality instead of "take advantage of no or low competition and use the profits to underwrite losses on competitive urban markets" of today which is another form of rob the poor to pay the rich.
Apr 18, 2011, 1:12 pm
#13
Join Date: Nov 2006
Location: MEL
Programs: DL, QF, QR Gold, MR Lifetime Gold
Posts: 7,003
The comment cmn.jcs mentioned is incorrect.
On of my best friends works for a food company (think salad dressing). When the production price went down (one of the ingredients got cheaper) they passed the savings to the customer, the difference did NOT go towards dividends. It does happen.
The idea of a completely free market is as asinine as the idea of a completely regulated one. It's very clear though that monopolies (with few exceptions, such as natural monopolies) are almost never good for the consumer, which is why so many countries have anti-trust laws.
All of your arguments suggest that the perfect price is the cost of production plus a reasonable profit. Can you give me an example of any (unregulated) business that prices this way?In fact the right price, in a free market, is the price that the customer is willing to pay. Too high, and you spill traffic. Too low and you lose opportunity (and risk the wrath of your shareholders). The end price may not be 'fair' but so what.Nice work, but purely academic. No relation to the real world.
The idea of a completely free market is as asinine as the idea of a completely regulated one. It's very clear though that monopolies (with few exceptions, such as natural monopolies) are almost never good for the consumer, which is why so many countries have anti-trust laws.
Apr 19, 2011, 10:52 pm
#14
Original Poster
Join Date: Jun 2005
Posts: 8,527
Of course you will and so will many others.
"I'll take!" I'll take!" is a very apt summary of the attitude that is taking the US as an economy and a civilized country right down with it.
There is no free lunch.
The loss on the $250 transcon is being paid by eliminating or overcharging for critical service elsewhere and by leaving the entire nation without an even halfway competitive national transportation infrastructure.
But, hey, as long as you can take yours, who cares what that costs everyone else, including your children and their grandchildren, in the long term. It's all about me, baby!