FlyerTalk Forums - View Single Post - For what reason is O&D so profitable for airlines?
Old Dec 18, 2006 | 2:00 pm
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YVR Cockroach
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Take a look at premium fares between financial/corporate/money centre hubs, namely NYC, LON (LHR in particular), NRT, SIN, HKG and to various lesser degrees, FRA, SYD, BOS, ZRH, AMS and CDG. Direct non-stop fares are exorbitant while connecting flights are cheaper as the premium end of the market values its time. The premium end of thiese markets are also very large: What these O&D cities have in common are huge concentrations of financial institutions (commercial and investment banks, IMCOs (investment mgmt co.)), consultancies (accounting, tax, mgmt), corporate HQs and/or regional HQs of large multi-nationals, and with highly-paid staff to go with it. A few hours of transit time can be worth thousands to these travellers. Those are the companies that'll pay the premium fares that is the cream of most airline's revenue, not the fare-sensitive joe/jane backpacker market.

As for your example of ORD, I know there are various commodity exchanges there and of course many HQs of Fortune 500 companies but I doubt if it's as lucrative as NYC? Of course it's still more lucrative than CLE and CVG as you identified, but also a number of major hubs in the U.S. IAH is a valuable O&D for routes from/to oil-producing places.
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