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Profitability Of Multi-stop Itineraries?  
User currently offlineLHCVG From United States of America, joined May 2009, 1642 posts, RR: 2
Posted (5 years 7 months 5 days 1 hour ago) and read 2046 times:

I'm referring here to the ones where the airline offers you an alternative between: 1) a relatively expensive n/s a-b (if available); 2) a cheaper route through a hub/focus city a-b-c; 3) a convoluted roundabout from a-b-c-d offered for a dirt-cheap price. For instance, living in Cincinnati, I understand that we pay a "tax" to have n/s service to so many destinations. Fine. And I get that an airline might give a "discount" for more efficient routings (through their major hubs via the hub and spoke idea). But, these two-stop deals, some with total mileage way over the nonstop flight and/or doubling back, how do they make money for the airlines when it would seem that a simple one-step would do?

4 replies: All unread, jump to last
 
User currently offlineKcrwFlyer From United States of America, joined May 2004, 3847 posts, RR: 7
Reply 1, posted (5 years 7 months 5 days 1 hour ago) and read 2028 times:



Quoting LHCVG (Thread starter):
And I get that an airline might give a "discount" for more efficient routings (through their major hubs via the hub and spoke idea). But, these two-stop deals, some with total mileage way over the nonstop flight and/or doubling back, how do they make money for the airlines when it would seem that a simple one-step would do?

I'm really not sure they even do. The more flights they put you on, the more it costs them. If you're paying a dirt cheap fare for a 2 or 3 stop, its likely the result of combining various fare sales to and from each city along the way.


User currently offlineCubsrule From United States of America, joined May 2004, 23308 posts, RR: 20
Reply 2, posted (5 years 7 months 5 days ago) and read 1900 times:



Quoting LHCVG (Thread starter):
But, these two-stop deals, some with total mileage way over the nonstop flight and/or doubling back, how do they make money for the airlines when it would seem that a simple one-step would do?

It's about demand, not their costs. People are going to be less willing to pay for out of the way routings. The theory is that, as long as passengers cover their own variable costs (which are quite low-- just a little bit of fuel and a few cans of soda basically), then the airline might as well fill empty seats at any price it can.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineLuvflng From Costa Rica, joined Nov 2000, 178 posts, RR: 0
Reply 3, posted (5 years 7 months 4 days 23 hours ago) and read 1808 times:

Basics of Economics

if Marginal Revenue >= Marginal Cost of carrying an extra passenger than the airline will sell you that itenerary.



Radar Contact Terminated, Squawk VFR
User currently offlineLHCVG From United States of America, joined May 2009, 1642 posts, RR: 2
Reply 4, posted (5 years 7 months 4 days 21 hours ago) and read 1719 times:

I didn't realize that MR per pax mile was high enough to support these awkward routings. But I guess they wouldn't be doing it if they didn't make money!

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