Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Which US Airports Have Most Unfair Fares?  
User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Posted (3 years 8 months 3 weeks 2 days 8 hours ago) and read 8961 times:

Interesting post by Nate Silver in the NYT:
http://fivethirtyeight.blogs.nytimes...rts-have-the-most-unfair-fares/?hp

It's about which of the 100 largest airports in the US have the most and least overpriced fares.

Rather than doing a simple average of fares to compare airports, he tried to clean up some of the Bureau of Transportation Statistics data and control for things like distance flown (fairer to charge more for longer distances) and airports with limited service (where costs are spread over fewer passengers).

You can read about his methodology in the article-- it's pretty solid.

Thought this note was interesting, since so many people assume WN has the lowest fares:

Quote:
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.)

Anyway, he finds IAH, EWR, DFW, MSP, and DCA to be the 5 most overpriced large airports, while the 5 most competitively-priced airports are FLL, MKE, MCO, TPA, and LAS.


CO/IAH-loyalist happily driven into the arms of WN/HOU
55 replies: All unread, showing first 25:
 
User currently offlineboeingkid From United States of America, joined May 2009, 117 posts, RR: 0
Reply 1, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8928 times:

CVG has always been overpriced

User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 2, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8901 times:

Quoting boeingkid (Reply 1):
CVG has always been overpriced

Which, according to Silver's analysis, isn't surprising given the market size (not large) and the fact that it's dominated by DL -- and where airports are dominated by a single carrier, fares tend to be higher.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineRabenschlag From Germany, joined Oct 2000, 1021 posts, RR: 0
Reply 3, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8893 times:

I always thought that market mechanisms determine prices, and in what sense can markets be unfair?

User currently offlinemogandoCI From , joined Dec 1969, posts, RR:
Reply 4, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8863 times:

CVG +$85
MEM +$99

it's so odd the author ranks by Top 50 O&D (those 2 aren't) instead of Top 50 total pax (those 2 probably are)


User currently offlineouboy79 From United States of America, joined Nov 2001, 4616 posts, RR: 23
Reply 5, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8829 times:

Quoting CODCAIAH (Thread starter):
Thought this note was interesting, since so many people assume WN has the lowest fares:

One of the biggest myths in the airline/travel industry, but the public is too stupid to know any better. Of course LUV shareholders don't mind one bit.  


User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 6, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8810 times:

Quoting mogandoCI (Reply 4):
it's so odd the author ranks by Top 50 O&D (those 2 aren't) instead of Top 50 total pax (those 2 probably are)

The rationale behind ranking by top 50 O&D rather than total pax is to compare the extent to which fare are overpriced for people traveling to/from said markets, vs. simply connecting through them. MEM and CVG might have high total pax because lots of people connect there, but their markets aren't large.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineflying_727 From United States of America, joined Jun 1999, 440 posts, RR: 5
Reply 7, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8812 times:

The fundamental assertion that the fares are unfair is flawed. There is much more to determining pricing of tickets than purely the miles flown, load factor, etc. Pricing for all things in the market is based on fundamental economic principles of supply and demand coupled with the customers WILLINGNESS to pay. In marketing, the difference between the willingness to pay and the cost to produce is one way to calculate the value/premium of your competitive advantage. Competitive advantage does not necessarily equate to the level of service provided, but can be the actual offering of the service. (i.e. serving a small town at 40% avg load factor. Customers are willing to pay a higher fare to keep the service than to pay a lower price and have the service dissolve regardless of distance). First class passengers are willing to pay more for the extra room and service, and because the general public is in the back. This also explains why UA customers are WILLING to pay a premium for Y+.

Also, having a low fare does not equate to being competitive because the service may not warrant a customer’s willingness to pay a high price. (i.e. people are not willing to pay legacy prices for Spirit’s service and legroom). Low pricing in the Florida market doesn’t make the carriers competitive either. The prices are low because of the supply is high, margins are low (sometimes negative), but carriers still fly the routes in order to satisfy their customers which they hope will fly the carrier for trips to locations with higher premiums. Some of the LCC or ULCC carriers in Florida do make higher margins but this is partially due low cost structures due non-legacy expenses (mainly senior employees, and some equipment age which increases maintenance expense). Outside the airline definition of legacy, Southwest is actually referred to as a Legacy carrier because they have typical legacy expenses.

This is only a brief discussion on pricing, airline pricing uses complex algorithms which use some of the information above and MUCH MUCH more.

Flying_727



On ATA, You're On Vacation
User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 8, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8769 times:

Quoting Rabenschlag (Reply 3):
I always thought that market mechanisms determine prices, and in what sense can markets be unfair?

They're "unfair" to the extent that when you control for distance and market size, fares deviate from what you would expect them to be and hence you have evidence that airlines are charging premium because of their ability to do so based on other factors.

Market mechanisms are not the only thing that determine prices. We don't live in a pure, Adam Smith world. And, besides-- this analysis looks at how market mechanisms affect prices, that's the whole point of the article.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineflying_727 From United States of America, joined Jun 1999, 440 posts, RR: 5
Reply 9, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8738 times:

Quoting CODCAIAH (Reply 8):

Market mechanisms are not the only thing that determine prices. We don't live in a pure, Adam Smith world. And, besides-- this analysis looks at how market mechanisms affect prices, that's the whole point of the article.

Thus they are not unfair.



On ATA, You're On Vacation
User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 10, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8725 times:

Quoting flying_727 (Reply 7):
The fundamental assertion that the fares are unfair is flawed.

He's not asserting that airlines are circumventing the market -- that's impossible. He's using a certain methodology and set of assumptions, which you may disagree with, to look at data in a particular way. He's not asserting that it's the only way to look at this data. He clearly defines what he means by "unfair", and it provides one interesting look at the types of factors that influence how airlines prices Y tickets in the US when you control for distance and market size and other factors.

For example, he finds that all else being equal, XNA tends to have higher fares, and there's a clear market reason for that: Wal-Mart and its clients are willing to pay more.

Not sure why people are jumping to say the assertion here is that airlines are somehow bypassing the market.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 11, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8725 times:

Quoting flying_727 (Reply 9):

Thus they are not unfair.

I think you're getting caught up with the word "unfair". He's using that word in a specific way to make a point.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineflying_727 From United States of America, joined Jun 1999, 440 posts, RR: 5
Reply 12, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8664 times:

Quoting CODCAIAH (Reply 11):
I think you're getting caught up with the word "unfair". He's using that word in a specific way to make a point.

Of course I am!!! lol He's using the "unfair" to incite an emotional response from consumers, regardless of his criteria. No different than any politician.



On ATA, You're On Vacation
User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 13, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8639 times:

Quoting flying_727 (Reply 12):
Of course I am!!! lol He's using the "unfair" to incite an emotional response from consumers, regardless of his criteria. No different than any politician.

Filed under "missing the point". Looks like you work for an airline, probably in revenue management or something, so I can see why that word would annoy you. Looking past his confusing (mis-)use of the word "unfair", is there anything about the article you find interesting?

For example, I think it's neat to see data that show markets dominated by one carrier or where other factors like relative size of business market (XNA and IAH vs. LAS and FLL) drive fares up or down when you control for distance and market size. Here's data that backs up assertions that so many on A.net make. Pretty neat!



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlinepeanuts From Netherlands, joined Dec 2009, 1445 posts, RR: 4
Reply 14, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8626 times:

What is the meaning of "unfair"?

Quoting CODCAIAH (Reply 11):
He's using that word in a specific way to make a point.

Exactly! Eye catching title in this world full of people who victimize themselves...

It's a flawed topic for the type of society we live in. Market mechanisms at work.

McDonald's is cheaper on 5th Street as compared to Terminal 1 at the airport (in a confined area)...right?
Chain stores carry different prices for same articles depending on the region, correct?

This topic will go nowhere. Just a NYT article to drum up some needless drama.



Question Conventional Wisdom. While not all commonly held beliefs are wrong…all should be questioned.
User currently offlineH53Epilot From Israel, joined Mar 2004, 177 posts, RR: 2
Reply 15, posted (3 years 8 months 3 weeks 2 days 7 hours ago) and read 8563 times:

Exactly. It catches a readers eye. If he simply mentions in the subject "Why airfares may be different at different airports" then many would probably skip reading. He's going for the emotional reaction along the lines of "Why airlines are able to rip you off.". It's interesting that he implies that airlines have pricing power in certain airports, yet never really discusses the fact that most airlines have billions of dollars of debt due to the Years of effectively subsidizing airfares and losing billions along the way. Passengers don't want to hear that. Only that they are getting unfair fares today.

User currently offlinemogandoCI From , joined Dec 1969, posts, RR:
Reply 16, posted (3 years 8 months 3 weeks 2 days 6 hours ago) and read 8534 times:

In Nate's world, he treats it as a pure commodity (like a greyhound ticket)

Nate considers "unfair" because he only controls for distance and market size, but not for wealth of the residents of the market, # of airlines hubbing there, amount of competition per route, desirability of the destination, on-board comfort (Y+ on UA, up to 38" on B6 etc), seat width, seat pitch, junk fees, or perks from FF (e.g. given the same flight NYC-west coast, i'm willing to pay $50-100 premium on CO/EWR due to FF status perks such as 2x miles and chance of upgrade).

Nate is a typical redistributionist. He made similar arguments back in 2009/2010 about how "unfair" that people who don't work hard themselves can't obtain the same level of healthcare as those who care about their own future.

In Nate's twisted mind, the guy who drops out of school to join a drug-dealing gang deserves to be treated equally as the one who studied hard for his MBA and got a job at a top financial firm, and it is government's fault for not bailing out society's bottom feeders (via various welfare programs). Thanks to people like Nate, by 2014, my hard-earned tax dollars go towards paying for that drug dealer's health care instead of education or infrastructure or renewable energy.

THAT is what "unfair" truly means


User currently offlinepeanuts From Netherlands, joined Dec 2009, 1445 posts, RR: 4
Reply 17, posted (3 years 8 months 3 weeks 2 days 6 hours ago) and read 8489 times:

Quoting mogandoCI (Reply 16):

  
In general your posts are a bit annoying. Today, I will give you credit. Your best post EVER!!!



Question Conventional Wisdom. While not all commonly held beliefs are wrong…all should be questioned.
User currently offlineScottB From United States of America, joined Jul 2000, 6826 posts, RR: 32
Reply 18, posted (3 years 8 months 3 weeks 2 days 6 hours ago) and read 8488 times:

Quoting flying_727 (Reply 7):
There is much more to determining pricing of tickets than purely the miles flown, load factor, etc. Pricing for all things in the market is based on fundamental economic principles of supply and demand coupled with the customers WILLINGNESS to pay.

The existence of "willingness to pay" doesn't necessarily make the price for a good or service "fair." You can charge $10 for a gallon of milk if you're the only game in town (for example, after a natural disaster) but that doesn't mean it's a fair price.

Quoting flying_727 (Reply 7):
In marketing, the difference between the willingness to pay and the cost to produce is one way to calculate the value/premium of your competitive advantage. Competitive advantage does not necessarily equate to the level of service provided, but can be the actual offering of the service.

In some cases, this is true -- but in other cases, the sellers in a market restrict the amount of product offered and use anti-competitive practices to deter entry by competitors; i.e. activities like gate- and slot-squatting. Also, the article's author DID break down the comparison among small, medium, and large airports to reflect the higher costs of providing service in small markets; the small markets do have a higher "fair fare."

Quoting CODCAIAH (Thread starter):
You can read about his methodology in the article-- it's pretty solid.

It might be difficult to do, but IMO one important data element that's missing (and perhaps difficult to collect) is what the average all-in cost of flying might be at these airports, since there's so much unbundling going on at a number of carriers.


User currently offlineIMissPiedmont From United States of America, joined May 2001, 6342 posts, RR: 33
Reply 19, posted (3 years 8 months 3 weeks 2 days 6 hours ago) and read 8358 times:

Quoting Rabenschlag (Reply 3):
in what sense can markets be unfair?

I agree.

Quoting CODCAIAH (Reply 8):
They're "unfair" to the extent that when you control for distance and market size, fares deviate from what you would expect them to be and hence you have evidence that airlines are charging premium because of their ability to do so based on other factors.


Then why would people pay the fare? Nobody is forced to fly anywhere. A bunch of whiny people want to get into a 50 million dollar (or more) airplane and fly 3000 miles for $150.00. Where is the flaw in this thinking ?



Damn, this website is getting worse daily.
User currently offlinedazeflight From Germany, joined Jun 1999, 580 posts, RR: 2
Reply 20, posted (3 years 8 months 3 weeks 2 days 5 hours ago) and read 8298 times:

@mogandoCI: if your worldview truly only consists of people with top-MBA's working in financial companies and drug dealers, it's a pretty simple and narrow one. But you share that with a lot of the whiners taking part in the discussion about that topic.

User currently offlinemogandoCI From , joined Dec 1969, posts, RR:
Reply 21, posted (3 years 8 months 3 weeks 2 days 5 hours ago) and read 8247 times:

Quoting dazeflight (Reply 20):
@mogandoCI: if your worldview truly only consists of people with top-MBA's working in financial companies and drug dealers, it's a pretty simple and narrow one. But you share that with a lot of the whiners taking part in the discussion about that topic.

And here comes yet another redistributionist that think people's dire situations are all society's fault with no such thing as individual accountability. Whatever happened to "independent adulthood" ?


User currently offlineCODCAIAH From United States of America, joined Jul 2006, 177 posts, RR: 0
Reply 22, posted (3 years 8 months 3 weeks 2 days 5 hours ago) and read 8175 times:

Quoting mogandoCI (Reply 21):

And here comes yet another redistributionist that think people's dire situations are all society's fault with no such thing as individual accountability. Whatever happened to "independent adulthood" ?

This thread should be closed. What could have been an interesting discussion on some data analysis has devolved into bickering about the author's other views and word definitions. Too bad.



CO/IAH-loyalist happily driven into the arms of WN/HOU
User currently offlineyegbey01 From United States of America, joined Nov 2003, 1732 posts, RR: 3
Reply 23, posted (3 years 8 months 3 weeks 2 days 4 hours ago) and read 8077 times:

Well...I live a few Metro stops from DCA. I am always wiling to pay more even though BWI is significantly cheaper. I sometimes scratch my head by how much cheaper BWI can be when compared with DCA. I often pay 600 for a round trip DCA to DTW when it is 225 out of BWI OBviously WN plays a huge role here, but DCA offers incredibly cheap fares all over Florida - which is always a bonus

User currently offlineCuriousFlyer From United States of America, joined Oct 2006, 702 posts, RR: 0
Reply 24, posted (3 years 8 months 3 weeks 2 days 4 hours ago) and read 7980 times:

"Fair" or not is semantic, but the idea is there. Where an airline (or a group of them) manages to be in a dominant situation, the fares can go through the roof. Two real examples in the NYC area:
- LGA or JFK to CLT is usually around $300 for a direct return with a 1 week notice. EWR to CLT is at least double this, and this is because EWR is a Star Alliance stronghold, with flights only by CO and US, whereas JFK also has B6 and DL and LGA has AA.
- NYC airports to YUL: direct fares are usully above $500, $600 with a one-week notice, often $800+ ! For a one hour flight, this is just not justified at all, even with high taxes. But this route is 90% Air Canada and 100% legacy... Fly to BTV which is close to YUL and where Jetblue goes, and the fares are around $200...

[Edited 2011-04-06 13:07:55]

25 Oak522 : I don't know about most unfair airport, but the most aggravating airport pair in my mind at the moment is PIT-DCA. US has cornered the market on the 3
26 Post contains images seabosdca : Many, if not most, airports do not offer travelers a free market for airfares, for many reasons. You have the CVG case, where a single carrier essent
27 SouthernDC9 : I have a friend who was flying out to CA (who doesn't fly much, as you'll soon imagine). He mentioned his airfare - seemed very high to me... he said
28 Alias1024 : I think everyone is getting bent out of shape by nothing more than a simple word play. He could have chosen plenty of other ways to describe the situa
29 heathrow : I know this is only US, but add any Canadian airport in to that list. Tried to book YVR to YZP yesterday, fare was almost 800$, plus taxes of almost 2
30 bjorn14 : I like Herb Kellerher's pricing model. "We figure out what it cost to produce that airline ticket then add a reasonable profit to it so people think t
31 glbltrvlr : Yes, but.... That's called cost plus pricing. It sort-of works when you are selling services to the government or a commodity, but it doesn't work so
32 Post contains images RamblinMan : Here's one that's ACTUALLY unfair which I've used quite a bit... BNA-MKL one way for $39, even last-minute. The "true cost" of this service is closer
33 YYZAMS : I am not sure about the US but I would def say YYZ! I would say DFW for the states.
34 mogandoCI : if society can properly differentiate bad stuff happening to good people and bad stuff happening to bad people, i'm entirely supportive of it. until
35 CO777ER : Generally speaking, AUS is at least $50 than IAH, especially on CO flights. EGE and ASE aren't on the list, but they'd be on top.
36 slcdeltarumd11 : He is doing it one way and its generally correct. Of course there are flaws with his method and much more time heavy ways to do it more accurately. In
37 twinotter : In that scenario, wouldn't a price of $10/gallon of milk prevent a small number of people from snapping up ALL the milk, leaving none for most people
38 SolarFlyer22 : Good choice of airports. IAH is not that bad but its mostly run by Continental so you are really are at their mercy when flying there domestically. I
39 ScottB : When selling services to the government, demand is relatively inelastic, so there may be little incentive (or even a perverse disincentive if guarant
40 Post contains images nycdave : I think it's worth noting that not one upstate NY airport ranked on the "expensive" side of things, and one (BUF) actually came out as one of the best
41 BOAC911 : Which US Airports Have Most Unfair Fares? Unfair to who?
42 YULWinterSkies : Really, unfair to airlines and their employees. They are the ones who have lost the most. I'm ready to get flamed for this comment, but this is a wel
43 Maverick623 : Fairer to whom? In the real world, you don't just exclude demand and what people are willing to pay from any analysis on how to make money from a pro
44 seabosdca : It's people who won't acknowledge that markets are often distorted who don't know anything about economics. Markets are not working where there are m
45 CODCAIAH : You're attacking the writer for political views that have little to do with the substance of his observations. When he talks about a market being "ov
46 ScottB : Because you might be able to fill two planes or a larger plane with a better margin at $300/ticket. In the real world, you also don't have barriers t
47 Maverick623 : Generally, no, and I apologize if I came across that way. In a perfect market environment, airlines either price tickets to make enough money to surv
48 Post contains images seabosdca : Thank you for clarifying. I think such conditions are present in the airline industry alarmingly often. I would love nothing more than to see a freer
49 ScottB : By your argument, there essentially is no "fair" or "unfair" price. For any price that is set, there exists a level of demand that may be near zero o
50 Post contains images Maverick623 : Exactly my point. They are not out to "screw" anyone over, to say that they might charge a higher fare for the sake of making people pay more and "fo
51 ScottB : That still does not inherently change demand apart from any sort of marketing Southwest might have done for its own product. Supply did change but th
52 Post contains images Maverick623 : So? Hence why the fares went down. I'm not even sure why this is an argument.....
53 ScottB : Because you've made this nebulous statement that: When in fact the equilibrium price in various city pair markets is essentially dependent on the sup
54 frmrCapCadet : Nate cut his teeth as a child with baseball statistics. His predictions and evaluations were tested in the real(?) life of the next week or season gam
55 web500sjc : to me this article was actually a way to show demand. DCA will obviously be more expensive than BWI, and the prices show that. airlines can charge $X
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Which US Airports Are Losing The Most This Fall? posted Mon Aug 31 2009 10:47:05 by Enilria
What US Airports Have The Backscatter Scanners posted Fri Nov 12 2010 20:13:24 by titanmiller
Which Hawaiian Airports Have Commercial Service? posted Tue Mar 18 2008 15:42:45 by Mozart
Which US Airports Subscribe To CDA Method? posted Wed Feb 20 2008 15:13:00 by ArcrftLvr
Real Data: Which US Airports Are Under/Overserved? posted Fri Nov 9 2007 07:44:31 by RoseFlyer
Which US Airlines Have International Hubs Where? posted Thu May 27 2004 16:59:18 by 777kicksass
Which Small Airports Have Big Cargo Planes Coming? posted Thu Sep 4 2003 19:10:00 by Mozart
Which US Airports Had Transatl. Service In 1977? posted Fri Aug 22 2003 19:14:52 by Zrs70
Which US Airlines Have Laptop Power Ports Onboard? posted Thu Feb 27 2003 19:41:46 by Srbmod
US Airports In Most Need Of A Facelift posted Sun Feb 23 2003 20:42:40 by Zrs70