MileHighClub
Topic Author
Posts: 47
Joined: Thu Jan 15, 2004 10:21 pm

Airfares - Whats The Logic Behind It..?

Fri Jan 16, 2004 12:58 am

Well, after reading these forums for well over a year, i've finally decided to trade up and sign-up as a member! Here's my first post....cool eh?!  Smokin cool

So i'm planning a mega trip to the US next month...and obviously I want to try out the new SQ A345 service direct to Los Angeles. Although I live in Hong Kong and can very easy fly UA or CX to the West Coast, I wouldn't mind travelling to Singapore to connect with the SQ flight.

After checking on webfares - look for "A345 Promotions" on the SQ website, there are huge discrepencies between fares on the same flight e.g.

If i was flying SIN-LAX-SIN - The fare works out to about $900 USD

However, if I fly BKK-SIN-LAX-SIN-BKK - The fare (also on the A345) is about $650USD.

And there are plenty more variations, for example its more than $1000USD flying from Denpasar to LAX via SIN...

What gives? I'm a hotelier, so I know a thing or two about yield management and such...but I would think that $250 is a big saving even though i'm sure that the routing via BKK will cost SQ a lot more.

Is there anyone in this forum who can shed some more light on the intricacies
of airline pricing?

Oh and another case that i know of are the CX/AA codeshares within Asia...for example HKG-BOM on CX operated a/c - If I buy a ticket on AA for the flight it is usually about 15% cheaper that having it ticketed on CX!
 
LJ
Posts: 4147
Joined: Wed Nov 17, 1999 8:28 pm

RE: Airfares - Whats The Logic Behind It..?

Fri Jan 16, 2004 3:14 am

A basic rule in air fares is that passengers wanting to travel from point A to B without a transfer (thus SIN-LAX-SIN) pay more than the transfer passenger who travels partially on the same route (thus the BKK-SIN-LAX-SIN-BKK passenger) provided that there is competition on the BKK-LAX citypair (the reason why the price is lower is because a passenger flying BKK-LAX has a choice between multiple airlines and if one offers a direct flight this means that those who only offer a connection must do their best to get the passenger). In your example I reckon that competition on the BKK-LAX citypair is fierce as Thai offers a direct flight and multiple others offer connection flights. Thus in order for SQ to attract passengers ex BKK for LAX they must do their best (or better lower their prices).

However, if you don't have a direct link with your destination and thus are always forced to transfer the prices may be higher than someone only flying locally. This depends on the number of possibilities available (thus competition) for those passengers to get from point A to point B. Needless to say, when the competition is low, prices are high.

Another rule is that a foreign airline is usually cheaper than the home airline of the country in which you reside. However due to some restrictions (some airlines try to "persuade" travel agents not to sell to non-residents) this may not always be possible.

Furthermore, it may also depend on the available fare classes ex Denpassar or BKK.

BTW in Europe some UK residents travel first fly to, for example, AMS before flying with BA to a destination outside Europe. The savings can be big, moreover as a ticket UK-AMS is very cheap nowadays. Fortunatly for the airlines many people don't want to have the extra hours of travel time and pay the higher fare instead.

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