The Great British Airways Rip-off

student100

Pin wrote:

Even more tax on airlines, on top of landing charges, airport taxes and increasing fuel costs. Yep great way of putting up fares.

Of course, that's the whole point - increasing the price so it's nearer to the total cost (both internal and external costs) of production.
In theory it would reduce the demand for flights towards the socailly optimal level (best for the environment and society as a whole).

WiseInvestor wrote:

Social taxation has been proven to have little or no effect on behavioural spending. Even though we're continuing to suffer high pump prices, drivers are still not being tempted out of their cars.

Of course, that's because car travel has very price inelastic demand (large changes in price only have small effects on demand). Whether air travel is as inelastic or not, I don't know (I would guess not - certainly large decreases in price seem to have increased demand (for low cost flights) significantly).

...but we could argue economic theory all day and I don't think it will get us anywhere...

MarkyMarkD

I won't agree with student's view on this. The airlines' pricing is intended to use up surplus capacity by selling at a lower price to overseas based customers - who would otherwise not choose an indirect flight.

There is virtually no marginal environmental impact from one passenger flying London - Paris and Paris - London in order to then fly on to the US on a BA flight. The only way the environmental impact would become significant would be if additional flights took place just for this purpose - which isn't going to happen.

If you care personally so much about the impact, don't buy indirect flights. Most people wouldn't do so anyway - because of the time and hassle factor. So, in the main, the customers who buy the Paris - London - US flights will be more price-sensitive French customers - NOT British MSEs who can take the extra hassle.

student100

MarkyMarkD wrote:

I won't agree with student's view on this. The airlines' pricing is intended to use up surplus capacity by selling at a lower price to overseas based customers - who would otherwise not choose an indirect flight.

They could also use surplus capacity by selling at a lower cost to British customers in the first place...


As I said, we could argue theory all day, and much as I'm enjoying this I think I'm going to have to call this a night Thanks for the opportunity for a good debate though

mystic_trev

spookmeister wrote:

I want to travel from London to Toronto. I got a price for doing so £1,366.60 for 2 adults and a baby. Then I tried the option of flying from Amsterdam to Toronto with BA

I put various dates in Expedia and got a return to Toronto for two adults and a baby for £846.80.......with BA!

MarkyMarkD

student100 wrote:

They could also use surplus capacity by selling at a lower cost to British customers in the first place...


As I said, we could argue theory all day, and much as I'm enjoying this I think I'm going to have to call this a night Thanks for the opportunity for a good debate though

If they did this, they'd make LESS PROFIT.

It's not rocket science.

If you sell 80% of capacity to UK customers at (say) £300 average, and then the other 20% to French customers at (say) £250 average, your total revenue averages £290.

If you reduced your price for UK customers to £290, it would likely make NO difference at all to how many seats you sold, as the £10 is NOT enough to persuade enough extra people to fly with BA.

So, BA can:

(1) price discriminate and fill the plane with price-sensitive French customers and get an average of £290 per seat; or
(2) reduce the price in the UK to £290 and sell say 90% of the seats which averages revenue at only £261.

The numbers (above) are made up, but if BA COULD make more money following your suggestion than they do by price discriminating, they would do it - they are not stupid!

Yeknodathon

What an interesting thread!

Currently seeking to get into N. America on a cheap flight and connect to my destination on an even more cheap flight. Flying directly to my destination with the major airlines is convenient but relatively expensive so I need to search around and calculate whether the added inconvenience of making two stops is worth the saving (I prefer at least one stop)? Yes, the pricing disparities are odd, very odd but it is like a challenge! And because there are disparities it means there is potential for a bargain!

Yeknod

pin

BTW BA have a sale on at the moment (until 30 May): http://www.britishairways.com/travel/mayoffers/public/en_gb. Cheapest fare to the States is £299.

Cardew

MarkyMarkD wrote:

There's nothing wrong in what BA, or the other airlines, are doing - they are just maximising their shareholders' profits.

The issue is really quite simple.

WiseInvestor and MarkyMarkD have gone to great lengths to prove what is not in dispute. Namely that these practices by airlines are designed to maximise their profits.

The dispute is on the methods they use to achieve that aim.

I contend that their practices are restrictive and they have formed a cartel to artificially inflate prices on certain routes.

pin

Cardew wrote:

I contend that their practices are restrictive and they have formed a cartel to artificially inflate prices on certain routes.

That would make such actions illegal and considering how high profile airlines are I'm sure both the European Commission and our own Competition Commission would have looked into the matter had they suspected anything.

Cardew

pin wrote:

That would make such actions illegal and considering how high profile airlines are I'm sure both the European Commission and our own Competition Commission would have looked into the matter had they suspected anything.

Having decided that the cartel formed by European motor manufacterers to inflate RHD car prices was illegal, It took them about 20 years to impliment and enforce legislation.

So there is hope!