Has anyone noticed that because their job requires excessive travel the airlines tend to charge more per ticket than someone that is just flying for say a vacation?
Hi,
Just hoping that i can get a few responses to help me with a project!!
Reply to this Hey Champ,
Not sure if you're looking for a response with the reasoning behind the pricing or what. If so, Being an economics student, there's a term called ELASTICITY, that has to do with it. Elasticity is pretty much a relationship between the quantity demanded of a product compared to a 1% raise in the price. For example, if a price is elastic, chances are there are several substitutes. A product that is INELASTIC has little to no substitutes, therefore, people have no choice to pay the price or not consume the product at all. Basically, once an airline knows you are flying for business as opposed to pleasure, it's a form of economic signaling and they know it's more of a "need' for you to travel. The more you "need" to travel, the more you should be willing to pay. Say for example, if you're going on vacation, chances are you're just looking for one of the cheapest tickets...... however, if you have a million dollar deal depending on the trip, you're less likely to fret over a few dollars. Granted that is an extreme case, but hopefully it helps you understand the airline's form of thinking. Anyways, for any vacations in the future, just sit back, relax, and enjoy...... especially if it's on your company's dime 😊
Reply to this Ya thats a good point, but I was looking more along the lines of price discrimination which is kind of what you described in a sense. I am doing an economics project on it actually and my professor asked me to research if an airlines looks into his flyer miles and sees that he travels for conferences many times a year and therefore ups the price on his tickets, as opposed to someone just going on a random vacation where if the price is too high they will abondon the trip. If you have any comments about this one great!!!! Thanks for the help I might be able to use some of the things mentioned. Thanks for bringing it to my attention.
Reply to this Hey Champ,
You are correct about the price discrimination. I didn't know you were an Econ student,so i didn't get nearly as technical. However, if you look at price discrimination, elasticity is the root of the ability to discriminate on price. I'm sure you are aware there are different kinds of price discrimination such as geographic, product bundling (where you have to buy more than usual, thus the firm captures the consumer surplus, etc)....... but anyways, what I'm trying to say is firms are ABLE to discriminate on price DUE to the elasticity of each individual. Firms are able to separate customers by their demand, and charge them different prices.
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