Does anyone understand airline prices?

[jaydee]

So I'm thinking of taking the wife and kid on a trip in November 2012 from Rochester, NY to Madrid, Spain. I look up flights on kayak for roughly the same days in November 2011 to get a sense of what the prices will be next year. From ROC to MAD I'm getting a price of around $700 RT, per person with a stop in Philly each way. Well heck, my bro lives in Philly, it's only a 5.5 hour drive, I bet I can save money by driving there and getting a lift to the airport and get to spend some time with him. Cost is about $800 per person using the same flight numbers from PHL to MAD as my original search from ROC to PHL to MAD!!

Maybe kayak is messed up? I go to the airline website directly (US Airways) and do the same search. From ROC - PHL - MAD and reverse trip home: $645. PHL to MAD and reverse trip using the exact same flight numbers from PHL to MAD in both trips: $744. How can it cost less to make one more leg?

This is not a rant, but a legitimate question. Can anyone explain this to me? I suppose it's possible that the airlines have poor programmers, but I'm hoping there's a better explaination than this? What am I not understanding about this industry?

Reference:
ROC - Rochester Airport
PHL - Philly Airport
MAD - Madrid Airport

 

[Exterous]

I would imagine the demand for flying from Phily to Madrid is more than the demand for Rochester to Madrid so they can get away with charging more for those people who book just through Phily

But yeah - flight prices are odd and seem to change randomly. My wife and I have played all sorts of games with DTW, the Lansing Airport, the Gerald Ford Airport and the two chicago ones (We have fam in GR and Chicago). It's a huge pain in the ass but has saved us hundreds on flights

 

[ElFenix]

airlines compete on routes from origination to destination, without much regard to the legs in between. so, it was cheaper to fly from austin to bogota through houston than from houston to bogota.

 

[JS80]

All airline pricing is done on purpose and can be explained with one word: algorithms.

 

[kranky]

It's all about yield management. Airlines spend millions analyzing data to work out ways to maximize revenue. That's why prices change day to day, sometimes hourly. If a flight starts to fill earlier than usual, they raise the price of the remaining seats to make more money. If bookings for a particular flight are lagging, they might cut the price.

Just guessing based on your example, they might not be selling enough seats on the ROC to PHL flight, so they trim some of the cost from ROC to anywhere if it transfers through PHL to help fill seats on the ROC departure. Two months from now, the situation might be different and you might save money starting in PHL.

It's not poor programming, you can be sure of that.

 

[ElFenix]

interesting:
http://www.maa.org/devlin/devlin_09_02.html

 

[Lithium381]

<why you no> face

 

[darkxshade]

Based on the responses, I would recommend you try to find & book a flight from a more remote location(that's cheaper) as your original destination that has a connection in Philly. Then you can get that and drive to Philly to catch the connecting flight.

 

[ElFenix]

Based on the responses, I would recommend you try to find & book a flight from a more remote location(that's cheaper) as your original destination that has a connection in Philly. Then you can get that and drive to Philly to catch the connecting flight.

they'll cancel you if you don't get on that first flight.

 

[Uppsala9496]

What are the ticket codes for each leg? For the direct flight you may be purchasing a ticket at a higher code, thus higher price.

 

[sactoking]

This is not a rant, but a legitimate question. Can anyone explain this to me? I suppose it's possible that the airlines have poor programmers, but I'm hoping there's a better explaination than this? What am I not understanding about this industry?

Reference:
ROC - Rochester Airport
PHL - Philly Airport
MAD - Madrid Airport

Very generally, it's competition. Imagine there are only 3 airlines in the world, A, B, and C. There are also only three cities in the world, Rochester, Philadelphia, and Madrid. Airline A has only one flight, a direct from Rochester to Madrid. Airline B has only one flight, a direct from Rochester to Madrid. Airline C has two flights, a Rochester to Philadelphia and a Philadelphia to Madrid. If you wanted to get from Rochester to Madrid you could take any of the three airlines. The competition on that route causes ROC -> MAD ticket prices to go down. If you wanted to get from Philadelphia to Madrid you could only take Airline C. Since Airline C has a monopoly on the PHL -> MAD route, tickets prices are inflated. Airline C will sell the ROC -> MAD ticket for less than the PHL -> MAD ticket because the origination and destination points are what matter in competitive pricing and not so much the stops.

This is, obviously, a general example but it is the analysis airlines use in pricing.

 

[jaydee]

I would imagine the demand for flying from Phily to Madrid is more than the demand for Rochester to Madrid so they can get away with charging more for those people who book just through Phily

I guess that makes the most sense when you look at it in terms of consumer demand. It may cost them more in terms of their "actual cost" if I take Roc-to-PHL-to-MAD route, but they'll make up for it in charging more to those who just take PHL-to-MAD for which there's calculated to be a higher demand. If they charged more for the ROC-to-PHL-to-MAD, I might take Continental through EWR, or Delta via JFK.

After all, a 20oz bottle of Pepsi is often more expensive than a 2-liter. Nothing to do with "actual cost", that's for sure.