We came across an unusually lucid piece of business reporting the other day. The Secrets Behind Crazy Air-travel Prices cuts through the muck and gives a very good overview of how airlines price tickets. Read it once, then read it again. You won't like it, but it will start to make sense. Here are some important takeaways—if you don't remember anything else, remember these points...
- Operating an airline is very expensive
- Its source of revenue, the airline seat, is highly perishable. The moment the plane takes off, that revenue opportunity is lost forever. It is often compared to a rotting banana
- Your seat might look the same as the guy's in 15F, but he actually bought a different product. Most likely, so did everyone on the plane
- The landscape is littered with failures