PPRuNe Forums - View Single Post - Airline pricing, I don't get it
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Old 27th January 2012 | 18:29
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ExXB
 
Joined: May 2009
Posts: 2,847
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From: Confoederatio Helvetica
Questions been asked and answered many times before - a search should give you some interesting reading.

However the $0.99 version is that pricing is NOT cost plus reasonable profit. The perfect price is the price that will sell.

Each market to US (LHR-EWR and LHR-PHL in your example) is independent. In pricing EWR, which they don't fly non-stop, they need to put their price in relation to what the competitors are doing in the same market. BA and CO/UA both serve this non-stop and a number of other carriers do so one-stop. Realistically to price a one-stop market you have to be lower than the non-stop carriers and at or around the price of the one-stoppers. So US calculates that at this point in time the right price LHR-EWR via PHL should be £460.

They do a similar analysis on the LHR-PHL market, looking at the prices of both their non-stop competitor and all the one-stoppers. I would guess that while they can be higher than the one-stoppers they probably can't be higher than BA. The right price for them now is £511.

If they priced EWR via PHL at (at least) £511 they wouldn't get many, if any, sales. Their revenue management people will decide if it's better to get £460 (split over two flights) or nothing and have the seats go empty.

Hope this helps.

Edited to add: Noticed I didn't answer your other question.

Assuming you are travelling return I would NOT recommend that you miss an intermediate flight. Most airlines will cancel the remaining flights on your booking. If you are going only one way, and are not checking a bag, you might be able to get away with it. But check US's conditions of carriage - it will tell you what their policy is on this.
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