Competition..???

[swashplate]

Hello everyone!

Just looked at BA's website out of interest:

LHR-MAN 1650 Today - £123 excl taxes


On BM's website:

LHR-MAN 1645 Today - £123 excl taxes


"....Competition will bring down prices in a free market!!"

hmmmmm...........


PS: BTW you get £3 off BA's fare if 'e-ticket'!!!

[This message has been edited by swashplate (edited 30 May 2001).]

[Capt Byrd de Styrke]

Similar instances of airline 'collusion'
at LHR on transatlantic routes.

For example, full fare business to Chicago prices are nearly identical give or take a couple of quid for AA,UA,BA,VS !!!

[Squawk 8888]

In a competitive market prices will always be nearly identical for similar services. Think about it- if there was a substantial difference the higher-priced carrier will be flying empty all the time.

------------------
Per dementia ad astra

[Capt Byrd de Styrke]

Squawk...

Similar services but.. different cost bases !!!

Different a/c, service levels, yield management strategies etc.. etc..

[Squawk 8888]

<font face="Verdana, Arial, Helvetica" size="2">Similar services but.. different cost bases !!!</font>

True, which is why some airlines are profitable while others go under. None of them can afford to charge more than the others, and charging less cuts into the margins and can also cause the volume to overwhelm the operations side of things. Remember, the key to setting the price is not your cost- it's what the customer is willing to pay that matters, which is why the business traveller booking the day before will pay through the nose while the vacationer who plans ahead will get a good deal.

------------------
Per dementia ad astra

[Capt Byrd de Styrke]

'Charging less may cut into the margins...'

Yes it may, but they may still may be able to cover their costs after a price cut.

Some airlines must be able to charge a lower rate for a similar route... because their cost base is different.

'Remember, the key to setting the price is not your cost....'

The starting point when setting prices is to cover your costs and then determine what you can soak out of the punters as profit !!

[World Traveller]

.....Oligopolistic industry, this domestic air transport thing (that is cos airlines compete with each other, cars, coaches, trains)....but within sevceral airlines on one route...non price competition, that is who has the best sandwich/seat/FFP/hosties/tail design/backhanders to travel agent etc etc etc.

Though pretty obvious if another airline charged twenty quid more most rational punters would use the cheaper. Hence FR/OG/U2....unless you use the more expensive one for reasons above.....

World Traveller (Plus)