Why Is Air Travel So Cheap?
The cost of last minute ticket doesn’t seem to be enough for airlines to break even.
How much of this is due to a lingering fear of flying? How much of it is the extra cost to travelers, in inconvenience and hassle, of being bit players on the security stage?
As long as a carrier is flying a route, it makes sense to fill as many seats as possible, even for $5, because the airline has high fixed costs, and low marginal costs. (Assuming that they don’t bring up new gate personnel or flight crew for a busy flight. If they do, then the bottom price for a ticket is higher.) Now, they don’t want to sell $5 tickets because if they do, then no one will pay $200 for the ticket. It’s framing effects. But costs are clearly too low, long term, for airlines to survive.
But I’m curious. Does our color-coded alert system, people pawing through bags, and all the rest of it has a measurable economic impact?