An Airline Pricing Puzzle

Yet another airline pricing puzzle.? A visitor tells me that he bought a Lufthansa ticket from Turin, Italy, to Bonn, Germany, and back, for $220, which includes flights to/from Frankfurt plus the fast train to/from Frankfurt airport.

Alternatively, he could have bought a Lufthansa ticket from Turin to Frankfurt for $280, and then paid for the train ticket (probably another $72).? The prices were for the exact same trips, and he acquired the pricing information essentially contemporaneously.? Why does this happen? It might be that there is competition for flights from Turin to Bonn, but in fact there are no non-stop flights on that route.? Even by the anomalous standards of pricing air travel, this kind of price discrimination seems unusually bizarre.

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  1. Joe D says:

    This happens all the time. A decade or so ago, a round-trip from Kalamazoo, MI, to Dallas was hundreds of dollars cheaper than a round-trip from Detroit–even though the Kazoo flight consisted of a short-hop to Detroit and then *the exact same plane* on the Detroit-Dallas leg.

    I asked the agent, “What if I don’t show up in Kazoo, but just check in in Detroit?” (I lived about halfway between the two airports, and I could sleep in another hour and a half this way.) I was told my entire flight would be cancelled. “But I’m saving you the fuel of moving me from Kalamazoo to Detroit and back, and you could conceivably re-sell that seat!” No dice.

    Insanity.

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  2. Ghost says:

    Some tickets in the airline industry are sold by the airline, some by travel agencies, and some by ticket wholesalers. The prices these parties pay for bulk purchases can effect the price seen by the end customer. Also, where did his prices quotes come from? A ticket from a travel agency office might be higher than a internet price quote since there may be less commission involved.

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  3. StefanH says:

    The same kind of question appeared on Tim Harford’s blog a couple of weeks back: http://timharford.com/2010/02/what%E2%80%99s-the-point-of-%E2%80%98hidden-city%E2%80%99-fares/

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  4. Scott says:

    I had a family emergency come up yesterday, so I started pricing airline tickets to fly out. Leaving tomorrow morning, I could fly coach for US$200 or upgrade to first class for US$300. But for the return leg, I could only get a ticket for around US$1300,any ticket.

    So $300 to fly first class outbound and $1300 to fly inbound. It’s no wonder why airlines are having financial difficulties. Who sets these prices and how can you budget for them?

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  5. D Thompson says:

    My friend had a similarly crazy pricing story recently, also in Europe: http://citycrab.blogspot.com/2009_12_01_archive.html

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  6. Toby says:

    Even better: I had a friend looking at a one way flight from Budapest to Frankfurt. It was twice as expensive as buying a round trip with a return to Budapest in November.

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  7. Simone says:

    another piece to the puzzle: he could take the train to Milan and than to Milan-Malpensa airport, fly directly to Cologne-Bonn airport for around 100 euros a/r, with Germanwings, the low-fare brand of Lufthansa, which is the only carrier operating on that route.

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  8. htb says:

    I think that consumers would be pleased by a rule that says a given seat on a given flight must be sold for a given price, regardless of whether the passenger is taking a trip requiring one, two, or twenty flight segments that day.

    The airlines won’t like this, though, and since they’re more willing (compared to me) to hire lobbyists to get their preferences enshrined in regulations, I suspect that we’re stuck with the oddities.

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