By Adelle Jäger. Type of airline. Published at Monday, March 25th, 2019 - 08:39:31 AM.
The advent of advanced computerized reservations systems in the late 1970s most notably Sabre allowed airlines to easily perform cost-benefit analyses on different pricing structures leading to almost perfect price discrimination in some cases (that is filling each seat on an aircraft at the highest price that can be charged without driving the consumer elsewhere).
Often the companies combine IT operations or purchase fuel and aircraft as a bloc to achieve higher bargaining power. However the alliances have been most successful at purchasing invisible supplies and services such as fuel. Airlines usually prefer to purchase items visible to their passengers to differentiate themselves from local competitors. If an airline s main domestic competitor flies Boeing airliners then the airline may prefer to use Airbus aircraft regardless of what the rest of the alliance chooses.
Because of the complications in scheduling flights and maintaining profitability airlines have many loopholes that can be used by the knowledgeable traveler. Many of these airfare secrets are becoming more and more known to the general public so airlines are forced to make constant adjustments.
If a particular city has two or more airports market forces will tend to attract the less profitable routes or those on which competition is weakest to the less congested airport where slots are likely to be more available and therefore cheaper. For example Reagan National Airport attracts profitable routes due partly to its congestion leaving less-profitable routes to Baltimore-Washington International Airport and Dulles International Airport.
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