When you buy an airplane ticket, you tend to think that everyone on-board purchased their tickets same price.
It may come as a surprise to you to discover that the person you are sitting next to during your flight may not have bought their ticket same price as yours.
Now, the question you are asking maybe, why on earth did my ticket cost much more than that of the next seated passenger, with no difference in the cabin, service rendered or any privilege enjoyed?
Airplanes comes in different segments or partition known as configuration, depending on the type or size of the equipment. Whether the aircraft’s cabin is divided into First class, Business, Comfort and Economy cabins or slightly different configurations, the fact remains that different passengers seated on the aircraft has paid different prices for their flight tickets, some lower, while others paid higher fares.
There may be up to 10-15 different fares on economy cabin as well as 3-4 different booking classes in the First and Business classes respectively, with different booking classes usually referred to as fare-buckets with various booking designators or descriptions, having assigned different fare conditions known as fare rules.
You may be wondering why do Airlines charge different ticket prices, to same passengers travelling on same day, to same destination, seated on same cabin-in fact next to each other, sharing same meal, same service, yet paid different prices.
Part of the marketing mix m any organization, is the pricing strategy of its products, either goods or services and product discrimination can be deployed as part of pricing policy.
Major Reasons why the Airlines have different fares on same cabin
Promotional fares as marketing Strategy: The Airlines offer very low ticket prices by way of promotional fares or discounted fares as a means of marketing strategies to tempt the passengers to buy the tickets at such prices that given a normal condition, would sell at higher prices. These promotions are offered at such times when the Airline have very low sales period. Passengers travelling for summer holiday, honeymoon vacation or other travel purposes, who have made their travel plans several months prior to the travel date, takes advantage of the offers. Where available. These passengers are usually referred to as Leisure travelers or visiting friends and families. They are favored by these offers since they plan their trip well in advance. It may also interest you to know that the promotional ticket offers are not limited to economy cabin only but are also extended to business class, as long as the prices are low as compared to the cost at normal times. Again, these cheaper ticket prices may be offered at certain time of the year, requiring the passenger to buy at specific times with the limitation of using them at certain window period. For instance, the Airline can offer a promotional fare to be purchased between August-september 2020, for a travel period of say January-March 2021.
Premium fares for Business Travelers: Another set of travelers usually referred to as Business or Premium passengers are offered high or premium fares. The business or high-fare paying passengers are not necessarily passengers on business class cabin only. You can be an economy passenger but may have paid a premium fare or the highest fare for that cabin, due to your last minute purchase as a result of urgency of your travel.As last minutes shoppers or travelers, they get to pay the highest fares available due to short notice business meetings or as a result of last minute schedule changes. They therefore have no option that to pay for what is available in order to make the meetings, seal the business deals as the case may be. Here, these categories of passenger end up paying for the loss incurred by the Airline for the sale of promotional tickets. However, the high-fare paying passengers enjoys the privilege of making last minute changes on their tickets free in some cases and less fees at other times. This is some kind of reward for the high cost of their tickets, in addition to other privileges like being able to select their seats preference at no extra cost.
Increased Revenue Generation :The primary purpose of price segmentation or classification also know as price discrimination, is to enable Airlines generate more revenue when seats are sold at different price levels. More so, the Airlines earn more revenue on the promotional fares by using tools known as fare rules to fence the cheap tickets or discounted fares by making them non refundable if the tickets are not utilized in some cases, as well as charging very high fees for date changes, no-shows or upgrade to the next higher fare class. All these extra income generated, increases or optimizes the revenues generated. The Airlines are able to study and forecasts passenger demand. Though the forecast may not be completely accurate all the time, the data available gives them a guide on the flow of demand using such events as the time of the year, seasonality, time of day and day of the week to make draw their conclusions and determine how to fix their prices.
So, if you are a budget traveler, why not take advantage of the low fare offers, especially during these times when Airlines are gasping for survival due to the impact of the pandemic. However, always ensure to confirm the fare rules guiding the promotional fares, as some of them may come with highly restricted rules that may make you lose the value on the ticket due to non refundable policy after flight departure (a no refund rule if you fail to board the flight without prior cancellation). Other restrictions may be inability to make date changes or high cost of charges placed on date change as well as no-show fees.
Some other restrictions guiding low fares may include “Saturday night rule” where you are mandated to have traveled and returned home on or before the Saturday preceding your first departure leg also known as outbound. While others may be a non endorsement policy, where you may not be permitted to be transferred to another Airline if the current carrier fails to fulfill the contractual obligation to you.