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Simplicity in airfares
Simplicity in airline pricing can increase profitability:
"The bottom line," says Jack Foley, the New York-born executive vice president of Aer Lingus, "is that our revenues are up and our costs are down. At least so far, the market is telling us we got it right because we made it simple."
Okay, the "revenue is up" part, I can understand. But "costs are down?" How does a simplified fare structure drive down costs?
"I don't think anyone in the business fully understands how much it costs to support the old pricing," Foley explains. "It's all kinds of little things. Do you know how many return seats go out empty because we used to force people to buy roundtrips to get the lower fares? Do you know how much money we spent doing [corporate] contracts with the old fares? Now doing a contract takes no time at all because the fares are so simple."
(Thanks, Paul)
Can we also have the co-operation of government in simplifying fares?
In Canada, it is common to advertise one-way fares, round-trip required, exclusive of taxes. The taxes, in addition to GST and PST are the airport fees, fuel surcharges, security charge, NAV Canada (our privatized air traffic control service) fee, etc.
Never mind that I think the ads border on fraudulent (if you advertise a one-way fare then you are advertising something that I cannot buy), the taxes add up: something that starts off at $149 one-way quickly hits $500 round-trip + taxes. And there is no easy way for the consumer to determine the taxes short of attempting to book.
If I see a widget in a store for $300, I know it's really gonna cost me $342 after PST+GST. I'd like to see "Ottawa to Halifax round-trip" for $300 and know the same.