eli5: Why are flights with a layover in a certain city sometimes cheaper than flights to that same city?

Question

Let’s say for example I live in Los Angeles and a United airlines flight from LAX to JFK with a layover in DFW is $500 but that same flight from LAX to DFW is $600. How did I save $100 by adding an extra flight?

In: 2

Answer 1

This is just a case of what’s known as “price discrimination”, in which sellers charge different buyers different amounts for the same thing, based on what they think the different buyers will pay.

To your example, imagine there are only two airlines. One flies the LAX->DFW route and the DFW->JFK route. The other airline flies LAX->JFK by way of ORD.

The first airline cannot charge you too much for the flight to JFK because if they do, you’ll just choose the flight by way of ORD. But since they’re the *only* ones who fly to DFW, if that’s your terminal stop, they can charge you *more*.