Why are flights between major airports cheaper than to/from a smaller airport?

Question

With all else being roughly equal: direct flight, similar distance, same airline.

Yeah the supply is greater at major airports (in the form of more gates), but so is the demand. I’m struggling to see why that doesn’t balance out.

In: 3

Answer 1

Just because supply and demand balance out doesn’t mean that something has to be cheap. A low demand and a low supply mean that you’re dealing with a niche market in which (1) there isn’t much competition to drive prices down and (2) you don’t benefit from economies of scale (as much).

If there’s only one airline serving a particular route (say, Brussels to Madeira), then that airline can charge higher prices as they know their customers have no other options, or at least the alternatives are much less convenient (e.g. flying with a stopover, taking a boat, or not traveling at all).

If you’re an airline serving a low-demand route, then you likely have to fly smaller planes on that route, as flying a mostly empty big plane would be wasting fuel. A smaller plane uses less fuel overall, but more fuel per passenger, which raises the ticket price. Also, to maximize their profit airlines want to have as many of their planes in the air at the same time as possible, since an aircraft only costs money when it is sitting idle. This is easy to do if you’re flying between big hubs that lots of people want to travel to. But if you’re serving to a small airport, you can probably only do so occasionally – say once a week – while still getting enough passengers. And you may only be able to fly the same route back and forth to this airport, rather than stringing lots of different journeys together (e.g. instead of going Berlin – Madrid – Rome – Frankfurt – London – Paris – Copenhagen – Berlin, you have to go Brussels – Madeira – Brussels). This makes it harder to draw up an efficient schedule for your planes as it gives you very little flexibility. So your planes will spend more time sitting on the tarmac or in a hangar, (which costs the airline money to park them there, and that additional cost has to be charged to the airline’s customers as well.