Why are flights with layovers in the opposite direction cheaper than direct flights?
In: Economics
Generally the flights are happening whether you take them or not.
When you see this
The direct flight is almost full
The indirect path will be two flights that are less likely to end up full
Direct flights are more convenient for people and business people will pay more for the convenience.
For the Airline on the other hand convecting flights through their hub is more convenient as it helps keep the planes full and leisure travelers who are price sensitive will take the deal.
The airline business is all about figuring out how to get different prices for the same service of moving you from A to B on the same plane.
Business people will book late and will pay more for convenience so prices go up as the date gets closer especially on direct flights.
Price sensitive vacationers will book long in advance and only care about the cost even if they have to take connections. So the airline will offer lower prices if you buy ahead of time and take inconveniently long rounds, which will go through their hub and help them fly full, in order to get their business.
Because they have to incentivize the less ideal flights or no one would buy tickets on them. If it cost the same to go direct or to have a layover somewhere, no one would ever pick the layover and they might have trouble filling planes. By making the longer and more aggravating flights cheaper, they get people to actually use them.
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Flight to layover destination is cheaper due to demand or airport being a major hub. Flight from major hub to destination is cheap due to it being from major hub.
Airlines use a hub and spoke system. They fly most flights into and out of hubs. It’s usually cheaper to move you from one spoke to a hub then to another spoke then go spoke to spoke.
It costs roughly the same amount for the airline to fly between 2 points no matter how full the plane is. More people do add more weight which requires more fuel, but the cost increase for each additional person is negligible compared to the baseline cost to staff and fly the airplane itself. If they cannot fill a direct flight between points A and B on a regular basis, they can either raise the price to compensate, or send you on a full plane from point A to point C, and then on a full plane from point C to point B.
The easiest way to do this is a hub and spoke system: they collect as many travelers from all over the country into one airport as they can, and route them from there to their final destination.
Years ago I had to fly from Dallas to San Francisco for my grandfather’s funeral. Direct flight on American was $1,300. There was a flight from Austin to SFO that was only $400. It was a connecting flight that stopped in Dallas so everyone who paid $1,300 could get on.
The best explanation I heard was that American had no competition on the direct flight, but several airlines could fly connecting flights out of Austin.
I wound up paying $75 for a Delta flight from DFW to AUS, just so I could fly back to Dallas and then SFO.
There was a chance that my return could be screwed up and I would wind up in Austin, but we landed at DFW and I just went home.
Let’s say you need a ride to the park on Sunday morning.
Your buddy said he’d give you a ride, but he’s lives in the opposite direction.
Your mom already planned on going to the grocery store Sunday morning & has an extra seat in her car.
It just so happens your buddy lives next to the grocery store. So you tag along with your mom who was going to the grocery store in the opposite direction, then you hop over to your buddy’s house for a ride to the park.
If there are only three flights a week between X and Y, but 3000 flights a week between X and A and 3000 between A and Y, then the supply of X-A-Y layover flights is literally a thousand times greater than the supply of direct flights between X and Y.
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