Price discrimination in airline ticketing
February 27 2019 06:56 PM
Alex Macheras
Alex Macheras

By Alex Macheras

There’s been plenty of discussion in the Gulf media over the last few days surrounding a common airline practice that’s being widely regarded as unfair and discriminatory against passengers of an airlines’ own home country. The airline ticket pricing structure technique disliked by much of the public is the following concept: how it’s significantly cheaper to fly ‘via’ the airport (transit) for international passengers than it is to start a journey by flying ‘from’ the airport (which mostly affects residents of the country).

Essentially, countries with flag carrier airlines dominating hub airports, such as British Airways at London Heathrow, Singapore Airlines at Singapore Changi, and Qatar Airways at Doha’s Hamad International are more focused on flying passengers across the globe via their respective hub airports, and in turn implement airline ticketing strategies to ensure the carriers can offer competitive tickets to international travellers, which will include a brief transit stopover at the airline hub.

For example, a passenger booking to fly British Airways on Stockholm-London-New York-London-Stockholm will pay a significantly low ticket price compared with a passenger flying from where British Airways are based, only booked on the London-New York-London flights.

This common strategy is in place all over the world, whereby airlines charge lower fares for passengers who are travelling on two flights (transit) because the airline receives money from both flights. It results in price discrimination, where the same seats on the same flight can be, and are often significantly different in price.

It means international passengers who connect via an airline hub benefit. Meanwhile residents of a country with a flag carrier and home airport are stuck with the reality that they’re paying (often) twice as much as other passengers, despite taking only one flight, and not two.

Here in the Gulf, this has worsened since the blockade. UAE-based passengers can no longer fly via Doha to worldwide destinations, and Qatar-based passengers can no longer fly via UAE to destinations. The reduced competition has increased flight ticket prices across the Gulf, and several residents of Qatar have taken to Twitter to express how they perceive this ticketing strategy to be unfair, given the airline is prioritising international passengers. However, it needs to be highlighted that this common practice is standard in the world of aviation, and specifically with airlines based at a hub airport. Local passenger traffic originating from hub airports represent a tiny, tiny percentage (less than 5%) of the total number of passengers flying on the airline, and hence — the airline sensibly adapts prices to ensure it continues to win international passengers flying through the terminal.

In the UK, a British Airways Business Class fare from London to Sydney is around $5,000 for roundtrip. However, if you start the journey on a British Airways flight from Helsinki, and transit at London Heathrow, the cost of the flight falls by 30% — despite the fact that an extra flight to and from Helsinki is added. Like many airlines, British Airways is here accused of giving non-UK passengers tickets at a lower price — something the the world’s airlines blame as being ‘strictly business’ as they work towards ensuring profitability on flights.

Could there be a shift in pricing strategy in the future to ensure the airlines’ own home country residents aren’t continuously losing out compared with international passengers? Not any time soon. As the hub-and-spoke aviation model continues, major airlines’ (including Iberia, Cathay Pacific and Finnair) priorities are continuing to be with those passengers using the carrier to make their way around the globe, not travel to and from the home airport.

*The author is an aviation analyst. Twitter handle: @AlexInAir

Last updated: February 27 2019 06:59 PM

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