Roundtrip ticket half the price of a one way ticket?

[slickpoppa]

Can someone please explain the economics of this to me. I am currently looking for one way ticket from Newark, NJ to DC (Reagan). If I search for a one way ticket leaving January 3rd, the lowest price I can find is $313 on Continental. If I use Expedia's flexible date feature and search for roundtrip ticket leaving January 3rd, and then choose January 6th as my return date, the TOTAL price is $151, again on Continental.

Wouldnt a rational airline, given that they are willing to sell me a ROUNDTRIP ticket for $151, be willing to sell me a one way ticket leaving on January 4th for some price less than $151? Or even $151? But instead they charge me $313? This makes absolutely no sense to me. No wonder so many airlines are going bankrupt.

[Nicholasp27]

economics
the market price of a 1-way is set at $313 as there are fewer people who need these to drive the price down

the market price of a round trip is set at $151 as there are far more people who need these so that drives the price down

if u are price elastic, then u will book a roundtrip for cheaper and save the money

if u aren't, then u will just book at the 1-way ticket price and they make more money off u...segments the market into those who search for best deals and those who don't care as much about price

they wanna sell each seat at the most they can...and they can sell 1-ways for $313 so they will


so buy the roundtrip and just don't make the return trip home

[NotInchoateHand1]

Well, they will sell your roundtrip ticket twice anyway (overbooking anyone?). In fact, they are depending on you not using the return portion of your ticket a percentage of the time. There are other reasons, but I forgot and I can't be bothered looking it up. Basically, it actually makes a lot of sense, one of the many standard counterintuitive business practices. Obviously, low-fare one-way airlines work on the opposite principle...

[highlife]

there is very little logic to airline pricing, anything they do is completely overcomplicated and based on many unimportant factors. the good news is you can just get the roundtrip and not show up for the return leg.

[Nicholasp27]

there is a lot of logic to airline pricing

every seat is sold at different prices...their goal is to maximize the average price per seat

some people will pay more and some less; they give lower prices on the internet and through expedia, etc to gain the sales of people who would otherwise go elsewhere or not fly if they can't get it for that price; they charge more for people who don't care about shopping around to get the best price; many people will fly with an airline just for frequent flyer miles even if it costs them double the price of another airline!

people who book 1-way tickets, book at the last minute, book at the airport, etc are less worried about price and shopping around than people who book online where they research prices and book in advance (or use priceline, etc for last-minute)

it's similiar to a hotel

u go to the lobby and ask for a room for the night; they say $88. u then go to their free lobby computer and go to hotels.com and book the room for the night for $45

many people will just take the $88 price; the people who are more price sensitive will book it for $45 on hotels.com...so they segment the market into those who will pay face value and those who won't and they get sales from both while making more than if they just charged the low price to everyone


fyi: many 'refurb' items aren't even refurbished...they are brand new but they allow them to sell to people who otherwise are priced outta the market at the retail price; so they get the retail price from most customers and then get extra sales and profit by selling 'refurbed' units to those who care enough about the extra $20 to buy a refurbished unit

[NotInchoateHand1]

Yup. Gets quite confusing when you are handling three reservations on the phone, and have a walk-in right in front of you, and four different numbers are flying out of your mouth...

I don't miss the "hospitality" industry.

[Nicholasp27]

yeah; hotel clerks will quote u different rates depending on how much they think u will pay; if u are blinged out they will raise the rate; if u are dressed more modestly they will quote u less

[bobbyi]

The other replies are too long. Here's the simple answer: Airlines are stupid. That is why they are all going out of business.

[NotInchoateHand1]

simpler response: bobbyi is wrong

[slickpoppa]

As an experiment I think I may call up Continental and originally ask for roundtrip tickets for 1/3-1/6, have them give me the $151 price, then see what happens when I ask what the price they would give me if I just go one way. I'd like to see the answer they give me, but I'll probably have to to speak to a higher-up to get an answer in English. I'm curious to see if I could haggle them down. In this case I don't really care, but this could be useful for more expensive flights.