Price Discrimination In Airline Industry Essay

Register to read the introduction… On the other hand, however, for price elastic market segments the carrier should consider lowering the price in order to boost higher passenger turnout. Nevertheless, in the same flights of short-haul trips, for instance, there are price sensitive leisure passengers, and price inelastic business passengers. How are the measures designed to differentiate them and charge different prices to those two different groups of consumers?

Price Discrimination in Airline Market

Price discrimination is not alone for airline market. Most businesses charge different prices to different groups of consumers for an identical good or service, for reasons not associated with costs. There are two main conditions required for discriminatory pricing - first, differences in price elasticity of demand between markets; second, barriers to prevent consumers switching from one supplier to another. While airline industry is typical on the first condition …show more content…
CSA is able to separate customers by their ticket booking time prior to departure. It encourages customers to book tickets earlier by offering lower price. The promotion is desirable to leisure travellers committed in earlier preparation for their occasional trips. On the other hand, CSA also imposes various restrictions to cheaper tickets, making them unattractive to consumers with a high valuation of time or convenience. The restrictions include a cancellation penalty, whether or not a Saturday-night stayover is required. People who book late often regard travel to their intended destination as a must-go trip and they are therefore likely to be willing and able to pay a much higher price very close to