Airline Ticket Prices

The same cost of airline ticket from one place to the other does not make an economic sense. This is because, there a big difference between the distance.  For example, from Wyoming to Denver is 280 miles and from Colorado to Orlando is 1845 miles (Mccartney, 2010).  In economy, the price fails to consider consumer base, operating cost and other market dynamics which impacts the supply and demand.  Other important point is that the higher prices in both long and short distances make the business to lose money due to customers’ shortage. The higher competition is creating wars as airlines wants to raise their tickets over time (Mccartney, 2010). Big airlines experiences low competition domestically and for this reason they raises their prices. In addition, higher costs make short distances tickets to be expensive. This does not benefit the economy because there is no supply and demand change. When supply increases, the demand decreases and if the demand increases the supply decreases and this happens when the price is different in certain areas (Mccartney, 2010).

 

In this case, the cost curves are affected in that the ticket will be reduced and the consumers will continue to pay low prices. As a result of the lowest cost, the cost curves will show productive efficiency from higher operating costs. Both demand curve and the cost curve will evaluate the size of airplane and be in a position to minimize profit (Mccartney, 2010).  Following that consumers pay higher tickets, the airline ticket have continued to rise. The demand will be affect by the consumer needs which will then affect the supply and cost curve. The purpose of the higher prices is to satisfy the customers and the satisfaction will then result to higher profits.

Reference

Mccartney Scott (2010). You Paid What for That Flight? It Can Cost More to Fly to Hartford Than

Barcelona. What Airlines Consider in Setting Prices

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