Have you ever been on a plane? Next time you buy a plane ticket, remember the price you paid, then get on the plane and ask the person sitting next to you how much they paid. There is a high possibility that the amount they pay is different from you, even significantly different. But why is that, two seats next to each other, same class, same service, same flight date and time, why are the ticket prices different?
How the economics of airline ticketing actually work. To understand the issue of air ticket prices. First, we must understand the business problems of airlines. To operate a flight requires a huge amount of cost, fuel accounts for the main part followed by airport fees, parking fees, maintenance fees for food and drinks, disposable items, aircraft rental, depreciation if the airline owns that plane…
On average, operating a Boeing 787 flight, a popular long-haul aircraft, costs more than $11,200 per flight hour. For example, a direct flight from Hanoi to Paris costs an airline about 134,000 USD, equivalent to nearly 3.5 billion VND. Despite such huge flight operating costs, the profit margin (profit on revenue) of airlines is extremely low, only fluctuating from 3% to 7% for traditional airlines, and about 8% for traditional airlines. %-15% for low-cost carriers. Having to operate within such a thin profit margin, the prerequisite to operate a flight is to fill it, the flight occupancy rate is called load factor, only when more than 70% of seats are filled. a new profitable flight. However, customers’ transportation needs always change, depending on the season, year, and weather.
Maintaining the loadfactor ratio is a balance problem. If the airline makes too many flights, the number of passengers per flight will decrease. The load factor will decrease, meaning the airline is operating inefficiently. flights to increase loadfactor means airlines are losing their customers to competitors, balancing these two factors to maintain loadfactor ratio is at the heart of every decision an airline makes.
There are two main ways for airlines to optimize these two ratios.
Đầu tiên là một thuật toán định giá vẽ máy bay phức tạp luôn luôn thay đổi theo cung và cầu thị trường, thuật toán xác định giá vẽ máy bay theo số lượng ghế còn lại, thời gian bay, độ phổ biến của đường bay, mùa cao điểm, đường bay này có bao nhiêu đối thủ cạnh tranh và đặc biệt là nhiên liệu tại thời điểm bán vé, giá nhiên liệu dự tính tại thời điểm bay… Phần nhiều yếu tố khách quan nằm ngoài kiểm soát của hãng bay, ví dụ như cuộc xung đột nga, vừa làm tăng giá nhiên liệu, vừa ảnh hưởng đến vùng trời chiến sự không thể bay qua.
The aircraft sales market is a complex adaptive system, every factor involved has an influence and to maintain profits for airlines, the value of the aircraft must change every minute.
The second way is more superior, if customers require flexibility in flight dates and times, their ticket prices will be higher. Tourists often buy tickets indirectly through travel companies or airline ticket agents, they follow Specific tour, fixed flight date and time months in advance and does not require flexibility. Moreover, travel companies buy tickets regularly and in large batches, each ticket sold to this type of passenger, it seems certain that each flight is filled up that is why it is always necessary to buy tickets in tour packages. very cheap. People who travel on their own, visit relatives, or go on personal business trips will book tickets closer to the flight date, can change flights, change flight times, although their seats may be identical to the above group, the difference Flexibility requires risk to the flight loadfactor and airlines will charge extra to hedge this risk. For employees who go on business trips, businesses will have to pay additional air tickets for them. The work schedule depends a lot on the partner, affected by business conditions, the negotiation process, whether they or not. Book tickets close to the date to easily change the flight date and time. They also require a higher service standard, or according to the company’s remuneration policy. Business chairs are specifically designed to serve this group.
You see, the loadfacter does dominate aircraft design decisions, even for the same type of aircraft, airlines have many types of interiors, changing the ratio of premium and economy seats according to departure and destination needs. arrive.
Aviation economics is really complicated, it has many questions that our short article cannot answer. For example: how do low-cost airlines operate?, How have they optimized loadfactor? Why are their profit margins so high? Why is the aviation industry growing strongly in Dubai and Singapore? And does this industry have the potential to grow? Please look forward to the next articles in our aviation topic.
