It’s time for another episode of Ask Cranky. I’ve received this question in many different forms ever since my days doing airline pricing, so I thought now would be a good time to answer it.
Why is it cheaper for me to fly from Fairbanks, Alaska to Denver than it is to fly from Fairbanks to Seattle? What happens if we just don’t get back on the plane after the layover in Seattle?
There’s nothing worse than trying to figure out airline pricing. After 3 years on the inside, I understand it, but it still makes my head hurt. This question, however, about why two flights cost more than one or why longer flights cost more than shorter ones is pretty easy. It’s actually just economics – supply and demand.
Back in the days of regulation (prior to 1978), pricing was pretty straightforward. There was effectively a price per mile. While that may make sense from a cost perspective (sort of), it doesn’t make much sense from a revenue perspective. So after deregulation, the airlines really started to try to maximize revenue. Crazy idea, I know. Let’s look at these two market to illustrate my point.
Fairbanks to Seattle is a monopoly for Alaska. They fly it nonstop and nobody else does. What’s more, only one other airline even offers fares on that route, and its Delta with a connection in Salt Lake that only goes a few times a week and requires serious backtracking.
So Alaska can really set the pricing in this market to be the most lucrative for them without having to worry about serious competitive threat.
Meanwhile in the Fairbanks to Denver market, it’s a very different scene. Yes, Frontier recently announced seasonal nonstop flights a few times a week, so they can charge a premium. But the competitive landscape puts serious pressure on fares. Alaska can offer several connections per day over Seattle while Delta can offer its connections over Salt Lake as well. This may not be the most competitive route in the world, but it’s certainly more competitive than the Seattle market.
Making problems even worse is the market size. Fairbanks to Seattle is a much bigger market than Denver to Fairbanks. So if Alaska lowers fares in Denver, it may be able to fill up a few seats with connections via Seattle whereas those seats might have gone empty otherwise. And that brings us to the next question – why not just buy a ticket to Denver and get off in Seattle?
If you have a one way ticket and no checked bags, then you can do that and you probably won’t get caught. It’s called hidden city ticketing, but the airlines don’t allow this. So, there’s always a chance you’ll get caught and then made to pay the difference between what you paid and the full walk up fare. (You don’t want to do that.)
If you have a checked bag, then you obviously have a problem. It will go on even if you don’t. And if it’s a roundtrip ticket, there are other problems. If you don’t show up for a single flight in your reservation, the rest of your trip is canceled. So you might be tempted to buy a ticket from Fairbanks to Denver roundtrip. The problem is that once you miss that flight to Denver, your return will be canceled as well and then you’re in trouble. I wouldn’t recommend it.