Why do flight prices differ greatly across currencies?
I am a Canadian with a Chinese background (so I am bilingual English/Chinese), and some of my family members are planning on a vacation to Tokyo, Japan, and the flight is a direct flight originating in Guangzhou, China. It is scheduled for early July of this year.
On PC Travel, the price is $1 948.50 CAD
Meanwhile, on China Southern's own website， ￥8088
Anyone with access to a currency converter knows that C$1 948.50 is worth 21.4% more than CN￥8088. So, how is it possible for 2 identical services can be worth 2 very different prices when purchased at the same time on 2 different websites? I thought that arbitrage causes (or should cause) the prices of the 2 sides to equalize pretty quickly, given the popularity of Japan as a general destination for Chinese people.
Best Answer
It is market segmentation. Airlines want to have larger profit as possible.
Old economic model tell you that there is an optimal spot between demand and prices (with higher prices you may get less passengers, but the passengers you have pay more, so possibly you gain more).
But since many years (initially on car rentals, then hotels), with more data, companies have found methods to "segment" the clients. So you may try to offer more expensive tickets to people who will pay for it (country, language, currency, and first number of a credit card are common methods, but now with web tracking us, there are more methods). If they offer cheap prices to the most rich nation, they get less profits. But with higher prices, you may increase the income, but you will have empty seats, so you offer them on other markets (which should not effect prices on the main market).
Note: market segmentation is also a reason of business ticket prices (also on economic class: more flexibility, more price, but you are in a business travel). This is also the reason why you may find flight with stop-over more cheap (e.g. A to C via B, but just A to C or also B to C are more expensive): some people can afford to pay, but you can fill the airplanes without need to reduce prices for the first group.
Note: For flights (and car rental and hotels) this is the norm, and nobody complain. Amazon 15-20 years ago tried a similar method for book, but it had to suspend itquickly: people were not "ready" for such segmentation.
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Why do airlines charge different prices?
Airlines charge different prices for the same experience largely to maximize revenue, as different types of people are willing to pay more or less for the same experience.Why do airlines charge different fares for the same flight economics?
Airlines go to great lengths to create a profit of each seat and maximize each flight. Each airline possesses a sophisticated strategy known as \u201cyield management\u201d which aids them in charging completely different fares to different passengers for the identical seat.What determines flight ticket prices?
Prices change due to seat availability and demand. The cheaper booking classes might be sold out even if there's still 3 months before you leave. There are some dates of the year where there is simply higher demand.Do airline tickets go up the more you search?
Surprisingly, there is very little evidence that online travel sites are raising prices the more that you search for a specific trip. In fact, they tend to show lower prices to logged-in users.The Reason for Flight Prices
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