looked for flights Washington DC to Costa Rica, one ways are 122 dollars with a stop in Charlotte. I then look at flights Charlotte to Costa Rica for the same dates, and that flight is now 400 dollars even though it’s only the second leg of the dc to Costa Rica flight, what gives?
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Tickets are based more on supply and demand between the start and end point, not the airline’s cost of getting you there. Nonstops are almost always more expensive than one-stop flights since that’s what people prefer, and they’re offered by fewer airlines.
American has to compete with multiple airlines for one-stop itineraries from DC to Costa Rica (and against nonstops on United), nobody else offers nonstops from Charlotte so they can charge a premium.
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The ELI5 of it is that this is due to demand and supply and competition.
As such, it isn’t about whether the NYC flight stops over in Charlotte. Think of it as completely separate flights/planes. NYC to Costa Rica route probably has multiple airlines flying the route spurring competition. Charlotte to Costa Rica perhaps has far less demand and fewer flights. As such any airline offering that flight does not need to offer low prices.
When it comes to airlines, most of the cost is fixed. So revenue maximizing is a very complex problem. Say the plane has 200 seats. The airline predicts that Charlotte to Costa Rica has only 20 passengers on average and no one else offers the flight. In this simple analysis, the airline now needs to fill 180 seats from NYC to Costa Rica so they don’t fly empty but there are 3 other airlines offering similar routes. So they price NYC to Costa Rica to sell 180 seats.
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Just to add to what others have said:
Another factor in pricing has to do with extracting as much revenue as possible from business travelers. They are not price sensitive (my company is paying for me fly to Toledo) but they are very time inflexible (the meeting is on Tuesday!) and often last minute.
So if you book during the week, for a short burst of time (1-2 days) that does not include a weekend, and within 2 weeks of your travel date, airlines will see you as a business traveler and will crank the price up hard. If you are flying for vacation and sitting next to a guy in a suit, you might possibly guess that your ticket might be half or a third of what his is.
But he didn’t pay for it so maybe he doesn’t care.
A ticket from A to B isn’t really based on the cost to get you from A to B. It’s based on how many people in A want to go to B, and how many other airlines offer flights from A to B.
If more people in A want to go to B, the ticket prices go up, and if more airlines offer flights from A to B, the prices go down.
In this case, it’s likely that several airlines offer flights from DC to Costa Rica, so the price is lower. Most of those are probably direct flights, though, or routed through Atlanta or some other airport. Your airline is the only one that routes through Charlotte, so they’re the only one offering a flight from Charlotte to Costa Rica, and the price is higher.
Note that sometimes this results in a flight to Costa Rica from DC being cheaper than a flight to Charlotte, and people who want to go to Charlotte might buy a ticket to Costa Rica instead and just get off the plane in Charlotte. Airlines do their best to keep you from doing that, and might even sue you for the difference in price. The ELI5 on that is “airlines are greedy.”
Something I haven’t seen mentioned is that ticket fairs aren’t how airlines actually make their money, every economy ticket they sell actually loses them money. Airlines’ primary revenue source is from frequent flyer programs; companies like credit cards buy frequent flyer miles from airlines to offer as incentives. This means that it’s in an airline’s best interest to be broadly accessible, so that their miles are good at incentivising people to seek them out as a reward; so there are many cases in which airlines will operate a line at a loss just to keep their brand in play.
profit maximization. That’s why they’re priced like that.
Ticket prices have no correlation to what it actually costs to run the flight. It’s all about what people are willing to pay. Airlines know people will pay more for nonstop flights, so if only one airline runs a nonstop flight from Charlotte to Costa Rica, they’ll charge a lot more than you’d expect. Meanwhile getting from DC to Costa Rice with one stop has lots of options on different airlines, so they’ll charge less to be competitive.
It does suck for consumers. Last year, it would’ve been cheaper for me to fly to NYC, then get a flight to Tokyo with a layover in my home city, than just flying direct to Tokyo. 3 legs and way more fuel burned, meanwhile I’m paying less overall.
Others have explained the reasoning but I’ll give you a funny personal experience. I’m nearly equidistant from PHL and EWR and I always check both when booking a flight. One time, I had a trip to Europe for business. There was a United flight from EWR to LHR that was ~$1000 round trip. There was also a United flight from PHL to LHR for ~$750 but it had a stop. The stop was in EWR and the second leg was the original flight that was priced at $1000. Similar to your story but the interesting part was that the first leg was a “flight” from 30th Street Station in Philadelphia to EWR on an Amtrak train. This was United looking to “steal” passengers from PHL (since PHL is an AA hub) and get them to EWR by creating a codeshare system the Amtrak. Just another wrinkle to the pricing dynamic…
The plane costs a certain amount to fly. If you simply priced the tickets as “cost of the flight divided by number of seats”, they would be too expensive and wouldn’t sell out.
Again: For many flights, there is no single ticket price that you could set that would make the flight profitable. What airlines need to do is sell some tickets for a lot of money, then sell the remaining seats cheaper until the plane is full. The obvious example of this is business vs. economy class, but there’s a lot more to it as you saw.
Once the plane is flying anyways, the marginal (additional) cost of adding one passenger is something like $30-50. So it’s better to sell a seat for $100 than let it go empty, but they can’t sell all the seats for that price.
This causes airlines to play insane games with tickets/prices. Basically, if it’s convenient and in demand, they’ll charge extra for it, even if it makes no logical sense. It will often literally be cheaper to fly A->B->C than to fly just B->C on the exact same flight, because direct flights are more desirable.
Flights on short notice are more expensive because if you are flying on short notice, you probably have less of a choice so you’re going to pay.
Business travellers tend to be less cost conscious (because to them, the main cost is the effort to enter the company credit card number), so airlines try to fleece them as much as they can. Luckily they haven’t managed some kind of dystopian “personalized pricing” yet where the AI determines exactly how much you’re willing to pay and then squeezes you, so they use tricks like “business travellers typically don’t stay as long and not over the weekend” or similar rules to limit when the cheaper ticket categories are available.
The rules are incredibly complicated, making the question of “what does a flight from A to B on day X cost” incredibly difficult to answer, even with all the data on hand. It’s somewhat easy to answer for a specific direct flight, but there probably is a cheaper indirect flight, and now good luck, because the possibilities are endless.