|Subject||Comparisons with competition, Price discrimination|
|Key Words||Fares, Regulation, Cost, Prices|
In this news story, an editorial writer seeks to dispel the myths surrounding the high prices paid by travelers out of the Minneapolis-St.Paul (MSP) airport. The conventional wisdom is that, because Northwest Airlines carries more than 60 percent of the traffic out of MSP, the fares are 49 percent higher than the average around the country. Many have argued that there should be more government regulation or that more gates should be made available to low-cost airlines.
Northwest responds (and the writer agrees) that the higher fares reflect a greater proportion of business travelers than is the case elsewhere due to MSP being a major business center. Business travelers tend to wish to travel directly to their destination, have flexibility as to when they return, and buy their tickets at short notice, all of which increase the fare. Leisure travelers can book ahead, take longer, and commit to a schedule, and they pay a lower fare in return.
Critics argue the cause and effect are the reverse: that high fares change the passenger mix and reduce the number of leisure travelers. They also believe that business travelers are paying unfair fares.
(Updated June 1, 1999)
|Source||D.J. Tice, "A Fare Question", St. Paul Pioneer Press, April 18, 1999.|
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