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Due to a confluence of factors resulting from the pandemic and government intervention, commercial airlines (at least in the U.S.) have to continue operating scheduled flights – even with few to no passengers!

The absence of paying passengers is also an understandable result of the pandemic and widespread intervention to discourage spread of the coronavirus. However, air travel has not been banned, and airlines have taken measures to maximize social distancing of whatever passengers do fly.

In a situation like this where supply (of commercial airline seats) so outstrips demand, it is normal to see suppliers discounting the cost of their service to boost demand. Is this happening? And if not, is there a known reason why not?

(I'm not a frequent flier, but I checked a few routes with which I am familiar and could not see any decrease from pre-crisis ticket prices.)

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    I had a $100 round trip first class denver-baltimore ticket I scheduled during the pandemic. It got cancelled though because of low demand. So while things are cheaper many routes simply aren't being flown anymore. Usual first class price on this route is 800+. Apr 17 '20 at 18:43
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(Theory answer)

First of all, note that supply has dramatically decreased along with demand (though not quite as dramatically). As an example, United Airlines is cutting its May schedule by 90%.

Second, given the very strong advice from government and expert sources that people should avoid non-essential travel, the population is now, roughly speaking, divided into two groups:

  • Those few who absolutely must travel, and will do so if they can afford it at all;

  • The majority who do not need to travel, and would not (or should not) do so, no matter how cheap it was.

Lowering prices might pick up a very few extra passengers from the first group, who urgently need to travel but can't quite afford to do so at the current prices. But it would do nothing to increase demand among the second group.

In other words, demand for air travel is now highly inelastic; demand is not much affected by price, and even a large change in price would likely have only a small effect on demand. If anything, airlines would probably find it more profitable to raise prices right now, because people in the first group would probably be willing to pay more. But they likely won't do this to a great extent as it would look like price gouging, and might look bad to the government officials on whom they're depending for bailouts.

Third, and related to the previous point, even if the airlines could somehow raise demand by lowering prices (or advertising or other means), that increased demand would have to come from non-essential travelers. If the airlines are socially responsible, they won't want to do anything that would encourage people to travel unnecessarily. And even if they're not socially responsible, they probably don't want to present the appearance of doing something socially irresponsible, either to the public or to the government (see above).

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In many cases, airlines won't have to drum up passenger demand because freight carriage on many routes will be enough to cover the cost of the flight - airline freight demand saw a slump in 2019 and the first two months of 2020, but since then it has seen a huge resurgence as demand has picked up.

Several airlines are converting passenger aircraft to temporary cargo aircraft (meaning they can carry cargo on the main deck as well as in the cargo hold), which shows just what the upsurge is.

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    I don't think it's so much an increase in demand (although that might be a factor) as a reduction in freight capacity because of fewer regular scheduled flights.
    – user105640
    Apr 15 '20 at 23:55
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    @Arthur'sPass its both - freight is increasing on certain routes, hence why some airlines are upgrading aircraft on some routes yet flying fewer passengers at the same time. Airlines would rather fly their own aircraft with no passengers but a belly full of cargo because it not only pays for the flight, it also allows them to do things like fulfil contractual obligations for passenger services on certain routes and requirements to retain slots at certain airports.
    – Moo
    Apr 16 '20 at 0:33
  • (+1) Interesting point in any case but how “many” is “many”? I expect freight routes to be very different from regular passengers routes. Thinking about Europe, how much freight demand can there be between airports in Northern England and Spanish or Greek holiday destinations? (Just to name one example). All the conversions I heard of were for wide-body long-range aircraft. That's where the freight demand seems to be but that's only a part of passenger traffic.
    – Relaxed
    May 5 '20 at 22:39

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