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Interesting questions and answers about how to practically handle that weird situation have been posted here and they helped me learn more about the subject. However I have recently been almost hit by this pricing practice myself when I was about to book a one-way CPH - BLQ Lufthansa flight for 6.500 DKK and then luckily I realized I better buy that same flight as double-way with a return flight that I don't know whether I will use or not, for 1.800 DKK instead of 6.500.

Right now this pricing practice seems beyond ridiculous to me, but before "officially" deeming it ridiculous I would like to understand:

1) How do airlines explain this practice to the public ?

2) Based on what do they argue that customers should not feel ripped off when they buy those one-way tickets instead of double-way ? (I'm just assuming they argue so, but I believe it's a fair assumption because I'm sure that if I ask an airline whether such one-way flights are a rip-off their answer will be along the lines of "No".)

So this is my question. Has anyone heard some airlines addressing any of those 2 points ?

ADDED: 3) Also, based on what do airlines count on people still buying one-way tickets - instead of double-way with a bogus return ticket - except counting on people being unaware of course ? Do airlines exclusively count on people being unaware, or do they offer some other kind of incentive or anything else that is supposed to make people decide to buy expensive one-way tickets instead of cheaper double-way tickets ?

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    Are they the same kind of ticket though? Quite often, the cheap return will be completely non-flexible and non-refundable, while the expensive single will be fairly to very flexible. Are you sure you're comparing like with like? – Gagravarr May 11 '15 at 10:13
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    Pick a different airline then? Tends to just be the legacy carriers that decline to sell their cheapest fare classes for one-ways, most LCCs will happily sell you a cheap one-way, so vote with your wallet! – Gagravarr May 11 '15 at 10:39
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    See wikipedia (outside of the US flag carrier is often similar) – Gagravarr May 11 '15 at 11:29
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    Some low-cost carriers are quite large and some legacy airlines not so much anymore. It's just a different way of doing business, even if the distinction is getting blurrier. Legacy means they are burdened with a commitment to maintain an extensive network with easy connections between flights and premium service. Regarding your question: Are you asking why they do it (there is nothing particularly ridiculous about it, and it's been covered before) or specifically how they communicate/try to explain it to consumers? – Relaxed May 11 '15 at 12:46
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    @Relaxed Are you asking why they do it (there is nothing particularly ridiculous about it, and it's been covered before) or specifically how they communicate/try to explain it to consumers? Sorry I had missed this comment. It's the second one, I'm asking how they communicate/try to explain it to consumers. I'm quite clear why they do it: because they can :) – SantiBailors May 11 '15 at 13:22
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I have never come across any attempt to communicate directly on this on the airlines' side. Many consumers probably do not really notice and those who do either have good reasons to pay for premium tickets (e.g. business travellers who don't pay for their tickets and enjoy the perks) or simply accept they have to play the game to get cheaper fares.

It also seems that many passengers are extremely price-sensitive. You hear many people complain about low-cost carriers, their arbitrary rules, huge surcharges for everything from checking in luggage to printing a boarding pass, use of remote airports, impossible departure times, lack of free food, etc. I have done it too. And yet, next time around, many of them are not ready to shell out €100 more on a short-haul flight on a legacy airline and fly low-cost again.

If people decide on price anyway, what would be the point in doing things any other way? A more transparent pricing strategy or any attempt at explaining it clearly would be pointless if it means you simply lose passengers to the competition because your tickets are slightly more expensive.

You have to take into account the fact that the airline industry has not generally been hugely profitable in recent years and would not sacrifice its margin anyway. So if one-way prices on legacy airlines were to go further down, some other prices would have to go up, everything else being equal. Charging more for flexible one-way tickets is a way for airlines to compete on other markets.

Finally, one-way vs. two-way is really just the tip of the iceberg. Airlines also price their tickets based on the competition on a specific connection and many other factors. That's why you can often find bargains on legacy airlines, even for one-way tickets or widely different prices for seemingly similar flights. And why crazier tricks like “fuel dumping” can sometimes work.

At the same time, they still do everything they can to sell more expensive tickets as well (in exchange for flexibility, premium service, frequent-flyer miles, etc.) Those are the main reasons why people still buy one-way tickets. Another incentive is that if you regularly book flights you do not intend to take and the airline notices it, they might cancel your frequent flyer account or something like that.

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It is a matter of "willingness to pay" and market price segmentation, which ultimately comes down to supply and demand.

By the way, the pricing of a product has nothing to do with the cost of manufacture; this only applies for commodities. For all other products, a good pricing strategy will involve estimating the demand/price graph for the consumer group in question and optimising the price-volume point to yield maximum profitability, either through very high prices (but few sales), a very high sales volume (at dirt cheap prices), or more likely, some combination of the two that comes out on top of either end. Of course there is a question of supply costs underneath that, but it is not the primary concern of the pricing analyst.

Okay so that's all very simple. But hang on: obviously different people will place a different valuation on the same products. How can you charge one person more than the next person for the same product? (Even though the two people have different valuations of it?) That is called market segmentation.

Business travellers [I am not talking business class, I am talking about those travelling for work] can, in general, afford to pay a lot more for their tickets but there aren't enough of them to fill up the plane and run a profitable operation. On the other hand you have very price sensitive leisure travellers who will spend hours hunting down a fare that saves them ten Euro cents. You could lower the price for everyone, but then you are leaving money on the table from those who are willing to pay more for your product.

So how do you sell the same product to two different groups of people at two different prices?

The current way to apply price segmentation to the market is a mixture of flexibility on the ticket; advance purchase requirements; and minimum stay.

Business travellers often (not always) require a good deal of flexibility on the ticket. If my meeting in Paris finishes early, I want to go home early and see my family. If my meeting in San Francisco next week is delayed by a few days, I don't want to get there early and waste time, when I have work to do in my office in England. Obviously, if I am a holiday traveller, I don't care, I have no meetings, I will just find the cheapest ticket that lets me sit in the sun. Therefore, flexible tickets are considerably more expensive.

Advance purchase follows the same rules. Perhaps tomorrow a client will call me and ask me to come to Osaka on Monday morning. Most people do not go on holiday at the drop of a hat.

Finally, the important one: minimum stay requirements. I do not want to stay away from home at the weekend. No one pays me to work on the weekend? However, if I am on holiday, I probably will be willing to stay for a Saturday night if the price is a lot different.

Therefore, tickets that enforce a minimum stay (of say three days), or more likely a Saturday night, are much much cheaper than tickets that do not.

However, if you price one way tickets at the same price as a discount return, you enable all the restrictions I have mentioned to be defeated by the purchase of two independent, one way tickets. Therefore, one way tickets are inevitably priced at the far top end of the pricing spectrum, to prevent their use in this way.

One way tickets should almost never be purchased by anyone, except those with substantial corporate discounts. There is almost always a cheaper way of doing what you want.

Now the LCC market has shaken this up particularly within Europe and domestic flights within the United States. BA, for instance, now sells European fares at the price of a half-round-trip. However in the business class cabin this logic is not applied. I am aware that AF is sticking to its guns and refuses to sell discounted oneway European fares.

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    Technically, that's called “price discrimination”. Market segmentation is a bit broader and involves creating slightly different products, which is not the case with minimal stay requirements or the like. – Relaxed May 11 '15 at 12:58
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    @SantiBailors does the airline need to "explain" it to the public? They are selling transportation, not lessons in pricing. :p If you find the practise morally reprehensible, there are a small number of LCCs who do not practise that particular aspect of price discrimination. – Calchas May 11 '15 at 13:04
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    Go and look around your local supermarket fruit section and you may be very surprised. ;) In particular the very same fruit juices are often cheaper in 2 litre containers than in 500 ml containers. I think people only want 500 ml and not 2 litres for lunch and so that pushes the price up. I don't think the airlines would wish to draw attention to their pricing practises and therefore the official line is no comment. – Calchas May 11 '15 at 13:23
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    In my local "Nisa" supermarket there is a brand of fruit juice sold in 550 ml and 2 litre sizes. The 550 ml size is about twice the price of the 2 litre size (in total price, not price per unit quantity). The two litre size is not even on sale. – Calchas May 11 '15 at 13:32
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    I cannot make your "The two litre size is not even on sale" go with the rest of your comment but I understand the pricing thing and I have to say that where I ever lived (all European countries) I have never seen anything like that, and I consider that as ridicolous as the one-way ticket thing, unless the differences between the two products are not only the capacity of the container but its shape, maneuverability, weight or any other thing that can make one preferrable over the other one for reasons other than capacity. Same concept about @Gagravarr comment. – SantiBailors May 11 '15 at 13:42

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