My big question here is whether an airline could profit by selling refundable fares at a reasonable price?
This is one of the things I can't understand. An airline will sell almost all non-refundable tickets(with a change fee) but to buy a fully refundable tickets requires paying around three times the amount. Essentially it discourages any reasonable customer from buying it. What if the airline instead wanted to encourage people to buy those tickets for something reasonable such as a 10% extra fee.
It would benefit the airline in the following ways:
1. Extra revenue for each ticket sold.
2. Extra passengers from people who are more willing to buy tickets on speculation.
3. Assuming later tickets stayed high, the airline would have a chance to sell a more expensive tickets later on.
It would have the following negative impacts:
1. Money would not be collected from people who don't end up flying.
2. The airline would lose money in terms of administrative fees and credit card fees.
3. Passengers could rebook a cheaper ticket of a flight on another if they found a better flight later on. Of course this would work both ways if every airline did this.
4. If this became the norm and every airline did this, last minute tickets would be cheaper instead of outrageously high.
Which airlines could benefit the most by implementing such a business strategy? Since this would result in a less predictable amount of demand, a shuttle style airline with a frequent route and open seating would have more flexibility to add or cancel flights based on demand. This would also help an airline that catered more to business travelers requiring the flexibility to change plans quickly.
This is one of the things I can't understand. An airline will sell almost all non-refundable tickets(with a change fee) but to buy a fully refundable tickets requires paying around three times the amount. Essentially it discourages any reasonable customer from buying it. What if the airline instead wanted to encourage people to buy those tickets for something reasonable such as a 10% extra fee.
It would benefit the airline in the following ways:
1. Extra revenue for each ticket sold.
2. Extra passengers from people who are more willing to buy tickets on speculation.
3. Assuming later tickets stayed high, the airline would have a chance to sell a more expensive tickets later on.
It would have the following negative impacts:
1. Money would not be collected from people who don't end up flying.
2. The airline would lose money in terms of administrative fees and credit card fees.
3. Passengers could rebook a cheaper ticket of a flight on another if they found a better flight later on. Of course this would work both ways if every airline did this.
4. If this became the norm and every airline did this, last minute tickets would be cheaper instead of outrageously high.
Which airlines could benefit the most by implementing such a business strategy? Since this would result in a less predictable amount of demand, a shuttle style airline with a frequent route and open seating would have more flexibility to add or cancel flights based on demand. This would also help an airline that catered more to business travelers requiring the flexibility to change plans quickly.
