The Sometimes Crazy Pricing Practices of Airlines

The Detroit Free Press ran a front page article last Sunday titled "Hub Premiums Cost Delta Fliers Plenty at [Detroit] Metro Airport" about some of the huge differences in airfares for international travel between Delta Airlines' hub airport in Detroit and its regional spoke airports in nearby Flint, Lansing and Saginaw.

For example, I just checked Delta's website for roundrtip travel to Tokoyo at the end of October. For first-class travel, the round-trip airfare from Detroit (DTW) on a 3:25 p.m. nonstop flight is $11,606, compared to only $6,324 from Flint, only about 50 miles away. If you fly from Flint you could take a short 20-minute flight to DTW at 1:30 p.m. and join the Detroit passengers on the 3:25 non-stop flight and save $5,282. For travel by coach, you could still save more than $600 by starting in Flint and pay $1,553 round-trip instead of $2,156 from Detroit.

For first-class travel to Amsterdam on Delta, the cost savings starting in Flint would be less, but still almost $1,500 compared to starting in Detroit ($6,304 Flint vs. $7,777 Detroit).

One reason given for more competitive Delta fares at the spokes (Flint, Lansing, Saginaw) than the Detroit hub: Delta accounts for 80% of the passengers at DTW and 91% of international travelers. In contrast, Delta accounts for only 40% of daily flights at the Flint airport, where they compete with AirTran (20% of daily flights), Continental (16%), Frontier (12%) and American (12%). Less (more) competition at the hub (spokes) translates into higher (lower) fares on average.

And the article points out that airlines don't price their tickets based on cost (e.g. travel distance), but on competition (or lack thereof) and what "the market will bear."

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