Wednesday, March 24, 2004

Scalia's plane tickets

Juan Non-Volokh mentioned an op-ed contribution in NYT "Scalia's Real Ethical Lapse", I had a short comment and decided to post here as well.

As no doubt many readers of your excellent weblog have told you, NYT article you refer to in your post engages in a bit of trickery to make its cheap (IMO) point.

They are comparing apples to oranges, in this case lowest price on a flight with stopovers for some arbitrary dates they chose to an unrestricted one way fare. Any traveler will tell you that unrestricted fares are *always* tremendously more expensive than restricted ones. As of this moment (03/24/2004 6:58PM EST) I can purchase tickets for a round trip New Orleans-BWI tickets for $178 (4/14-4/21 connecting in Charlotte - US Airways flights 870/1042 and 1439/431)

I can also buy a one way trip on Delta

5:00 am Depart New Orleans (MSY)

Arrive Baltimore (BWI) 9:57 am Wed 14-Apr

Duration: 3hr 57mn Delta 715 / 982

Connect in Atlanta (Hartsfield Intl.)

for $119 ... US airways in this case comes in @ $290 although flying into a different airport in the DC area can drop US Airways price down to $209.

But that is not quite the point of the article, even if the exuberant *displayed* difference in prices is the hook to reel the reader in. Try as I might, I was not able to find any reference to the requirement to fly the actual round-trip in the US Airways with a purchase of a round-trip tickets, and the authors of the NYT op-ed chose not to divulge their sources on this.

There is a huge number of combinations to get the lowest price tickets, but it is bizarre to me to imagine that airlines would force someone to burden their planes and tax their resources solely for the unenforceable purpose of sticking it to the consumer. Indeed, as the authors of the article suggest "Airlines, however, charge more for a one-way ticket because they know that some business travelers need the flexibility to buy such tickets, and are willing to pay more for it." However, that is why airlines provide unrestricted and restricted types of fares. This is called product differentiation and airlines are amazingly adept to it.

I am not going to go into high fixed costs for each flight and low marginal cost of each extra passenger that determine this pricing. Suffice it to say that "Barry Nalebuff [who] is a professor of business at Yale" should know better. It would be repetetive to say that NYT should also know better. Clearly they do not know and will never learn.

Perhaps Scalia is not a very good expedia user :)


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