One-Way Ticket

While arranging my mom's itenerary for her visit, I discovered that doing a lot of one-way trips using discount airlines will give me the lowest price/trip combination. The interesting thing about this is when you do a roundtrip itenerary using a discount airline the price is even higher. Why is that? It used to be that one-way fares from big airlines (Northwest, United, USAir, Delta) are priced higher. This makes sense if they view one-way passengers as those with inelastic demand, that is those who don't react to higher prices as much. Makes sense if the passengers are really desperate to fly.

Discount airlines though view one-way passengers differently. They price lower to this class of passengers because they view them to be price sensitive. In fact Southwest's default option is for one-way.

So for traditional airlines, a bundled service is more cheaper, while for nimbler new players disaggregated flights are more cost effective. Interesting. More on this later.