Factors Having Impact On Providing Cheap Air Tickets By Airlines
People looking for cheap air tickets from airlines, invariably find good flight deals. The prices of flight tickets are determined by many factors which are likely to change in a short span of time. However, many carriers which operate on the USP of providing low priced tickets try to find ways and means to continue to provide cheap air tickets to customers. So, what are the main factors which enable providing low cost tickets to the people?
1.Capital investment decisions: These decisions are basically about buying the aircraft. Which aircraft is most fuel efficient, how many of these need to be bought and whether there would be concessions on financing the bulk orders, all these questions determine whether airlines would be in a position to provide low fare tickets or not. Leasing cost forms an important component of the operating cost and, therefore, capital investment decisions are usually oriented to minimize this cost so that price-sensitive markets can be tapped.
2.Operational decisions: These decisions are related to the matters of routing and navigation, determination of which sectors would be flown, how to minimize the turnaround times, how to save fuel and economize operations and what is the minimum scale of operation which would help airlines in offering the cheapest tickets to customers. Minimizing inefficiencies and wastages and preventing losses also helps in reduction of prices of tickets. So, operational decisions have to factor in efficiency and economy at every stage of planning.
3.Hedging of currency risk: The risk of currency fluctuation has direct bearing on cost of flight tickets since the fuel costs as well as the salaries of foreign pilots has to be made in foreign currency. So, in times of frequent variation in currency rates, currency risk hedging enables providing more stable prices of tickets. Whether this risk hedging is permitted or not in a particular country, determines whether cheap air tickets can be provided on long term basis or not.
4.Government: Government is a significant player which impacts prices of tickets mainly through its decision on taxes levied on fuel and on other aircraft inputs. Also, if it develops the airport, then the airport development charges and the landing and parking fees charged from the airlines also have a bearing on prices of tickets, especially of the low-cost carriers.
5.Market-forces: Demand and supply conditions also have a bearing on pricing since airlines resort to yield management practices depending on market conditions during different periods of time and for different locations.
So, a number of factors, over which the airline may or may not have control, have a bearing on prices of tickets. Hence, it is not an easy task and
1.Capital investment decisions: These decisions are basically about buying the aircraft. Which aircraft is most fuel efficient, how many of these need to be bought and whether there would be concessions on financing the bulk orders, all these questions determine whether airlines would be in a position to provide low fare tickets or not. Leasing cost forms an important component of the operating cost and, therefore, capital investment decisions are usually oriented to minimize this cost so that price-sensitive markets can be tapped.
2.Operational decisions: These decisions are related to the matters of routing and navigation, determination of which sectors would be flown, how to minimize the turnaround times, how to save fuel and economize operations and what is the minimum scale of operation which would help airlines in offering the cheapest tickets to customers. Minimizing inefficiencies and wastages and preventing losses also helps in reduction of prices of tickets. So, operational decisions have to factor in efficiency and economy at every stage of planning.
3.Hedging of currency risk: The risk of currency fluctuation has direct bearing on cost of flight tickets since the fuel costs as well as the salaries of foreign pilots has to be made in foreign currency. So, in times of frequent variation in currency rates, currency risk hedging enables providing more stable prices of tickets. Whether this risk hedging is permitted or not in a particular country, determines whether cheap air tickets can be provided on long term basis or not.
4.Government: Government is a significant player which impacts prices of tickets mainly through its decision on taxes levied on fuel and on other aircraft inputs. Also, if it develops the airport, then the airport development charges and the landing and parking fees charged from the airlines also have a bearing on prices of tickets, especially of the low-cost carriers.
5.Market-forces: Demand and supply conditions also have a bearing on pricing since airlines resort to yield management practices depending on market conditions during different periods of time and for different locations.
So, a number of factors, over which the airline may or may not have control, have a bearing on prices of tickets. Hence, it is not an easy task and
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