How do airlines price air tickets?

The Spring Festival travel rush craze (II) starring the people of the whole country has begun. The train ticket is obviously long gone. Want to buy a plane ticket for the performance? That must be expensive. As we all know, aircraft is a "luxury" in transportation because of its small size and high construction and use costs. Even so, air tickets are sometimes very cheap. Unlike the fixed price model of government monopoly pricing, railway transportation is subject to floating pricing according to market changes. The same airline, different airlines, flight time, different cabins and flight time will all affect the ticket price. How to price air tickets? This is undoubtedly the most concerned issue for airlines. At this price, you can't afford a plane ticket at most. For air tickets, every consumer has an affordable upper limit (the specific upper limit varies from person to person), and once the air ticket exceeds this upper limit, it will give up buying. For example, many consumers think that the ticket price of Beijing-Shanghai line should not exceed that of Beijing-Shanghai high-speed rail, otherwise it is better to take the high-speed rail by plane. For airlines, they always want to squeeze the last drop of blood from consumers, that is, to maximize profits. How to maximize the benefits? They will try their best to analyze the upper price limit that consumers are willing to pay, and then set the price precisely at that position. Therefore, airlines will adopt the pricing method of price discrimination. The so-called price discrimination refers to the fact that suppliers of goods or services implement different sales prices or charging standards among recipients when they provide goods or services of the same grade and quality to different recipients. To put it bluntly, selling the same goods or services, but charging different prices to different people, just like buying clothes in a small commodity market, depends on your bargaining power. For airlines, using price discrimination pricing means can maximize economic profits and get all the money they should get. If every consumer sets a different price (first-class price discrimination), the cost is obviously too high and unrealistic. Therefore, airlines often adopt three-level price discrimination, that is, differentiated pricing according to consumers in different markets and different supply and demand situations. For example, the price of holiday air tickets often rises by more than 50%. Then I'll sell it to you at this maximum price, and we'll use a simple example to illustrate it. Suppose there are only two types of passengers who choose a certain route now, and the upper limit of the unit price of air tickets they can bear is pb and pe respectively. The number of tickets that airlines plan to sell to these two types of consumers is xb and xe respectively. The total benefits are as follows: due to the limited number of aircraft seats, the benefits are constrained: first, the total number of air tickets with two different prices cannot exceed the total number of aircraft seats C, that is, XB+XE ≤ C; ; Secondly, airlines will also set an upper limit on the number of tickets with two prices. The number of low-priced tickets should not exceed the total number of consumers in the market who need low-priced tickets qb, that is, xb≤ qb. Similarly, the number of high-priced tickets cannot exceed the total number of consumers who need high-priced tickets qe in the market, that is, xe≤ qe. Therefore, we can turn the problem of maximizing airline revenue into a simple linear programming problem: in this linear programming problem, the variables are the number of seats sold xb and xe, and we draw constraints in a two-dimensional plane: it is not difficult to find that in the feasible region, there is a point that can maximize the revenue function R, that is, point A, in the lower left area of point A, and there are seats that have not been sold, which reduces the revenue of low-priced seats. It can also be seen from here that the airline's strategy of maximizing revenue is simple: first find ways to fill high-priced seats, and then fill the remaining passengers with low-priced seats. But if there is no difference between high-priced tickets and low-priced tickets, even consumers who can accept higher prices will choose low-priced tickets. In order to make passengers who can buy high-priced tickets willing to buy high-priced tickets, airlines will formulate various rules of the game. The most typical is the difference in booking time. For example, college students who want to go home on holiday often have to book tickets one month in advance, while business people may buy tickets in the morning and afternoon. Note that consumers who need to fly urgently because of emergencies or certain needs are also consumers who can accept high-priced air tickets. At this time, they are willing to pay for a smooth destination, which is also the reason for the soaring holiday ticket price-QE has been greatly improved. . In addition, low-priced tickets often have restrictions such as non-return and non-exchange. These are all manifestations of airlines' "manufacturing differentiation". The votes have been divided, but wait a minute, there is another problem. From the above discussion, we know that airlines will make differentiated pricing according to the consumer market. But how did you get the exact price? This is a complicated problem, which is analyzed by stochastic process in mathematics and equilibrium price in economics. In fact, the algorithm of each airline is likely to be different. But in fact, it can also be analyzed by a very simple principle, that is, opportunity cost. The so-called opportunity cost refers to the total income that can be brought by the abandoned choice when faced with the choice decision of multiple schemes. For example, if you buy stock A with a sum of money instead of stocks B, C, D and E, then the income generated by the stock with the highest income among stocks B, C, D and E is the opportunity cost of buying A. For airlines, the opportunity cost of selling a ticket at price P is "the highest price people are willing to buy this ticket before the plane takes off, p* (p*p)". Therefore, as long as we can predict the probability of this event, and then compare it with P by multiplying the probability with P, we can decide whether the ticket price should be set as P, but it is difficult to directly calculate the probability of p*. Fortunately, airlines can also find some clues from past sales data. In fact, airlines are faced with such an uncertain event in pricing: how many people will buy seats of the corresponding grade at what price? This uncertain event contains a complex result set B, which consists of a binary group (P, X) consisting of price P and final sales volume X, and any result will produce a benefit, so a benefit set R can be derived from this result set B, and the elements in R are the products of P and X in each binary group in B set. After excluding the benefits of the existing scheme, the opportunity cost is the highest among the benefits. If the opportunity cost is higher than the established income, there will be a "hidden loss". In order to avoid this kind of loss, airlines will price according to the opportunity cost. For a simple example, there are 20 seats in a cabin of a certain flight. According to the previous sales data, these 20 seats may have the following profit results: As can be seen from this table, the highest profit is the combination of (520, 18), which is 9360 yuan. If you don't choose this scheme, the opportunity cost will be higher than the income itself, resulting in economic losses. Therefore, when airlines set the ticket price, they will take this income as the target income. So will the airline set the price in 520 yuan? It doesn't have to be like this. Past data cannot represent today's situation. After determining the target revenue, the airline will adjust the price according to the expected attendance rate of this flight. In fact, the problem of air ticket pricing is far from simple, because just counting the data of previous years and sorting out the statistical data of previous income has involved a lot of statistical work, and calculating the expected sales volume is more complicated, and it is almost impossible to predict the air ticket price completely. Nevertheless, from the above analysis, we can still see the basic market rules and profit-seeking strategies of airlines, which are actually not as unpredictable as air ticket prices.