That's how it would work - they airlines would have to cut service. By filling up seats with lower fares, it allows the whole route to be profitable. This helps more flights to occur serving more places.
An airline incurs a giant cost at the moment it decides to fly a route, everything after that is almost pure income, with little or no associated cost. Consider Cuba Airlines, which I invented right now because Cuba is between Belgium and Belize. The routes Belgium-Cuba, Belgium-Belize and Cuba-Belize have three different sets of competing airlines, so Cuba Airlines can sell those three tickets, but faces different competition doing so. Maybe it can charge more for Belgium-Cuba than for Belgium-Belize, maybe less.
If the route Cuba-Belize isn't generally full enough for the kinds of planes Cuba Airlines has on hand and the competitive situation allows charging more for Belgium-Cuba than Belgium-Belize, what can Cuba Airlines do to fill the planes up?
If you say that the prices for Belgium-Cuba has to be lower than Belgium-Belize, maybe that's okay, and maybe it means that Cuba Airlines can't charge enough to pay for the two flights. It depends on how the competitive situations are for the three routes.
baseballdork|1 year ago
Is this assuming that there would be empty seats if the hidden city nonsense wasn't allowed?
Arnt|1 year ago
An airline incurs a giant cost at the moment it decides to fly a route, everything after that is almost pure income, with little or no associated cost. Consider Cuba Airlines, which I invented right now because Cuba is between Belgium and Belize. The routes Belgium-Cuba, Belgium-Belize and Cuba-Belize have three different sets of competing airlines, so Cuba Airlines can sell those three tickets, but faces different competition doing so. Maybe it can charge more for Belgium-Cuba than for Belgium-Belize, maybe less.
If the route Cuba-Belize isn't generally full enough for the kinds of planes Cuba Airlines has on hand and the competitive situation allows charging more for Belgium-Cuba than Belgium-Belize, what can Cuba Airlines do to fill the planes up?
If you say that the prices for Belgium-Cuba has to be lower than Belgium-Belize, maybe that's okay, and maybe it means that Cuba Airlines can't charge enough to pay for the two flights. It depends on how the competitive situations are for the three routes.