Why are BA domestic flights so expensive?

[ACDC]

After watching some aviation related videos it suddenly dawned upon me, that the domestic market isn't really an earner for BA. They don't want the domestic market for someone to travel from say Newcastle to London. They would rather use for a passenger to go from Newcastle to say Singapore via LHR. They would earn more from that. So they deliberately inflate prices. If a domestic passenger wants it, they will pay over the odds, so it's a win win for BA.

What do people think?

 

[Watershed]

Domestic BA flights can be very affordable and in fact cheaper than the train for many journeys. But the prices vary enormously depending on demand, especially since (as you say) they value the seats for their ability to connect people to their long-haul network, which is where the real money is made.

See this article from Oliver Ranson which discusses the topic in more detail:

Air Fares & Probability Models

Explaining high-end domestic & short-haul fares

revman.substack.com

British Airways domestic fares can get so expensive that it is unrealistic anybody* will ever pay them. And while Qatar Airways is well-known for it’s good value fares, short-haul fares from Doha are sometimes not much cheaper than longhaul services.

* of course somebody will every now and then, but hardly ever, you know what I mean.

...

Revenue Management 101 would state that the airline charges these fares because that is what the market allows and that is what people are willing to pay. This is not actually correct.

In fact we have a corner solution (see article). These airlines are pricing this way because they do not actually want people to buy those tickets.

...

Now let’s turn back to BA’s GBP 1,770 fare to Edinburgh. I do not see this as a real air fare anymore. Realistically nobody in the UK is actually going to pay this fare.

I see it as representing a 50% chance that they will sell a pair of longhaul seats to an Edinburgh passenger for GBP 3,540.

Or a 25% chance that Edinburgh will feed GBP 7,080 to or from the longhaul network.

Viewing some types of shorthaul airline pricing as a form of probability modelling to cover the risk of displacing longhaul seat sales can help explain outwardly bizarre airline behaviour.

 

[Tetchytyke]

It depends. Mostly supply and demand economics at work.

The domestic flights which connect neatly to/from a large bank of long haul departures will have more demand and so fares will be higher. The flights which don’t connect so well don’t have such a high demand and so fares will be lower. And if BA think lots of people will use a flight for long haul then they will pre-emptively price the domestic legs accordingly to ‘reserve’ these for long haul.

I don’t think any of this is controversial and it’s really just common sense. To choose a random Friday in June, the 0925 from Newcastle (NCL) to Heathrow (LHR) connects into a lot of the trans-Atlantic stuff and is priced at £430 for NCL-LHR. The 2015 doesn’t connect into much and is priced at £72 for NCL-LHR. It’s probably not a surprise that you can fly on the 0925 to LHR then on to Los Angeles for £450.

 

[AlterEgo]

After watching some aviation related videos it suddenly dawned upon me, that the domestic market isn't really an earner for BA. They don't want the domestic market for someone to travel from say Newcastle to London. They would rather use for a passenger to go from Newcastle to say Singapore via LHR. They would earn more from that. So they deliberately inflate prices. If a domestic passenger wants it, they will pay over the odds, so it's a win win for BA.

What do people think?

That’s a neat summary, but some domestic flights don’t connect in neatly to many popular long hauls, so some SH fares can be very cheap.

 

[RailWonderer]

Domestic BA flights can be very affordable and in fact cheaper than the train for many journeys. But the prices vary enormously depending on demand, especially since (as you say) they value the seats for their ability to connect people to their long-haul network, which is where the real money is made.

Please...Find me a flight from London to Aberdeen or Inverness for less than £200 return with no checked bag that doesn't depart in the late evening or at the crack of dawn. Then you have the cost of getting to and from the airport. Aberdeen was expensive apparently because of the oil companies booking their employees' flights back and forth. If BA wanted they could go Nordic style and have a few more flights per day and make a slimmer margin but demand is probably inelastic and business oriented on these flights hence no reason to price them down.

I don’t think any of this is controversial and it’s really just common sense. To choose a random Friday in June, the 0925 from Newcastle (NCL) to Heathrow (LHR) connects into a lot of the trans-Atlantic stuff and is priced at £430 for NCL-LHR. The 2015 doesn’t connect into much and is priced at £72 for NCL-LHR. It’s probably not a surprise that you can fly on the 0925 to LHR then on to Los Angeles for £450.

They might be connecting Newcastle to Rome via Heathrow, or Vienna, or a range of European destinations as well, not just to the US.

 

[Watershed]

Please...Find me a flight from London to Aberdeen or Inverness for less than £200 return with no checked bag that doesn't depart in the late evening or at the crack of dawn.

Here are the dates up until the end of next month on which you can get return fares for under £200 that meet those criteria, assuming a 7 day trip:


Aberdeen and Inverness are rather different beasts to the Glasgow, Edinburgh, Newcastle and Manchester routes though. The latter 4 all have feasible rail alternatives, which moderates prices somewhat, whereas the train takes so much longer for Aberdeen and Inverness that it's not as effective a competitor.

Then you have the cost of getting to and from the airport

True, but when LNER and Avanti are charging Anytime fares of £200 each way on the aforementioned 4 routes, the cost of the airport journey pales in comparison.

Aberdeen was expensive apparently because of the oil companies booking their employees' flights back and forth.

Quite so, probably also some renewable energy demand there as well as tourists and wealthy people with second homes, playing golf etc.

If BA wanted they could go Nordic style and have a few more flights per day and make a slimmer margin but demand is probably inelastic and business oriented on these flights hence no reason to price them down.

They have plenty of flights relative to demand. The only destination that I'd argue warrants more flights is Inverness but evidently BA feel that one flight a day is generally sufficient to cater to demand.

 

[Tetchytyke]

They might be connecting Newcastle to Rome via Heathrow, or Vienna, or a range of European destinations as well, not just to the US.

They may well be. Trans-Atlantic is BA’s biggest LH market though, so the flights that connect into the early afternoon bank of flights to the US are always going to be in the highest demand.

Find me a flight from London to Aberdeen or Inverness for less than £200 return with no checked bag that doesn't depart in the late evening or at the crack of dawn.

£100 each way isn’t expensive for that length of journey.

 

[GRALISTAIR]

I have not checked recently so please forgive me. I assume since LCY is not a connecting airport but LHR is, then flights to LCY (for city people) are priced quite a bit higher?

 

[Bald Rick]

I have not checked recently so please forgive me. I assume since LCY is not a connecting airport but LHR is, then flights to LCY (for city people) are priced quite a bit higher?

LCY is a connecting airport, principally for Edinburgh / Glasgow / Belfast / IoM to some popular european destination. But, obviously, it’s much less used for connections than LHR.

Flights are priced higher though, simply because it is quicker to get to much of London (less time holding on approach, shorter and easier trip from plane to kerb, shorter trip to much of central London) and therefore ‘worth’ more to passengers. And also because with smaller aircraft the cost base is a bit higher per passenger.

 

[GRALISTAIR]

I do understand (because I nearly booked a flight pre Covid) that LCY can be a connection airport. My plan was CHA to ATL to CDG to LCY to MAN - Chattanooga/Atlanta/DeGaulle/City/Manchester - but connects massively less than LHR. Iirc the cost was more expensive than via Schipol