Travel The Airline Dynamic That Could Change Everything

17:31  04 july  2018
17:31  04 july  2018 Source:   fool.com

These are the world's 10 best airlines, according to TripAdvisor

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Then the airline changed it. That’s the scenario facing TPG reader Jason, who emailed us to ask… But if the schedule change is 60 minutes or less, you can only change your ticket — no refunds are allowed.

Because ticket prices are dynamic , and can change according to everything from airline to day of the week, searching for the same flight from an alternate location could show a different, lower price.

a large passenger jet sitting on top of a runway: .© Provided by Fool .

The airline industry is facing a chaining dynamic that is forcing leading carriers like Air Canada and WestJet Airlines Ltd. to adapt and play catch-up.

The latest trend to befall the global airline industry is the emergence of ultra-low-cost-carriers (ULCCs) that threaten to undercut even the lowest cost economy fares of traditional airlines.

ULC’s are a trend that first began in Europe. When the trend first began, many figured that ULCCs could never make their way to Canada.

That’s because it is so much more expensive to fly in Canada already thanks to the country’s vast geography and a low population density that only serves to make matters of air flight more challenging for the established carriers.

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This will give you everything you need to know about your ticket in case you have to make a change . 2. Book directly with the airline — There’s nothing more frustrating than Bottom Line . Make sure you know the situations which can allow you to receive a refund when booking your next plane ticket.

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In fact, a 2017 survey that was put together by online travel agency Kiwi ranked Canada number 65 out of a total of 80 countries in terms of their affordability to book flights out of the country.

The cost to book a flight in Canada has become such a competitive issue lately that now there is mounting speculation that the federal government could – or at least should – do something to fix it.

But one of the great things about capital markets is that they do have a tendency to fix themselves.

This is essentially a version of the “efficient market theory” in action.

While Canadians wait for the government to address the excessive fees that regulators are stamping on their tickets, some of these ULCC have stepped in and seized the opportunity.

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When the airlines need to change their plans, passengers are rarely offered any compensation, but when travelers must change or cancel their own reservations, huge fees can apply. In this post I’ll offer some tips on how to minimize or avoid fees

If the private financing can be secured, the Houston-Dallas connection would be the fastest high-speed rail line in the nation and among the first successful private passenger rail projects in recent American history. Eckels and airline industry experts have predicted that the airline will maintain its neutrality

The list of ULCCs flying out of Canada is growing, and now includes Kelowna-based Flair Airlines, Wow Air and European-based Primera Air.

Travellers can count on these airlines offering fares that are considerably cheaper than their traditional counterparts.

But of course, there’s a catch.

In exchange for discounted fares, passengers of ULCC are required to pay add-on fees for things that would regularly be included in a traditional flight.

Things like checked baggage, in-flight headsets, refreshments and beverages, for example.

Passengers can still save money on the discounted flights; they just need to do a little extra homework and organization – taking advantage of things like printing out boarding passes at home, eating ahead of a scheduled flight and packing an extra pair of headsets.

The response

But now that these low-cost providers having been gaining some traction in the Canadian market, carriers like Air Canada and WestJet are being forced to respond.

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  WestJet severs ties with Hopper app after 'confusion' about secret fares WestJet Airlines said it is severing ties with airfare finder app Hopper due to confusion over the developer's announcement the airline would offer "secret fares" on its app. Montreal-based Hopper announced Wednesday that WestJet and Air Canada were among its first global partners to unload some of their seats via "secret fares" at discounts of up to 35 per cent.

That dynamic has pushed airlines to do everything they can to show lower prices while still making a profit—including doing all the things we’ve come to hate “The online travel agencies changed the nature of competition in the airline industry—from competition on elapsed scheduled flight times to

Dynamic pricing is the reason that the cost of everything from airline tickets to home electronics can vary so much from day to day, or from week to week. The bottom line is that retailers need customers to stay in business, and ever- changing pricing models can benefit both parties.

The airline industry is one characterised by high fixed costs; in order to stay profitable, it’s critical that these airlines keep their planes full.

Both Air Canada and WestJet have since begun offering their own version – called basic economy – on a small number of domestic routes this year.

Bottom line

It’s not unusual to see established company’s respond in this way, that is, dipping a proverbial toe into the water to see if it’s a strategy they will be able to successfully adopt.

If successful, we could see both airlines roll out the offering more broadly later this year or early next year.

But the real danger here is that in following suit with a more threadbare strategy, it will almost certainly have an impact on already razor-thin margins.

That may not be a huge problem for now, but if passenger volume were to decline in the future,  this trend certainly has the potential to cause the airline industry to go into a tailspin.

Fool contributor Jason Phillips has no position in any of the stocks mentioned.

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