In spite of the fact that the distance between the airports is often discussed by customers as the main factor to determine the airline ticket price, this factor is taken into consideration only in combination with a range of other significant factors. That is why, the equal prices for unequal distances are based on the economic rationale behind the approach to setting the prices. Thus, the distance between Casper, Wyoming, and Denver, Colorado, is more than 444 km, and the distance between Denver, Colorado, and Orlando, Florida, is more than 2,957 km, but the airline ticket prices are equal (Cheap flights: Expedia, 2014).
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The important determinants which influence the ticket price include not only the distance factor but also the demand, supply, costs, and competition factors (Skousen, 2008, p. 54). From this point, the rationale behind the equal prices for the tickets from Casper, Wyoming, to Denver, Colorado, and from Denver, Colorado, to Orlando, Florida exists, and such a price policy is determined by the combination of such factors as the relationships between the supply, demand, and cost curves.
To determine the price for the flights from Casper, Wyoming, to Denver, Colorado, and from Denver, Colorado, to Orlando, Florida, it is necessary to analyze the existing demand and supply factors. Thus, referring to the statistical data of 2009, it is possible to note that about 35,000 passengers flew from Casper to Denver during that year (RITA: Transportation Statistics, 2014). According to the other data related to the flights, the discussed route is not very popular with the public; the demand curve is almost unchanged during the years, and the supply curve which is influenced by the tendency can demonstrate the obvious decrease (Cheap flights: Expedia, 2014).
However, the costs remain to be unchanged in order to provide the customers with regular flights without delays. While focusing on these factors, it is important to note that airline companies choose to set the higher price in order to avoid the shortages in the demand and reach the equilibrium.
The economic sense associated with the price policy and followed in relation to these two routes is observed while focusing on the number of passengers typical for the route Denver-Orlando. According to the statistical data of 2009, about 270,000 passengers flew from Orlando to Denver in 2009, and more than 300,000 passengers flew from Denver to Orlando during that year (Cheap flights: Expedia, 2014). Focusing on the demand, supply, and costs curves, it is possible to note that the demand related to the route increases because more passengers become interested in travelling from Denver to Orlando (RITA: Transportation Statistics, 2014).
Airline companies respond to the tendency by stabilizing prices because the supply increases, and the costs are mainly unchanged. Moreover, the competition increases, and all these factors can lead to decreasing prices in the future in contrast to the situation associated with the Casper-Denver route.
Thus, the unexpectedly equal prices for different distances are set by the airline companies in order to cover costs, and address the changes in supply and demand. From this perspective, while determining the prices for flights, the changes in the supply, demand, and costs curves play the more significant role than the differences in distances because of the necessity to guarantee the profits for airline companies and compete within the industry effectively.
Cheap flights: Expedia. (2014). Web.
RITA: Transportation Statistics. (2014). Web.
Skousen, M. (2008). Economic logic. New York, NY: Regnery Publishing. Web.