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Tuesday, May 03, 2005 

Bundling in the Air

We're trying to book a trip from Jackson to Iceland. The best route would combine some one-way tickets of different carriers. Of course the price doing it this way is crazy. This brings up the question of why isn't a roundtrip airfare ticket a form of bundling under the antitrust laws. Each one-way ticket is a separate good and though it may make sense to price two one-ways more than a roundtrip, how can it make sense to charge more for one one-way than for a round-trip. Indeed, to make it even crazier not only are you economically forced to buy a roundtrip, it is apparently a breach of contract if you don't use both legs. If a fruit stand sold an apple for $2 and a pear for $1.75, but both for $1, wouldn't we suspect the prices for the individual items were inflated to force the joint purchase. Would it also be acceptable for the seller to insist that if you did purchase both fruit you had to eat each in front of him?

I'm racking my brain for why this might be standard practice and all I can come up with is that a big expense for airlines is fuel. If everyone purchased one way tickets, then the plane and crew would still have to fly back but there wouldn't be any passengers. That might explain why a one-way ticket is as expensive as a roundtrip. That's all I got.

But then couldn't airlines analyze this traffic and go point a to b to c instead of point a and return?

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