Why is it important to launch low-cost air tickets

2023-02-14

According to media reports, recently, the Civil Aviation Administration of China (CAAC) responded to the rumor that the airline company would stop the release of low-cost tickets, saying: "The CAAC has not put forward relevant requirements for airlines, and the specific content can be contacted with relevant departments." Previously, the news that many domestic airlines stopped the release of low-cost tickets in order to reduce losses caused a heated debate, and the discussion about the rise of ticket prices and the inability to buy tickets has not been reduced. In real life, many people are always sensitive to the price of air tickets, which can be seen from the change in the price of the fuel surcharge charged when purchasing air tickets. When the fuel surcharge is too high, people will weigh the pros and cons of travel and consider whether to transfer to high-speed rail. In July last year, the amount of fuel surcharges collected for more than 800 kilometers reached the highest level of 200 yuan in history, which greatly increased the travel cost of passengers, and also caused controversy at that time. However, unlike the minimum price of this ticket, although people do not understand the high fuel surcharge, there are relatively few objections. The reason is that the fuel surcharge is a dynamic mechanism for the airline to deal with the high cost of oil prices, which is similar to the increase in ticket prices in the peak travel season, and is an adjustment in line with market rules. The civil aviation industry is one of the industries with the highest degree of marketization and internationalization in China. As early as 1997, the former Civil Aviation Administration began a pilot program to allow airlines to sell discounted tickets. In 2004, the landmark reform of civil aviation tariffs began. The former Civil Aviation Administration and the National Development and Reform Commission jointly issued the Civil Aviation Domestic Air Transport Price Reform Plan, stipulating that the domestic air fares are mainly guided by the government, and the government price authorities changed the direct management of the specific fares of the approved routes to the indirect management of the air transport benchmark price and the floating range. The government price authority determines the benchmark price and the fluctuation range of the air ticket, and the airline decides the sales price by itself within this framework. Since 2004, a wider range of air ticket price reform has been gradually implemented, and until today, the market-regulated tariff mechanism has basically taken shape. The airline has the autonomy to adjust the ticket price. A variety of marketing activities based on the ticket price have helped Chinese airlines develop rapidly in the past few years and established a brand in the international civil aviation industry. In contrast, the railway transport industry in China, which can compete with the civil aviation industry and compete for passenger flow, has only taken substantial steps in the market-oriented reform of high-speed rail bullet train fares since December 1, 2019. Several railway administrations and groups have adjusted more than 400 trains to floating fares. In the three years of the epidemic, airlines launched a variety of "free flight" products in response to changes in market demand, which is a positive response strategy based on the market-oriented adjustment of ticket prices. With the infection of COVID-19 with "Class B and Class B", domestic and international travel is smooth. This is a good time for airlines to actively seize the market. Today, when high-speed rail is increasingly crowding out the share of passengers in the short and medium distance market of civil aviation, if the airline's ticket pricing strategy cannot be adjusted independently, it will only greatly affect the share of civil aviation in the transportation market, and is not conducive to all airlines to reverse the losses caused by the impact of the epidemic, rising oil prices, exchange rate fluctuations, etc. as soon as possible. The industry has a common understanding of whether the ticket price strategy affects the airline's profit, that is, the sales profit of first-class and business class tickets is far higher than that of economy class tickets

Edit:sishi    Responsible editor:xingyong

Source:https://epaper.gmw.cn/gmrb/html/2023-02/14/nw.D110000gmrb_20230214_3-10.htm

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