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Wednesday, April 6, 2011

Hopkins One of the 15 Most Unfairly Overpriced Airports

Posted By on Wed, Apr 6, 2011 at 1:32 PM

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Nate Silver, stat-guru and Five Thirty Eight proprietor, tackles unfair airport pricing in a New York Times piece. Airline pricing data is readily available in any number of rankings, but Silver takes it a step further (and in a more useful direction).

Instead of pinpointing which airports have the highest fares, he figures out which airports have the most unfair high pricing. We'll let him explain, since he's smarter than us.

The question, then, is not where are the average fares highest, but where are they the most unfair.

I doubt anyone would dispute that it’s fair for an airline to charge you more for traveling a longer distance, so distance is something we’ll need to control for. I’d also argue that it’s fair to charge you more for flying into or out of a smaller market where there is less demand for air travel. Fewer economies of scale are available in a place like that: the airline can run fewer profitable flights each day, so the costs of ground services like check-in and baggage handling will be spread over fewer passengers, and aircraft may be idle longer.

At the same time, smaller airports tend to be served by fewer airlines, and lack of competition can lead to higher prices; that isn’t fair to the traveler. Nor is it fair if your home airport is one like Memphis, where discount airlines like Southwest have had trouble breaking in to compete with full-fare carriers, despite years of trying.

What we need is an approach that distinguishes airfares that are high because of monopoly pricing from those on routes that are legitimately expensive to fly.

If you want to roll through his stat-heavy summary of variables and how he controlled for certain factors, go ahead and dive in yourself. For most of us, the money shot is the end results, which are summarized in the chart below.

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