Making Sense of Airline Pricing

Nice piece in the Wall Street Journal on the factors driving airline prices. Not surprisingly, one of the biggest factors is the presence of competition from low cost carriers.

High prices do catch the attention of low-priced competitors. In the first quarter this year, the most expensive market in the country, per mile, was Boston to Philadelphia, a US Airways-dominated route, where the average fare was a whopping $684. Southwest began serving that route in June.

And now? US Airways' highest coach fare is $281 round-trip—$400 less than its first-quarter average fare.