There have been a number of instances worldwide, where the airlines which operate on the low-cost model have been witnessed to charge higher prices and the ailing full service carriers are in fact offering the lowest air fare on the tickets. Experts point to the life-cycle of the LCC business model which shows that the initial market conditions which permit the airline to offer cheap air tickets to the customers cease to exist over a period of time due to entry of multiple players in the market and change in demand-supply conditions, the airlines feel compelled to hike the prices of the tickets to increase their profitability.
But, do these demand-supply conditions really exit or is it just an alibi which the airlines use to hike the prices of the flight tickets? How are these demand-supply gaps measured that provide the justification for the increase? There have been instances where the probes have been launched into the pricing mechanisms adopted by the airlines and investigating whether the price rises have truly been due to the more demand and less supply. Ascertaining whether there were high demand levels could be possible by taking note of the number of queries received (through different medium of communication) or the number of booking made and how quickly were these filled in the last bucket of seats released.
However, ascertaining the high demand levels is a different ball game altogether than matching and then justifying the consequent rise in the prices of the otherwise lowest air fare tickets. To what extent the price rise can be called reasonable is something which is difficult to ascertain. For this reason, if the prices of the tickets have risen beyond the reasonable limits there are likely to be questions which need to be explained for by the airlines.