ECON 106: Turkish vs. US Airfares

A kid does not worry about airfare pricing
or availability, just enjoying the travel as it
comes - like finding a random dinosaur
exhibit within an international airport

Even as an economist, I find myself continually amazed by the day-to-day economic differences between the US and other countries that I experience while abroad. That's one reason I hope so many of my students can travel in the future - to see economics at work firsthand. One such case in point is airfare purchases. Even without obvious travel snafus, it can be frustrating dealing with pricing issues. In late October, Kelly and I booked round-trip airfares from Lexington to Boston for the first week of January for an economics conference I will attend there. Booking travel more than two months in advance for the week after the big holiday travel season, we had to pay almost $400 apiece for our tickets.

Fast forward three weeks to when we booked our flight from Alanya to Istanbul :( to catch our international flight home in December. It is a one-way direct flight with no connections, booked 4.5 weeks in advance. And it cost us $35USD apiece! That's almost the cost of a checked bag in the US, and the Turkish price includes a free checked bag.

Of course, there are potentially several reasons for this in-your-face pricing discrepancy. Supply and demand come to mind first. Demand-wise, I'm not sure that many more people want to fly from Lexington to Boston as they do from Alanya to Istanbul. And supply-wise, there are only two airlines even flying out of Alanya, so competition can't be that much higher here than in Lexington.

The most obvious answer is the difference in incomes and prices between the two countries. In the US, average income (as measured via Gross Domestic Product) is more than 2.5 times higher than that of Turkey, even after accounting for our more expensive prices of goods and services. It seems likely that the reduced purchasing power of the average Turk means a lot fewer flights being purchased since they are oftentimes luxuries.

But again, look at that price difference! And the ease of booking one-way travel here really makes one wonder why it's rather difficult to book easy and timely air travel within the US.