Why Are Multi-City Itineraries Cheaper than Return Flights? (Crazy Value)

Ldealoverlord on 18/08/2023 - 23:42
Last edited 19/08/2023 - 00:01

Hey Ozbargain,

The reasoning for layover flights being cheaper than direct flights is pretty straightforward - Mainly supply/demand and also customers willing to pay more to fly direct.

However, I'm just wondering if anyone has any insight in how compared to a direct return flight, a multi-city flight plan with additional flights tacked on can come out cheaper.

The scenario/example is this:

Flying Cathay, a economy return flight from Melbourne to Hong Kong is around 1300 AUD.

However, if you book a multi city flight where you go from Hong Kong to Melbourne, and then sandwich a Hong Kong to Tokyo return flight in between, the total itinerary is cheaper (1200 AUD).

I.e MEL -> HKG (5 days)

HKG-> TYO (7 days)

TYO -> HKG (5 days)

HKG -> MEL

The prices for business class is even more absurd/crazy value. Business return with Cathay from Melbourne to Hong Kong is around 6000 AUD, while a business return from Hong Kong to Tokyo is around 4000ish. The multi-city itinerary as above is only 4000 AUD! I'm getting a whopping 4 business flights for four thousand dollary doos.

How is this feasible? It isn't a comparison between a direct flight vs a layover flight, you're literally just adding two additional flights on top of identical return flights, and instead of costing you, you're saving money. It isn't like there is a low demand for these routes either.

Using an analogy, If a pizza was $3 and a soda was $2, a bundle deal might normally be $4 - bundling them together would give you a discount compared to buying two separately. Here, its like a bundle deal is instead $2.5 - even if you didn't want a soda, you would get it anyway as the bundle would be cheaper than just buying the pizza on its own.

Going to Tokyo in this case can be seen as a subsidy instead of an add on.

Any insight or speculation would be appreciated!

Travel Airfare

Comments

    • Muzeeb on 19/08/2023 - 00:16
      +8

      Thanks chatgpt

  • Benoffie on 19/08/2023 - 00:56

    Same goes for overnight layover or day delays (esp to EU). Technically you're not spending a night in any one place but if you're willing to arrive the day after you leave, the savings can be in the hundreds.

  • Trance N Dance on 19/08/2023 - 06:27
    +1

    It's probably pricing as a MEL-TYO return with stopovers each way.
    Simply put CX knows they can charge $X for a MEL-HKG return because demand is there whereas a return flight to TYO with a stopover isn't as popular so prices that lower to attract customers. They're also competing with direct MEL-TYO flights priced at $1000-1400

  • capslock on 19/08/2023 - 07:14

    They are just competing on fares to Tokyo.

    No need to compete so hard on fares to Hong Kong because they have a competitive advantage in offering a non stop service.

    Airfare pricing has nothing to do with distance flown. It is all about what the passenger is willing to pay.

    • leiiv on 19/08/2023 - 11:42

      So in general, a direct flight is priced more expensive than the longer ones with stopovers?

      • nickj on 19/08/2023 - 13:43

        Yes.

        Have a look at skip lagging /hidden city pricing in the USA - basically it can be cheaper to travel further sometimes, because airlines have to price to be competitive value against other airlines to your destination, and if they have a stopover that their competitors don't (eg Cathay in this scenario would be comparing the prices of JAL, Qantas, ANA direct flights from Melbourne to Tokyo, and saying we should charge less because they're direct flights and we're not).

    • dealoverlord on 19/08/2023 - 14:11

      As this isn't a layover flight, but an extended stop over, I guess it works in my favour then as I wanted to both go to Hong Kong and Japan.

      In my case, I'm saving on my hong kong tickets, while getting the japan tickets for free.

  • holdenmg on 19/08/2023 - 08:37
    +1

    It is still early here… I'm quite interested in the $3 pizza or the bundle if Coke (not Pepsi). :+)

    • Alligate on 19/08/2023 - 10:05

      Word, but make it pepsi max, god of fizz

  • BigBirdy on 19/08/2023 - 08:40
    +2

    If you book but then don't complete the Tokyo leg, the airline is likely to cancel the rest of your itinerary

    • leiiv on 19/08/2023 - 11:46
      +1

      Can you book two one way tickets and still come up cheaper?

      • Trance N Dance on 19/08/2023 - 16:00

        No, one way international tickets will book into flexi fares which are always more expensive than saver fares allowed on return/multi-city/open-jaw tickets.

  • capslock on 19/08/2023 - 08:56

    This happens all the time in the world around us. Say you wanted a McChicken for lunch today. You can buy the burger by itself for $7.45. Or you can buy this week's promo of $5.95 for a small McChicken meal plus cheeseburger.

  • djones145 on 19/08/2023 - 10:52

    cathay has always been like that, parents travel to hk alot and if u add any extra desination (like japan or taiwan) its always either a little more expensive or cheaper.
    i guess cause cathay is owned by the governemnt, more flights means more people into the airport, transport, food and shopping.

    • Trance N Dance on 19/08/2023 - 16:05
      +2

      There might be government related ownership somewhere in the mix of owners via other airlines and companies but CX are hardly owned by "the government". They're 42.3% owned by the Swire Group, 28.2% by Air China, 9.4% by Qatar with the rest on the open market, and they're all in it to make a buck.

      • djones145 on 20/08/2023 - 22:38

        air china is state owned. Swire group has lots of dealings in hk and china (property etc).

        • Trance N Dance on 20/08/2023 - 23:48

          Yes, Air China and Qatar are both state owned but that doesn't mean their government ownership will directly influence CX. Not to mention they're minority stakes and of two different governments that aren't in direct control of Hong Kong either.

          • djones145 on 21/08/2023 - 08:57

            @Trance N Dance: they have influence , during the protests in hk (pre covid), a number of staff were fired as it was found they were posting support (facebook) for the protestors and attending rallies. My relo was one of them (quite a number of her friends were too)

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