Personally I can think of many places I would rather be on 11 July this year than Heaton Park in Manchester. But tens of thousands of Oasis fans are collectively spending millions on tickets for the first night of their reunion tour.
Viagogo currently has a ticket on sale that, according to the site, has a face value of £2,000. All yours for £5,000 – an uplift of 150 per cent – plus a “handling and booking fee” of £755 and the VAT that applies, taking the total to £5,906. Let’s call it three times the number you first thought of.
An outrage? The government seems to think so. Ministers are consulting on “introducing a cap on the price of ticket resales”. The consultation is “seeking views on a range from the original price to up to a 30 per cent uplift”.
On social media, Derek Edwards contacted the culture secretary, Lisa Nandy, saying: “If you are looking at this then you also need to look at the airline industry?”
The implication: airlines are capitalising on strong demand to charge outlandish prices.
Mr Edwards then contacted me, asking: “Would you add your voice to this?”
No.
Sorry to be blunt, but dynamic pricing – where the price is set according to aggregate demand – works wonders in aviation. I have no comment on gig tickets beyond observing that if there are willing buyers at almost £6,000 for an Oasis ticket, then the market will find a way to deliver. In a similar vein, if you will excuse the phrase, heroin is illegal but there seems a ready supply and an alarming demand.
Dynamic pricing is extremely well-suited to a commodity with a finite supply, whether that is space in Heaton Park or a seat on Ryanair’s flight on Saturday 18 January from Manchester to Shannon in Ireland. I haven’t picked that particular departure at random; I bought a ticket for flight RK4776 a day ahead.
The price: £19.99. Once Rachel Reeves has helped herself to £13 in Air Passenger Duty, and Manchester airport has applied its passenger charges, Ryanair will not be in an advantageous position, financially. But Europe’s biggest budget airline is betting that most passengers will also pay around £20 to bring a wheelie bag on board and/or check in luggage. Many travellers will also book car rental through the site and/or buy food and drink on board. Taken together, Ryanair expects me to pay more than the marginal cost of supplying that seat.
£20 for 300 miles of air travel is absurdly cheap. But by the afternoon of departure, the price had gone up five-fold to £99.99. That is because anyone seeking a ticket on the day probably has a “distress” reason for buying the flight. Distress in this context need not involve, say, a family emergency – it could just be that a passenger has missed their earlier flight due to a traffic jam or simple incompetence. Whatever the reason, there is a market at that price.
That same seat on the same plane on Monday is currently priced at £250. Yes, one-way, including only a small piece of cabin baggage.
Exploitation? Price gouging? Outrageous profiteering? People apply those labels and many others to describe the way airlines raise their prices in tune with demand. But all Ryanair is doing is offering a service. If you don’t want to pay £250 for an hour’s flight, that’s fine (and understandable).
Those with a need to get from northwest England to the west of Ireland on Monday can choose from plenty of other options: a cheaper flight to Dublin, then the bus, for example. Better still, the newly reopened Holyhead-Dublin ferry link has excellent rail-and-sail deals. But if you need to be beside the River Shannon in a hurry, the plane may be the only one for you – and there will be people relieved that Ryanair has laid on the flight.
Dynamic pricing is an excellent way to allocate scarce resources. Yes, airlines will make the most they possibly can when demand is strong. Suppose the government tried to cap fares: no one would be happy except for a few people who get in early at a particular price.
Travellers desperate to leave in a few hours deserve an option that allows them to pay hundreds of pounds for the privilege. And airlines deserve the right to make hay while the sun shines. Which, often, it doesn’t.
Whatever you are prepared to pay for a flight or a gig, don’t look back in anger.
Simon Calder, also known as The Man Who Pays His Way, has been writing about travel for The Independent since 1994. In his weekly opinion column, he explores a key travel issue – and what it means for you.
