Airlines and Price Discrimination

The use of price discrimination by airlines

Air lines can use two types of price discrimination; 1st degree and 3rd degree.
If an airline supplies flight’s to a country or an airport that only they supply then there is imperfect competition in the market and then they are the price maker because there is no other company that can offer the consumer that flight. Therefore they can set the prices as high as they want and people will consume their service unless they can find another means of travelling to their destination. If the destination is far away then the person can only realistically fly there so demand is relatively inelastic, therefore people will pay a high price. This is an example of airlines using 1st degree price discrimination.
Airlines also use 3rd degree price discrimination. Airlines charge different prices to infants, children and adults. Airlines charge different prices for infants and children compared to adults as an incentive to get the adults to fly with their airline rather that any other airline supplying the same routes as them. Airlines use this price discrimination as a barrier to other companies to stop people using the other airlines.