Would you apply that to other examples of loss leaders too? When I buy a Ryanair ticket with no priority boarding, a randomly assigned seat and no luggage and don’t buy anything on the plane, should I feel guilty because if everybody paid as little as me the flight wouldn’t be net profitable for Ryanair? If not, what’s the difference?
I’d ask you to estimate the distribution of the loss leader among customers and compare your usage of it to the average rate, and maybe the high end rate. I necessarily have to make up numbers, but I wouldn’t be surprised if 50% of airline seats were cheap seats. It would then be impossible for you to use cheap seats at more than twice the rate of the average person. I’d also expect that even without you, there would be a substantial number of customers who use cheap seats all the time. If a substantial number use them all the time, you being a person that uses them all the time is not greatly far from what is expected. And I’d expect that the rate at which you take trips doesn’t differ greatly from the rate at which those other people take trips.
It’s true that if everyone only bought cheap seats, the price structure would be unsustainable. But there’s a big difference between something that would be unsustainable if everyone did it and something that would be unsustainable if done by even a relatively small number of people. If 5% of the population used public restrooms as often as a homeless person, public restrooms would become unsustainable, never mind “everyone”.
Also, some of the amenities in question are run by the government. The government doesn’t do loss leaders; it doesn’t let you camp out in public parks because it wants to attract more paying customers who incidentally might want to sleep there. It’s a government, it runs on taxes.
Airline tickets are a bad example because they are priced dynamically. So if more people find/exploit the current pricing structure, the airline will (and does) shift the pricing slightly until it remains profitable.
Would you apply that to other examples of loss leaders too? When I buy a Ryanair ticket with no priority boarding, a randomly assigned seat and no luggage and don’t buy anything on the plane, should I feel guilty because if everybody paid as little as me the flight wouldn’t be net profitable for Ryanair? If not, what’s the difference?
I’d ask you to estimate the distribution of the loss leader among customers and compare your usage of it to the average rate, and maybe the high end rate. I necessarily have to make up numbers, but I wouldn’t be surprised if 50% of airline seats were cheap seats. It would then be impossible for you to use cheap seats at more than twice the rate of the average person. I’d also expect that even without you, there would be a substantial number of customers who use cheap seats all the time. If a substantial number use them all the time, you being a person that uses them all the time is not greatly far from what is expected. And I’d expect that the rate at which you take trips doesn’t differ greatly from the rate at which those other people take trips.
It’s true that if everyone only bought cheap seats, the price structure would be unsustainable. But there’s a big difference between something that would be unsustainable if everyone did it and something that would be unsustainable if done by even a relatively small number of people. If 5% of the population used public restrooms as often as a homeless person, public restrooms would become unsustainable, never mind “everyone”.
Also, some of the amenities in question are run by the government. The government doesn’t do loss leaders; it doesn’t let you camp out in public parks because it wants to attract more paying customers who incidentally might want to sleep there. It’s a government, it runs on taxes.
Airline tickets are a bad example because they are priced dynamically. So if more people find/exploit the current pricing structure, the airline will (and does) shift the pricing slightly until it remains profitable.