Douwe Osinga's Blog: Cheaper Airfares

Sunday, September 24, 2006

Cheaper Airfares

I wonder whether any economist has ever studied the prices of public toilets. The prices are of course usually pretty low, but there doesn't seem to be much reason to it.

For years and years the going rate in the Netherlands was 25 (Guilder) cents, about 11 euro cents, but after the Euro introduction, it shot up to 50 euro cents. A case of severe Euro inflation? Maybe. It seems to me that a market like this is held into place by little more than convention; if you really have to go, you'll most likely pay up, but the actual cost to the seller is rather low. Held up by convention and the need for the price to fit one coin, the toilet charge stays stuck and defies inflation until an external event opens up the chance for a new equilibrium.

Equally interesting is the question which establishments charge for the toilets and which don't. Companies usually don't charge their employees for going to the toilet, but sometimes they do charge for the coffee. In normal restaurants toilets are free, but in some fast food outfits and clubs you have to pay. On airports it's free, on railway stations you pay, but on the train it is free again.

On planes it is of course also free, but I wonder for how long. Somebody at Ryan Air or Easyjet must be thinking about this. After the free coffee the free toilets could very well be the next thing to be sacrificed in the persuit of offering the cheapest ticket possible. If you charge 2 euro per go, you can not only use this money to further reduce prices, but people most likely also will go less, so you'll  need less toilets, which will allow the airline to cram in more seats and reduce the ticket price. People will complain of course and call it an outrage. But when it is time to book, they will buy the ticket that is 5 euro cheaper and remember to go before take off.