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This looks like pure speculation and borderline false. What is happening: Many airlines are moving toward a better pricing system. If you look at United's rece

This looks like pure speculation and borderline false. What is happening: Many airlines are moving toward a better pricing system. If you look at United's recent quarterly earnings call, they talk about how their previous system (age old system) constantly under-forecasts demand leading to lower pricing for tickets. Their new system is said to do a better job leading to better prices realized. There is no way to dynamically price as shown in the article as a large fraction of the tickets are purchased through third party sites. Except maybe Southwest (which requires people to book through their site), I don't know how any airline can accomplish this. Also, if you show a higher than normal price to a repeating customer - they he will either switch to browsing in incognito or take his business else where.

quickben 9y ago
"under forecast" They just wanted to oversell more. It's not like with the new system they'll want to oversell less.
- nikanj 9y ago
  They’re trying to maximize revenue R, which is seat price P times seats filled S. S goes down when P goes up, but the linkage is very complex. Some people take flights to wherever if it’s cheap enough, some fly a given route on given days, no matter the cost. Some will tolerate layovers and transfers for some cost, but that cost needs to be high enough. Forecasting these components lets you increase total revenue without overselling.
- chrismcb 9y ago
  Actually you do want to oversell less... But you do this by raising the price. They don't really want to oversell to the point where they have to accommodate the overage. If the demand for the flight is higher then they expect, they could charge more and still sell all the seats.
- deleted 9y ago
  [deleted]
Kequc 9y ago
The entire article reads like blog spam. They make a contradictory statement in the same paragraph here: > Experts say such technology is most likely to be used to offer discounts to customers with loyalty status <...> such as to induce a new customer with an especially affordable ticket. Yeah exactly you're going to always offer the lowest price you can. I've never heard of someone being loyal to an airline who wasn't already getting significant discounts with a loyalty card. A loyalty card is going to be replaced with a browser cookie? I don't think so.

quickben 9y ago

"under forecast" They just wanted to oversell more. It's not like with the new system they'll want to oversell less.

nikanj 9y ago
They’re trying to maximize revenue R, which is seat price P times seats filled S. S goes down when P goes up, but the linkage is very complex. Some people take flights to wherever if it’s cheap enough, some fly a given route on given days, no matter the cost. Some will tolerate layovers and transfers for some cost, but that cost needs to be high enough. Forecasting these components lets you increase total revenue without overselling.
chrismcb 9y ago
Actually you do want to oversell less... But you do this by raising the price. They don't really want to oversell to the point where they have to accommodate the overage. If the demand for the flight is higher then they expect, they could charge more and still sell all the seats.
deleted 9y ago
[deleted]

Kequc 9y ago

The entire article reads like blog spam. They make a contradictory statement in the same paragraph here: > Experts say such technology is most likely to be used to offer discounts to customers with loyalty status <...> such as to induce a new customer with an especially affordable ticket. Yeah exactly you're going to always offer the lowest price you can. I've never heard of someone being loyal to an airline who wasn't already getting significant discounts with a loyalty card. A loyalty card is going to be replaced with a browser cookie? I don't think so.