{"id":50,"date":"2008-07-15T09:43:39","date_gmt":"2008-07-15T07:43:39","guid":{"rendered":"http:\/\/www.ofcourseimright.com\/?p=50"},"modified":"2008-07-15T12:15:35","modified_gmt":"2008-07-15T10:15:35","slug":"airline-upgrade-auctions","status":"publish","type":"post","link":"https:\/\/ofcourseimright.com\/?p=50","title":{"rendered":"Airline Upgrade Auctions?"},"content":{"rendered":"

\"BureauThose of you who know me know of my interest in economics, which started literally on my first day of college, thanks to a great professor named Joseph Seneca<\/a>.\u00a0 He managed a lecture in 1983 of over 400 students in Scott Hall<\/a> at Rutgers University<\/a>, twice a week, for two semesters at 8:05am for an hour, covering Introductions to Micro- and Macroeconomics.<\/p>\n

With that start in mind, I have learned to ponder my day-to-day issues with an eye on supply, demand, marginal benefit and cost, trying to understand profit maximization.\u00a0 It’s also why I like reading books like Age of Turbulance<\/a>, by Alan Greenspan<\/a>.\u00a0 While I do not subscribe the Greenspan’s anarcho-capitalistic approach to managing the economy, I haven’t been chairman of the Federal Reserve, so I’ll assume he knows a few things more than I do on the subject.<\/p>\n

This brings me to two of the most remarkable Internet creations: priceline.com<\/a> and eBay<\/a>.\u00a0 eBay is remarkable not so much because of the vast amount of innovation that went on in its inception.\u00a0 Rather the founders applied very straight-forward economic doctrine to bring buyers and sellers together in a common market place so that goods could be sold at their optimal prices.\u00a0 eBay is elegant in its simplicity.<\/p>\n

Priceline.com works along the same lines as eBay, but makes legitimate the grey market in airline tickets, hotel visits, and the like.\u00a0 And who can’t like a company that employs William Shatner<\/a> as its spokesman?\u00a0 There are several limitations, however, to priceline that have often stopped me from considering them.\u00a0 One of the big ones has been an inability to upgrade to a higher class of service.\u00a0 This perhaps may sound snobbish, but sitting on an airplane with my legs cramped in front of me for 12 hours is not<\/strong> my idea of a good time.<\/p>\n

And so I’ve wondered about an idea: why not let airlines auction upgrades?\u00a0 If the airline hasn’t sold a business class seat by the time of the flight, they could hold a pre-arranged auction that consisted of bidders who wanted the seat, complete with reserve pricing.\u00a0 Wouldn’t this maximize the airline’s profit?\u00a0 After all, people have done this on eBay without airline participation allowing individuals to maximize their<\/strong> profit, leading airlines to put many controls in place to prevent it.<\/p>\n

There are of course a few problems.\u00a0 If you’re a very frequent flyer you expect to be upgraded all of the time without having to go through the hassle of an auction.\u00a0 And if you’re just a frequent flyer you expect to get upgraded some of the time.\u00a0 If you’re a business class traveler who normally pays the a factor of three more than the discount coach seat, you may instead decide that it’s cheaper to bid in the auction and get the same results, thus causing the airline to lose money on the proposition.<\/p>\n

I’ll discuss mitigations to some of those problems in a future post.\u00a0 For those wondering about the picture, that’s the Bureau of Economics<\/a>, which is part of the U.S. Federal Trade Commission, and not a Greek temple.<\/p>\n","protected":false},"excerpt":{"rendered":"

Those of you who know me know of my interest in economics, which started literally on my first day of college, thanks to a great professor named Joseph Seneca.\u00a0 He managed a lecture in 1983 of over 400 students in Scott Hall at Rutgers University, twice a week, for two semesters at 8:05am for an … Continue reading “Airline Upgrade Auctions?”<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[501,69,497,70],"class_list":["post-50","post","type-post","status-publish","format-standard","hentry","category-economics","tag-airlines","tag-ebay","tag-economics","tag-rutgers"],"_links":{"self":[{"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/posts\/50","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50"}],"version-history":[{"count":1,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/posts\/50\/revisions"}],"predecessor-version":[{"id":52,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=\/wp\/v2\/posts\/50\/revisions\/52"}],"wp:attachment":[{"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ofcourseimright.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}