Hacker News Reader

Comment by gregschlom | Hacker News Reader

I have a question for the HN crowd: what would happen if airlines sold their seats at a fixed price and let customers resell them?

For the sake of the discussion let's assume that all seats are in the same class (ie: economy) - there are no business / first class seats.

So the idea would be:

1. All seats are sold at the same price, no matter how early or how late you buy. The price covers all the costs associated with running this flight, given an expected "occupancy rate" (sorry not the right term).

2. All tickets are non-refundable. If a customer changes their mind, they use the airline app to put their ticket up for sale. They can try to sell the ticket at the same price, or at a discount (or maybe even at a higher price?)

3. Airline charges a small fee (something like $10) every time the ticket is transferred to another person.

Since this has never been done - to my knowledge - there must be something wrong with it. But I wonder what it is?

View on HN

The problem here is really selling all seats for the same price.

Airlines know that some customers are price-sensitive, e.g. those planning a trip months in advance, and some customers less so, e.g. business people flying out to a last-minute meeting.

So if they just sold all the tickets for the "average" price, they simply wouldn't get as many customers, because all the price-sensitive customers would go to their competitors still doing things the old way, and there's no guarantee that they will attract enough of the less price-sensitive customers, unless they lowered prices even more than the previous average, and if they actually make less than the current average price, this is simply not a viable plan.

In addition, since the customers you have left tend to book later, you won't know for sure if you're filling up your plane or not until closer to the departure date, and that could potentially wreak havoc when allocating planes to routes.

> Since this has never been done - to my knowledge - there must be something wrong with it. But I wonder what it is?

Sure it has. Look at concert tickets. You are basically talking about introducing the scalper into the airline ticket market.

Try to get any tickets to a major act at anything approaching face price - especially for the prime seats. You can't do it. The scalpers always beat you to it.

Now imagine, the only seats left after the scalpers get through are the tickets in the way back.

Now lets just throw in the mix handling flight changes. Because from the airlines' perspective every flight is full. You could never book through the airline....

.... I could go on and on...

But yeah .... bad idea (sorry!)

The challenge is whether you are fundamentally buying a seat on a particular plane, or transit from point A to point B. Almost all simple solutions re: air travel break down once connections get involved.

Also breaks down for equipment swaps. If we view seats on a given flight as assets that can be resold, there's a lot of ways that normal (even understandable) airline operations can "devalue" those assets, and sorting that out legally would be an amazing mess.

Pretty much any American airline that provides "better" service generally does something along the lines of having a very limited coverage map and a more-or-less a uniform fleet.

Most problems with air travel are "last mile" problems, with "last mile" is defined as flying to a location that does not have a critical mass of service to really be a "full service" city.

The issue I have with that is then these middle-men buyers would step in like they do for NFL and concert tickets, buying up all/most supply almost immediately when it becomes available for any reasonably popular flight. Then they charge double the price, and there's not much one could do other than pay double or not fly.

Airlines would set higher prices in the first place.

That's worked well for concerts and sports tickets...

>what would happen if airlines sold their seats at a fixed price and let customers resell them?

Buying airline tickets involves multiple checks to minimize the possibility of the buyer blowing up the plane, and resale on the secondary market will weaken those

You used to be able to do this in the long-ago; you'd even see people selling tickets in the classified section of the newspaper (kids, ask your parents).

The problem is, the airlines would rather make more money by selling the new person the ticket at an inflated price (presumably if they cared enough to save money, they'd have bought in advance), and from you as well in ticket change fees. This was sold to us as a post-9/11 fix to ensure terrorists didn't buy tickets, but I doubt that was the underlying reason.

So, stubhub for plane tickets? I think there's some difficulty around changing the name that's on a ticket, but other than that, it seems like a neat idea.

I think there are a lot of rules around reselling tickets post-911. I'm sure you could find a way to execute it while accounting for the new regulations, but for most airlines i don't think its worth it. They also make money off of a fluctuating ticket price or they wouldn't have them.

The way I understand it, if airlines were to offer fixed-price tickets with no class distinction, then there wouldn't be almost any flights - i.e. there's no point at which, for a typical flight, number of tickets bought * fixed price >= costs of fueling a jet and paying the crew.

The obvious answer is that plane ticket prices would increase. Some people wouldn't fly and some flights wouldn't fly.

So everyone is worse off? How is that an improvement?

I don't think it's an improvement. I'm just addressing the points of my parent.

It's not done because it'd mean less profit for the airline.

Exactly, even when you add in the transfer fee proposed here. Any rational ticket holder wouldn't sell their ticket for less than [what they paid for it] + [the transfer fee], and that means the airline let someone else get money they could have got if they had just sold the ticket directly to the second person.

The only scenario where this would be useful is if the the original purchaser is willing to sell their ticket at a loss for some reason, e.g. if they know they can't make it and just need to minimize their losses. But at least Southwest airlines already has a customer-friendly solution here, they will credit you the full price of the ticket for a future flight, for most tickets at least.

Original purchasers sell their tickets at a loss back to the airline all the time (for credit). It's called canceling your flight because your plans change for some reason.

As you point out, Southwest lets you do this for free. And JetBlue is something pretty reasonable as I recall. Unfortunately most of the fee-addicted airlines have really ratcheted up their cancellation fee however.

I guess one can't resell. Need to know the names and id of customers. Regulation stuff.

Reply on news.ycombinator.com