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Selling empty middle seats by dutch auction

I have written before about letting passengers pay for an empty middle seat next to them and recently about ANZ’s cuddle class and related programs which partially implement this.

While I believe airlines could sell the empty middle for somewhere in the range of 30-40% of a regular ticket, this still has issues. In particular, are they really going to bump a poor standby passenger who had a cancelled flight and make them stay another night so that people can get a more comfortable seat?

One idea is to allow the sale of empty middles by dutch auction. In effect this would say, “If there are going to be empty middles on this plane, those who bid the most will get to sit next to them.” If this can be done, it’s a goldmine of extra revenue for the airline. What they sell costs them nothing — they are just selling the distribution of passengers on the plane. If the plane fills up, however, they sell it all and nobody is charged.

The dutch auction approach would let each passenger make an offer. If there are 5 empty middles, then the 10 people who sit next to them win, but they all pay the 10th highest bid price. If only 9 passengers bid, the 10th highest price is zero, and everybody pays zero — which is what happens today, except it’s semi-random. While this may seem like a loss for the airline, many game theory tests suggest that dutch auctions often bring the best result, as they make both sides happy, and people bid more, knowing they will actually pay the fair price if they win.

(On the other hand, airlines are masters at having two people pay vastly different prices for exactly the same thing and have managed to avoid too much resentment over it.)

There is one huge problem to solve: How do you arrange that matched bidders are sitting together to share the empty middle? Each empty middle benefits two passengers.  read more »