|
Infectious Greed waxed wroth today about the news that Northwest Airlines will start charging extra for premiumn seats, such as front aisles and exit rows.
His commenters unanimously brought him back to his roots, though (IG is, after all, a blog for investors), by noting: "Clearly each seat on a plane has a different value; else there would be no need for advanced seat selection." So charge for it.
Also, the airlines have noticed that leisure travelers tend to pay less and book ahead, while business travelers pay more but book late. So cramming your frequent business travelers into the middle is not a way to keep your best payers happy.
United has done this for a while. Book the lowest fare and you are automatically assigned a middle seat. But if you pay an annual fee, you can get in the economy plus section, with five extra inches of leg room. One wonders about a business model that dictates making conditions so unpleasant that people will pay handsomely for a minimal amenity, but on the other hand, the airlines are not exactly getting rich, and assigning seats according to a market system makes a lot of sense.
Especially for me - PFF can't pay for First or Business Class, but I am willing to pay an extra $15 for a bit more room. As an IGer said:
I also hate being nickel-and-dimed, but in this case agree with the commenters: if there are seats that passengers “fight for”, that means those seats represent premium value, why not use a market-mechanism to assign them, vs. random luck. And, of course, price discrimination is very useful to others (such as content purveyors), who can slice and dice their products in various ways to meet various preferences, to the benefit of all.
posted by James DeLong @ 1:35 PM | Markets: Business, Investment & Innovation
Link to this Entry |
Printer-Friendly |
Email a Comment | Post a Comment(0)
|
