Auctions: An up-and-coming feature in the Airline Industry
The airline industry has recently started to use auctions as a way to generate more revenue for some of its respective companies. Unfortunately, for the typical cost-conscious college student, it may not be that much of head-turner because airlines have decided to use auctions to allow some passengers to secure last-minute seat upgrades (rather than selling the ticket in the first place). Delta Airlines, for example, hopes to use auctions to reduce the number of free upgrades it gives away to elite travelers.
In class, we have tried to study the best way to bid in auctions. Right now, it’s unclear what will be the dominant strategy in these auctions. Different airlines run different styles of auctions, which affects the best strategy to be played.
Link: http://www.wsj.com/articles/going-once-going-twice-airlines-auction-seat-upgrades-1452105322