Why The Airline Industry Is A Hotbed For Market Clearing Prices and Auctions
Its no secret that airlines enlist a large variety of methods to make the most money on tickets. A lot of these tricks include internal changes such as minimizing the time aircrafts are grounded, decreasing the number of service items being given at no extra cost, and packing as many seats into an airliner as possible. Many other tricks include manipulating ticket prices in order to ensure tickets are being sold at the most profitable price.
First, airlines constantly adjust prices with time and market demand. For example, if they are constantly overbooking a flight in one route, they will increase the prices of tickets on flights flying that route in order to adjust for the demand. They also may begin offering lower priced tickets with multiple layovers, or other competitors may join the flight route and bring prices down for consumers. As airlines adjust the prices of their flights, they do so in order to ensure that every flight is fulfills the needs/possibilities of the market. In other words, there is always a Market Clearing Price algorithm being run on flights: https://www.cnbc.com/2018/08/03/how-do-airlines-price-seat-tickets.html
Second, airlines may offer auctions on airline tickets through platforms such as Priceline.com. Until late 2016, priceline offered a bidding platform for tickets in which multiple people would be able to name the price they would be willing to pay for a ticket (https://traveltips.usatoday.com/make-bid-airline-tickets-61411.html). In this case, the highest price will always win, but because you don’t know what the other bidders are bidding you should bid your true value (and don’t forget to take into account taxes and fees). In fact, for a positive payoff, it may be worthwile to bid below your true value as well, but never go over!