I was surprised to know that the guy, who booked his flight at the last minutes, was happy to pay higher price in coach than in business or first class. But that is how the airline industry does to make up for the profits with their new “simplified low-cost pricing.” It's also the sign that major carriers like AA, Delta, and UA are being forced to cut some of their expensive prices as rival discount airlines rapidly expand. So far, the price-cutting is still happening only in certain cities, and not nationwide. They are doing that technique to attract customers from other airlines and to create customer loyalty among regular flyers. Meanwhile, the airline needs certain revenues to cover its fixed costs. By offering different prices for the same flight, it enables them to charge a high price for the flexible tickets, and still serve the passengers with a low willingness to pay. Overall, airline industry still make a profit with less empty seats and just a few customers have to end up with high-sky prices. Besides that, the airline industry also practices overbooking as a way to avoid passengers who skip out on reservations or to collect double fares if a prepaid passenger doesn't show up. Most of these no-shows are business customers or leisure fliers tend to book trips early and end up cancel last minutes due to changing plans. True to that bumping is bad for both the airline and the passengers because the passengers get delayed, and it hurts the airline's image. But look at another perspective, overbooking seats might actually benefit the consumers. If the airlines don't maximize their revenues, the passengers would end up paying higher fares. This practice might help lower fares and they also compensate well for voluntary passengers who are willing to take another flight.
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