I recently had the opportunity to fly on United Airlines, returning from Hawaii. It would perhaps be better to say that I recently had the chance to experience economic experimentation by United Airlines.
I booked a flight for my family a month in advance, paid a market price for the tickets, and tried to reserve seats. Since I don’t have any premier status with United, my request for a seat assignment was declined. This has been a long standing practice in the industry, to try and favor “frequent fliers” over other customers. I’ve come to expect it, but it’s always a little disincentive to switch to a new airline.
A week before the trip I tried again to reserve seats for my flight, but was denied. Then 24 hours before the flight I finally managed to get seats for the flight to Hawaii, but was denied seats for the return trip. Here we go again. We enjoyed our vacation, and when I tried 24 hours before the return flight to get seats for the return trip, I was denied again. We show up to the airport expecting to have four seats scattered through the airplane, and request seats now two hours before the flight. They said no, but they offered me the chance to purchase an upgrade to “economy plus” at $64 per seat. I responded “no thanks” to the $256 price increase, so they sent me to the gate to get seat assignments. By the time we arrive at the gate, it’s 45 minutes until the flight but they still won’t give seat assignments. Apparently they are still looking for the suckers to pay the extra $256. Finally 30 minutes before the flight they call me up to give me economy plus seats (which are really economy seats anyway).
Why the long story about a seemingly routine travel experience? For me it was a reminder of two interesting things:
- companies look all over the place for ways to use price discrimination. By separating customers according to what they are willing to pay, they expect to maximize their revenue, and economists have long studied this phenomenon to say that it works well.
- companies that treat their customers as adversaries will get exactly what they ask for.
I recently read an excerpt from the book “Wikinomics” (link not included) in which the author pointed out that in the new economic world we live in, it’s important for companies to instill trust among their customers. At the same time, I repeatedly encounter a few old world companies that continue to treat their customers as disposable commodities. There are a few companies in the US that excel in this:
- AT&T & Verizon, which results in customers jumping back and forth like bunnies
- Comcast and DirecTV, which solidifies the piracy market
- all airlines
Personally I don’t mind being experimented upon, or being subject to such arbitrary pricing mechanisms. I just remember it, and act accordingly when given a choice. This is yet another example where the fuck you button would be useful.