alt Hacker NewsSay Alice is willing to pay $100 for a given flight, while Bob would at most pay $50. The airline wants to charge Alice $100 and Bob $50, netting $75 per seat on average.
Agentic access would give Alice the chance to cross-shop and buy the cheaper flight as well. But now, to net the same amount, the airline has to charge $75 per seat, excluding Bob from participating in this market.
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If they can afford to fly Bob for $50, Alice deserves that too. If that means the flight isn't profitable, then I guess they couldn't really afford to fly Bob or Alice for $50 and that price was a farce to begin with. I can understand airlines want to squeeze their customers for the maximum they are willing to pay, but I don't think that makes a good argument and I don't they should be entitled to it.
This has already been going on for years. Google Flights and Kayak already have fare histories, fare forecasts, fare monitors with automated notifications. So now anybody can get the cheapest price with a low effort.
The industry responded with aggressive unbundling - basic eco now has no carry-on, no seat selection, no changes. All can then be bought as extras.
This is a scenario across many industries - hotels, car rental, cruise, concerts, online retail etc.
Basically - yes that trend is bad for Bob, but it makes things more transparent, fair, and increases competition. It's the way the world goes - hard to stop that.
How does the airline sell the same type of ticket to Alice for $100 but Bob for $50? I don't think airlines show consumers different prices for identical tickets at the same moment in time. The prices are constantly in flux and vary by fare class, amenities, the time you book, etc. But if Alice and Bob both go online to buy a near identical ticket at the same time I don't see how they would get different prices.
You said they’re “trying to reduce prices for everyone” and you’re describing them trying to maximize prices for everyone (which, yes, they want to do).
[Edit: didn't pay enough attention to the flow of the conversation here - this is really a response to ProblemExplorer's original post, which linked to _diyar's post (parent to this one) as explanation].
You say this as if consumer and producer surplus are new phenomena.
And you vastly overestimate the price discrimination that airlines have today for comparable classes of service.
They don't make their money on economy seats.
Sounds like algorithmic pricing works both ways. Good.
precisely. I worry people aren't "getting it". I edited my post to point to this comment as it's very short and precise.
In your example ($50/$100), the airline is extracting all consumer surplus. This is called perfect price discrimination, and it is bad for consumers.
There is nothing stopping the airline offering Bob $50 per seat in the second scenario, other than profit preservation. If they were making a profit on the $50 ticket in the first scenario, they are making it in the second. They just happen to also be making less profit on the $100 ticket.
In effect you are making corporate profit a constraint on the market, which is not the case.
Your example actually shows that the welfare extractive pricing algos companies use today can be undermined by AI, which is good for consumers in this narrow example.