Price Discrimination

March 28, 2006

One of the remaining Dinosaurs of the airline industry has borrowed a page from Southwests’s handbook - differentiating its product (airline seats) within a given flight. They intend to do this by charging a $15 premium for a handful of exit-row or aisle seats on their flights.

“I think they’ll find that the emergency exit row is worth much more,” said Trippler, with Minneapolis-based Cheapseats.com.

And yours truly would tend to agree. It’s a segmented market, identifying customers who place a greater value on these seats and allowing them to acquire them at a premium ought to be lauded. But a quick perusal through the comments submit by Free Press readers gives mostly the typical “corporate-greed” type of argument. The rebuttal raises some concernts, but most of them are nonsensical. Because so few seats are affected, there is not a very strong argument that “families won’t be able to sit next to one another.” And though I’ll tend to agree that “[T]he traveling public is more interested in the cost and comfort of getting from Point A to Point B than in the financial condition of the carrier involved,” the two go hand-in-hand. Consumer satisfaction and financial stability are relatively inseparable.

Of course it’s corporate greed. But it’s also consumer greed! There are alot of people who would gladly pay more for the extra leg-room. And there are some people who don’t think its worth it - letting them pay more for a seat on which they clearly place a greater economic value makes good business sense. It helps ensure the consumers get what they want, and keeps the airline in the black.


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