The Economics Behind "Basic Economy" – A Masterclass in Price Discrimination
#HackerNews #Economics #PriceDiscrimination #BasicEconomy #Masterclass #Jetback #Insights
Basic Economy fares are ultra-restricted airline tickets that offer a lower base price in exchange for fewer benefits than standard economy class. Introduced by major U.S. carriers in the 2010s, these fares have become a widespread strategy for market segmentation - a textbook example of price discrimination in practice.
"The nation's three largest airlines have begun charging some solo travelers higher fares than groups of two travelers or more.
It's not a widespread phenomenon – currently, we're only seeing it on a handful of one-way domestic flights. And it's unclear whether whether this began just recently or weeks, even months ago. Maybe airlines are testing this new pricing tactic out on a smaller scale before expanding.
We don't know. But we can say one thing for sure: Solo travelers – whether they're flying on a corporate account or not – will be the ones who pay the price."
https://thriftytraveler.com/news/airlines/airlines-charging-solo-travelers-higher-fares/
#USA #AirTravel #PriceDiscrimination #Oligopolies #Competition #Antitrust #Airlines
1/4
Can I just randomly rant about price discrimination for a minute? I sometimes work with trade secret law and some of the most closely guarded trade secrets I run across are pricing structures. I suppose you can tell some other stories about why you’d want to keep prices a secret, but I’m pretty sure that the main reason is price discrimination.
#economics
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"Hotel booking sites caught overcharging travelers from Bay Area
In an investigative column, SFGATE contributor Keith A. Spencer exposes online price discrimination targeting San Francisco travelers"
By Keith A. Spencer, Freelance Writer
Jan 13, 2025
"...
In one shocking case, the Bay Area test user was offered a nightly rate for a Manhattan hotel room that was $500 more per night than the rate offered to consumers in the less affluent cities for the exact same room and dates.
..."
https://www.sfgate.com/travel/article/hotel-booking-sites-overcharge-bay-area-travelers-20025145.php
"Price discrimination, then, is a Bizarro-world flavor of cod-Marxism. Rather than having a democratically accountable state that sets wages and prices based on need and ability, price discrimination gives this authority to large firms with pricing power, no regulatory constraints, and unlimited access to surveillance data. You couldn't ask for a neater example of the maxim that "What matters isn't what technology does. What matters is who it does it for; and who it does it to.""
https://pluralistic.net/2025/01/11/socialism-for-the-wealthy/#rugged-individualism-for-the-poor
#Economics #Economy #PriceDiscrimination #DynamicPricing: "Ultimately, preventing the dystopia of perfect price discrimination—or some more realistic approximation of it—means cutting off companies’ access to the data they use to determine how much to charge us. This isn’t complicated; it’s just a politically heavy lift. Getting Americans fired up about their personal data has been notoriously difficult, which helps explain why we still have no federal digital-privacy law. Perhaps if more voters understood that strong privacy protections would also protect them from price discrimination, Congress would feel more pressure to get something done. (A glimmer of hope appeared earlier this month when lawmakers announced a bipartisan bill that would limit the user data that companies can collect.)
Near-term solutions might depend on the companies themselves. If prices become too complex, that creates an opening for a firm to commit itself to clear, simple pricing, Bentley University’s Shelle Santana says. For example, Southwest Airlines allows two free checked bags. Mark Cuban’s pharmaceutical wholesaler, Cost Plus Drugs, markets itself as a transparent alternative to the usual stress of buying medicine. Boring Mattress Co. promises to help customers “escape mattress hell” by offering a simple flat-rate mattress with free shipping. Santana cited JetBlue’s early marketing. “Their whole campaign was, We like our customers,” she said. “As a flier, you’re like, You don’t even have to love me. Just don’t make me feel like I’m in hell.” In a world of constantly shuffling prices, could predictability become a competitive advantage?" https://www.theatlantic.com/ideas/archive/2024/04/surge-pricing-fees-economy/678078/
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