When you think of an auction, you probably think about auctioning off fancy cars, rare art, or even the show Storage Wars. But would you ever think of auctions on airfare? This is a real possibility that may come in the near future to airlines that we fly on frequently.
When flying on an airline, you can notice empty business class and first class seats sometimes. The airlines are noticing this as well, and want to do something about it. So the aviation industry is beginning to adopt online auctions for these seats. Giving people in the economy class seats the option, at the last minute, to participate in online bidding auctions to pay a small additional fee for that ability to occupy that empty luxury seat. This seems like a pretty good idea for both parties, the airlines as well as the customers, with the airlines getting to fill in those empty seats and make a little money, and the customers getting to fly more luxuriously without paying full price for that luxury seat. However, there is a flaw. What is stopping the frequent business class flyers from not buying their normal seats, and instead purchasing economy class with the knowledge that they will be given the opportunity to bid for the other seats. This would cause the airlines to lose money, so a new approach would have to occur.
The airlines are currently attempting to figure out a way to have the seats go at a reasonable price, and to not allow flyers to bank on the opportunity to upgrade. The airlines have considered only offering the auction to certain customers, but that could cause issues in itself. Their real issue that they need to solve, is what we learned in class with having the buyers forced to reveal their true value of the upgraded seats. So maybe the airlines will have some sort of sealed-bid second-price online auction, or some type of ascending auction to solve this issue. Either way, we can most likely expect this to become a reality fairly soon.