Airlines have long perfected the yield algorithms over the years to determine flight prices and the break even point. The basic rule of thumb is the closer you get to the travel date the more expensive your flight will be.
Going, Going, Gone…. again.
So it looks like seat auctions are on their way back, once you’ve already bought your seat. The Economist ran a report yesterday on the increasing use of auctions on premium seats, a rather nifty way of upselling to the traveller once they’ve already parted with the cash. Depending on the airline and whether you need to be enrolled on one of their programmes will determine what your options are.
Interestingly Richard Kerr, aka The Points Guy, offered a handy calculation as a rough guide as what to bid. So I thought I’d give it a whirl. Previously I’ve done auction systems in the airline industry but that was for the entire aircraft, not a single seat. Fun, fun, fun indeed.
A Working Example
Okay, suppose I want to fly from London Heathrow to Dubai (LHR -> DXB). What I first need is the basic economy price and then the price for the premium economy.
A quick look on cheapflights.co.uk gives me the following:
Economy LHR->DXB: £352
Premium Economy LHR->DXB: £968
So the question is, what to bid? The Points Guy offers a simple equation that gives a sensible guide price.
Bid offer = (premium seat price - economy seat price paid) * percentage
The percentage can be anything you want but the guide set by The Points Guy is between 20-40%. To implement this in Clojure is easy enough, it can be done in one line.
user> (defn calc-bid [premecon econ pc] (* pc (- premecon econ)))
So using the prices I have for the LHR->DXB flight, I’m going to add 20% and see how that looks.
user> (calc-bid 968 352 1.2) ;; => 739.1999999999999
A suggested bid price of £739.19, a potential saving of £228.81 on the premium economy class price, that’s promising but that does not take into account factors such as how many other people are bidding, scarcity and so on.
There’s nothing to stop you bidding the absolute minimum of £1 for example, depending on the number of bidders (which is highly controlled when you think about it). Perhaps you were flying on a Boeing 777 which can average a capacity of 382 seats depending on configuration, with an 80% load factor that’s 306 people who could bid but only a small percentage, 8% or so, would actually want to bid (not everyone is competitive or has the cash for example). So theoretically 24 people actually bid….
Then you’re into bid psychology and proper statistics, this post really needs a part 2…..