The economics behind "Basic Economy" – A masterclass in price discrimination • Hacker News Board

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#101

Post by pasquinelli » Wed, Jun 25, 2025, 1:03 AM UTC

carlosjobim wrote: post #89

pasquinelli wrote: post #19

Earlier quoted context omitted.

> It's made it so that relatively poor people can afford to regularly fly all over the world, which is a relatively new thing. has _it_? do what is _it_ again? >> All told, is all this chicanery benefiting airlines? i'm really curious how screwing passengers has done these things.

If you fit more people onto a flight, you can make more money, while the journey is less comfortable for the passengers.

and if all those people paid the same amount then there would be the same end result, but the situation would have nothing to do with the conversation, so i'm afraid that explains nothing.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#102

Post by meta_ai_x » Wed, Jun 25, 2025, 1:10 AM UTC

djoldman wrote: post #10

It appears that taking advantage of human imperfections and irrationality are taking up more and more of companies' strategies and time. You've got folks thinking constantly about advertising, pricing strategies, dark patterns, network effects that prevent or discourage churn, etc., in ways that tend to exploit flaws in the consumer's decisioning process or gaps in their knowledge, to the consumer's disadvantage. It…

Having to pay for your bags and meals are actually good for consumers and overall environment.

If passengers are forced to pack lightly because they have to pay extra fees is actually a win-win-win for everyone. Plus it is less discriminatory because my airfare is not subsidizing someone else abuse of the system.

Same goes with food. I want the option to not pay for the shitty airline food.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#103

Post by m463 » Wed, Jun 25, 2025, 1:34 AM UTC

sfifs wrote: post #92

slg wrote: post #51

Earlier quoted context omitted.

I think the biggest change in general corporate management in my lifetime was the deprioritizing of the concept of goodwill. I’m not naive, businesses have always prioritized profit. However, there used to be this idea that pure profit maximization ruined your brand and reputation. You didn’t want to be known as the asshole company that nickel and dimes everyone or has draconian policies that make people hate dealing…

The biggest driver i feel is increased financialization of company ownership. Since the 80s, financiers essentially punish any boards or CEO who prioritizes longer term impact items like goodwill at the cost of short term quarterly results. This massively influences incentives - as a CEO or board you may know what is the right thing for long term success but you'll be fired if you choose that over short term results.

I also think that brands are being attacked and devalued.

Look at all the ASKJKL type uppercase brands on amazon.

Meanwhile trusted/established brands are impossible to search for specifically.

And established brands are bought and sold to bad new owners. Pyrex was sold and doesn't make good (borosilicate) glass products anymore. Segway went to ninebot.

I'm sure there are lots of examples of this...

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#104

Post by quantified » Wed, Jun 25, 2025, 1:35 AM UTC

robbiewxyz wrote: post #75

slg wrote: post #51

Earlier quoted context omitted.

I think the biggest change in general corporate management in my lifetime was the deprioritizing of the concept of goodwill. I’m not naive, businesses have always prioritized profit. However, there used to be this idea that pure profit maximization ruined your brand and reputation. You didn’t want to be known as the asshole company that nickel and dimes everyone or has draconian policies that make people hate dealing…

My gut is this comes down to lack of real antitrust enforcement. If your customers have no choice but to come crawling back to you then why treat them well?

As in, it doesn't matter that you're "an" asshole. It would matter if you were "the" asshole, but all of you together can do what you want.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#105

Post by selectodude » Wed, Jun 25, 2025, 1:40 AM UTC

FuriouslyAdrift wrote: post #47

onlyrealcuzzo wrote: post #9

Earlier quoted context omitted.

It's made it so that relatively poor people can afford to regularly fly all over the world, which is a relatively new thing. Lowe middle income people in lower middle income countries can afford to fly somewhat regularly, and even internationally, too. Flying used to be just for the rich only as far back as the 60s, and for nobody as far back as 200 years...

I'd rather go back to only being able to fly once every few years as opposed to the bacchanal that is Ryanair...

Then save your pennies and fly in first class. The choice is all yours.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#106

Post by quuxplusone » Wed, Jun 25, 2025, 1:55 AM UTC

tekla wrote: post #91

dkjaudyeqooe wrote: post #77

Earlier quoted context omitted.

> All of the fat in the industry has been squeezed out I don't know where you live but in the US this is patently not true. Airlines are an abusive oligopoly there, with landing slots and the like cementing control of certain markets for certain airlines. Ticket prices are much higher than they used to be and are much higher than Europe (for instance).

Airlines make roughly no money.

OTOH, from TFA: "By 2017, US airlines were among the most profitable in the world, and some Senators pointed to things like Basic Economy as evidence that consumer interests were being undermined for the sake of extra profit."

Both statements could be true simultaneously, of course.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#107

Post by sandworm101 » Wed, Jun 25, 2025, 1:56 AM UTC

>> Third-Degree Price Discrimination: The seller charges different prices to different groups of consumers based on identifiable traits or segments, often tied to different demand elasticities. Common examples in airlines include offering discounts to seniors, students, or military, or more broadly, the use of market segmentation by travel purpose.

Military discounts are not a marketing trick. Some companies actually want to be nice to those who serve. Many a corporate leaders are themselves vets.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#108

Post by m3kw9 » Wed, Jun 25, 2025, 1:56 AM UTC

djoldman wrote: post #10

It appears that taking advantage of human imperfections and irrationality are taking up more and more of companies' strategies and time. You've got folks thinking constantly about advertising, pricing strategies, dark patterns, network effects that prevent or discourage churn, etc., in ways that tend to exploit flaws in the consumer's decisioning process or gaps in their knowledge, to the consumer's disadvantage. It…

You got economy or business class, you really don’t have much choice

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#109

Post by steveBK123 » Wed, Jun 25, 2025, 1:58 AM UTC

robbiewxyz wrote: post #75

slg wrote: post #51

Earlier quoted context omitted.

I think the biggest change in general corporate management in my lifetime was the deprioritizing of the concept of goodwill. I’m not naive, businesses have always prioritized profit. However, there used to be this idea that pure profit maximization ruined your brand and reputation. You didn’t want to be known as the asshole company that nickel and dimes everyone or has draconian policies that make people hate dealing…

My gut is this comes down to lack of real antitrust enforcement. If your customers have no choice but to come crawling back to you then why treat them well?

Seems like the opposite as the origin was Delta trying to compete with Spirit and then all the legacy carriers following.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#110

Post by nadermx » Wed, Jun 25, 2025, 2:06 AM UTC

djoldman wrote: post #100

wagwang wrote: post #39

Aren't flights at an inflation adjusted all time low and most airlines operating at a razor margin? Seems like the market doing their job. Also price discrimination sounds a lot worse than what it really is? Idk, I don't like that air travel is so easily accessible but, the pricing stuff is the least of our worries.

I would love to see the following be factored in if it isn't already: 1. airline ticket holder minutes wasted due to flight delays and cancelations. 2. amount of jet fuel wasted on empty flights for the purpose of keeping gate privileges. 3. money spent attempting to acquire or merge with other airlines and attendant FTC defense preparation. 4. (any and all other wastes of revenue that do not get invested in the cons…

From my understanding, I can't find the article, but it seems airlines by default due to Pilots unions take like 95% of profit, fixed. So when fuel or what not meses with profits. Airlines have to declare bankruptcy to renegotiate with Pilots.