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Hipmunk Says Goodbye

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Re: Hipmunk Says Goodbye

#331

Post by wpietri »

bbarn wrote: post #326
wpietri wrote: post #188

Earlier quoted context omitted.

The barrier to entry is definitely not "100% over-regulation". Starting an airline would be extremely difficult even if it were entirely unregulated. You need airplanes, pilots, and a variety of flight and ground crew. You need landing slots at busy airports. And then you need a customer base big enough to fill up your flights. Even if all of that were easy, you still want anti-trust regulation, because airlines are…

Look at what happened to Virgin America? It was a consumer-focused airline that was doing very well financially, and it was forcibly acquired because of regulations that US airlines must be US owned.

Nope. That was a problem early on for Virgin America. But Branson was quite explicit: consolidation was the problem: https://www.virgin.com/richard-branson/virgin-america

Re: Hipmunk Says Goodbye

#332

Post by wpietri »

edouard-harris wrote: post #325
wpietri wrote: post #271

Earlier quoted context omitted.

You say it isn't sustainable, but you also say Hawaiian is still going. Which is it? The claim was "kills an industry", but from what you say, the industry's still going. And you say the critical factor was "kept them away from the good gates", which is exactly the kind of thing that is solved with careful regulation, not deregulation.

I think the parent comment is saying that the situation of having a price war between too many players isn't sustainable. And it seems not to have been here, since all but one of those players either died or exited the market as a result, leaving the remaining one with monopoly pricing power.

Sure, wars aren't supposed to be sustainable. That's why people start them.

I agree a monopoly over a small market niche sometimes happens even in antitrust contexts. That can happen with or without price wars. I also agree monopoly pricing power is bad. (Although not nearly as bad in a niche, because other well-funded competitors get an incentive to step in the more prices get out of line.) But none of this is proof of the death of an industry.

Re: Hipmunk Says Goodbye

#333

Post by wpietri »

Shinchy wrote: post #308
wpietri wrote: post #181

Earlier quoted context omitted.

> if sale below M.A.P. drops the bottom out of a market and kills an industry, the product can disappear from common production and the consumer doesn't benefit in the long run Is there an example of this happening anywhere in recent history? I ask because it seems absurd to me that there is an industry so fragile that retailers taking a bit less profit would lead to sudden, total collapse. (And doubly absurd this mi…

I've worked extensively with various luxury brands that do this (to be honest almost all of them do). The reason is almost always brand integrity, they don't want consumers to think of their brand as being cheap so they only ever discount to a point. Add to that that some brands will allow unsold stock to be returned - obviously this means the seller will only reduce the price to a certain point before it doesn't mak…

Sure. That's because they're not mainly selling a product, they're selling exclusivity. But if every single "luxury" handbag company goes out of business because map violations get people to stop caring about "luxury" handbags, that doesn't mean that handbags getting manufactured.

Re: Hipmunk Says Goodbye

#334

Post by wpietri »

zebrafish wrote: post #328
wpietri wrote: post #181

Earlier quoted context omitted.

> if sale below M.A.P. drops the bottom out of a market and kills an industry, the product can disappear from common production and the consumer doesn't benefit in the long run Is there an example of this happening anywhere in recent history? I ask because it seems absurd to me that there is an industry so fragile that retailers taking a bit less profit would lead to sudden, total collapse. (And doubly absurd this mi…

Retailers will never take less profit in the long run. Especially in industries where ROIC is extremely important. The retailer will always squeeze the manufacturer and the manufacturer, depending on the volume of the account, will typically fold to keep the (extremely expensive) line running. This plays out over long time horizons (a few years) but eventually price erosion will happen and capacity will go offline.

Nobody is disputing that when prices decrease, capacity might also decrease. But the claim was that capacity drops to zero, which I still think is absurd.

Re: Hipmunk Says Goodbye

#335

Post by alexhutcheson »

nunez wrote: post #218
splonk wrote: post #89

Earlier quoted context omitted.

1-2% is more of an upper bound. The numbers I've seen have been more like 10's of cents per conversion. And for whatever reasons, flight availability providers are not in the business of providing high throughput for clients, so the cost of performing those searches is probably considerably higher than you think. When I joined the travel industry I was shocked at what people considered reasonable latencies for availa…

That’s surprising considering that there isn’t a Google Flights interface for hotels (I.e. an aggregator through which users can purchase hotel reservations through hotel providers directly)

https://www.google.com/travel/hotels

Re: Hipmunk Says Goodbye

#336

Post by zebrafish »

wpietri wrote: post #334
zebrafish wrote: post #328

Earlier quoted context omitted.

Retailers will never take less profit in the long run. Especially in industries where ROIC is extremely important. The retailer will always squeeze the manufacturer and the manufacturer, depending on the volume of the account, will typically fold to keep the (extremely expensive) line running. This plays out over long time horizons (a few years) but eventually price erosion will happen and capacity will go offline.

Nobody is disputing that when prices decrease, capacity might also decrease. But the claim was that capacity drops to zero, which I still think is absurd.

Well, I think the claim that worldwide capacity will drop to zero is absurd. But after enough price erosion, domestic capacity will dwindle significantly and these companies' goal is to remain in business.

I love low airfare as much as anybody but the claim that price transparency leads to price erosion isn't ridiculous. I honestly think that the trend towards lower prices has led to the reduction in quality of the flying experience as the airlines try to accommodate both low prices expected by consumers and high margins expected by Wall Street.

But your point is fair. The capacity rarely disappears completely because of price transparency. Only innovation and obsolescence will completely take that capacity offline.

Re: Hipmunk Says Goodbye

#338

Post by munificent »

dnautics wrote: post #247
munificent wrote: post #183

Earlier quoted context omitted.

If you remove regulations, businesses will raise barriers to entry. Businesses don't like to compete. Competition is a zero-sum game that they might lose. Instead, they prefer to form cartels and turn it into a non-zero sum game where they all win (and consumers all lose). World history clearly shows that lack of regulation inexorably leads to trusts, cartels, price fixing, price dumping, and all sorts of other anti-…

But what is the minimum size for a business to "get so big they have taken over control of regulation"? I have seen very small companies (like, think size of one) deftly manipulate state- and federal- level regulations to their advantage.

> But what is the minimum size for a business to "get so big they have taken over control of regulation"?

This is sort of like asking, "What is the minimum weight you can put on a seesaw before it tips?" The answer depends entirely what's on the other side.

One way to look at free markets is that they provide economic stability in the same way that tensegrity [0] structures provide physical stability. They work not because any element provides stability, but because — when very carefully composed together! — the elements exert opposing forces which all balance out leading to a stable system.

The "brilliant idea" of markets is taking advantages of forces that already exist — human selfishness and the desire to profit — and harness that to produce a system with some level of efficiency. The downside is that there's no real way to evaluate market participants in isolation.

[0]: https://en.wikipedia.org/wiki/Tensegrity

Re: Hipmunk Says Goodbye

#339

Post by reaperducer »

monksy wrote: post #186
reaperducer wrote: post #26

Earlier quoted context omitted.

Lots of weirdness in travel these days. The last time I booked a flight on Delta (October) I found out that it can no longer handle cash payments at the airport. Not for anything. Not tickets, not baggage fees, not upgrades. Nothing. They direct you to a place in the airport where you can guy a Visa gift card with cash and then pay for what you need from Delta. I don't know if that's true of other carriers these days…

DO NOT EVER buy a ticket with cash. It's silly since it's the nation's currency. Yes, it is silly you can "avoid it" by other card methods. But at least theres a longer trail associated with that, and probably puts you at a lower risk of being labeled as a concern.

In the early 2000's (pre- and post-9/11) my wife had a job where she would 2-3 times a month get a phone call at 5am and then have to go to the airport and get on the next plane to whatever city was specified by her boss, take care of business, and then return at the end of the day. Paid for her ticket in cash, and her only luggage was her purse and her Palm Pilot (actually a Sony Clié UX50, which I remember because it was awesome).

She got pulled aside by security every single time for extra pat-downs and such. It got so frequent that they knew her by name, but they still went through the routine every single time.

She's very glad not to have that job anymore, but for other reasons.

Re: Hipmunk Says Goodbye

#340

Post by ng7j5d9 »

amenghra wrote: post #85
JoshTriplett wrote: post #77

Earlier quoted context omitted.

What alternatives exist to Hipmunk's display of flights? I've never seen a site with a similar display of flights by time, including display of the layovers, and easy ways to drag the earliest and latest start times to eliminate flights that aren't an option. > ITA Matrix still has time bars, if you loved that UI ITA Matrix doesn't seem to do anything like Hipmunk's UI. > flights are just not that profitable. In Nort…

http://www.ai.mit.edu/courses/6.034f/psets/ps1/airtravel.pdf might help you understand why it's not a trivial problem (I'm not saying 1-2% commission should or shouldn't cover the costs, just pointing out what goes into these engines).

Thanks for posting that link! I came across that presentation several years back and found it quite enlightening. Then I thought of it for some reason a few months ago and tried Googling for it but couldn't find it. Very glad to stumble upon it again, and this time I'll definitely bookmark it.
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