The airlines are masters at A/B testing and figuring out what works best, as the industry is notoriously low margin and very cut-throat. You can bet that they price things this way because it works better.
BTW, people pay a lot extra for first class tickets and love the "free" drinks. Different classes is how the airlines optimize profits from different market segments. They're very good at this.
"Masters of A/B testing" is, in my opinion, a gross overstatement. However what is true, is that a large number of people will automatically choose the lowest available option among airfares, without considering comfort or amenities. When your product is efficiently lined up against your competitors, sorted by price alone, (i.e. Expedia, Kayak...), then being second-place by $3 is enough to impact sales volume.
It's one of the primary reason airlines have moved so much of the total cost out of the ticket price, and on to additional fees: luggage, food, seat selection, printing a boarding pass, etc.
That underestimates how sophisticated the airline's slicing and dicing of the market is. Ever wonder why no two people on a flight paid the same price? Why there are a proliferation of classes on board?
Beyond economy class, of course the price is less of a factor (didn't realize that needed to be stated).
"No two people paid the same price" is a myth, most certainly not true. Ever book 2+ seats at the same time?
Airlines do use yield management techniques, however, which results in pricing that changes for the same resource over time. That's not A/B testing, and like anything that relies on a lot of forecasts as inputs, bad forecasts up front often lead to sub-optimal revenue totals.
Are you telling me you've surveyed every person on the plane to know for absolute sure nobody paid the same price? Do you think they create a unique fare code for every passenger? Of course they don't.
I never said airlines are stupid, I stated an opinion they are not "masters of a/b testing". You've not provided any evidence to convince me otherwise.
> Are you telling me you've surveyed every person on the plane to know for absolute sure nobody paid the same price?
I read it some years ago in an article about airline operations management and how they optimized their fares, which varied constantly through the day and the days of the week. Then there are all the various discounts people can get, frequent flyer prices, rebooking fees, etc. It's all based on heavy use of statistics, which is a more complex version of A/B testing.
> I never said airlines are stupid
You suggested they often make bad forecasts, implying they didn't know what they were doing.
The airlines are masters at A/B testing and figuring out what works best, as the industry is notoriously low margin and very cut-throat. You can bet that they price things this way because it works better.
BTW, people pay a lot extra for first class tickets and love the "free" drinks. Different classes is how the airlines optimize profits from different market segments. They're very good at this.