Auctioning unsold airline tickets

Adapted extract from Insight (USA), monitored for the Institute by Roger Knights.

The San Francisco firm Marketel International Inc. is attempting to set up an electronic market for airline tickets that would enable potential passengers and travel agents to submit bids for seats. The requests would list destinations and desired departure date and time, as well as what the consumer is willing to pay. Airlines would plug into the system to pick the bids they want to accept, thus enabling them to earn some money from seats that would otherwise remain empty. Marketel plans to make its money by charging less than $10 for every bid placed and a similar fee for each bid accepted by a vendor.

'Passengers would list destinations and desired departure date and time, as well as what they are willing to pay'

The company hopes to begin offering the computerised service next spring through such reservations systems as American Airlines' Sabre and United Airlines' Apollo, both used extensively by travel agents in the States, but Bill Perell, Marketel's co-founder, acknowledges that no agreements have been reached. The plan also calls for customers with personal computers to be able to place their bids directly on the data base through various home computer services.

The Last Minute Club

The travel industry has created a new way to market excess capacity and airline seats. The Last Minute Club of Toronto (an example of lateral thinking in its own right) has started to market 'mystery weekends' to a surprise resort in the Caribbean. Travellers are only told at the airport about plans for their final destination.

Applied Thinking Digest, 116 Galley Avenue, Toronto, Ontario M6R 1H1, Canada (tel 416 533 9667). Subs $45.

Comment by Nicholas Albery

A third possibility would be to have a small auction booth at each airport where last minute tickets to particular destinations would be auctioned off, leaving just time to book in luggage and to board the plane. This way people would have more control over their destination, there would be the thrill of trying to pick up a bargain at the auction, airlines would be less at risk of discounting tickets they could have sold at the regular price and they will get the best price possible in the circumstances.

'A small auction room at each airport where last minute tickets to particular destinations would be auctioned off'

Nicholas Albery, 20 Heber Road, London NW2 6AA (tel 081 208 2853; fax 081 452 6434).

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