Continental Selling Options on Tickets | Hacker News Reader

Continental Selling Options on Tickets

nytimes.com

“It’s a value to people like a stock option is a value,”

Of course it isn't. It doesn't generate dividends and I can't sell it. Idiocy.

My real fear: Continental starts paying Kayak and co. for data on who is searching for what, and when. Price 'insurance' becomes necessary because Continental jacks up prices as soon as they see a spike in demand.

> My real fear: Continental starts paying Kayak and co. for data on who is searching for what, and when. Price 'insurance' becomes necessary because Continental jacks up prices as soon as they see a spike in demand.

Continental is already serving essentially every kayak search. They know how many people are searching for what, even if they don't know exactly who. If they want to raise prices as a result of search spike, they can already do that.

who would buy an option on an underlying sold by the same people that control the price of the underlying? if continental sets the price of the seats and then sells you calls or puts on those prices; why would anyone buy those options?

The way airline seat pricing works is say you have 200 seats on a plane, you might pick 4 prices and sell the first 50 for the lowest, the next 50 for the 3rd lowest and so on. This is why seats seem to get more expensive closer to the date of the flight, tho' it is not really based on time but demand. To make this valuable, the price difference of the next band up must be more than the option - but I agree that this is a gamble unless you know the inventory well.

You could know the inventory pretty well with FareCast[1] and ExpertFlyer[2]. Paying a few bucks to lock in a lower fare before prices skyrocket at the last minute seems quite reasonable.

1: http://www.bing.com/travel/ 2: http://expertflyer.com/

They are selling you an option for a few bucks to lock in pricing for seven days. Since airline prices change several times a day, if you're paying attention to prices and notice them drop, but can't book for some reason (maybe you're booking for others and need their approval first), it's not a terrible deal.

But the option is only for buying a ticket from Continental within seven days. It's not like if prices go up, you can sell your option to someone else and pocket the difference like you can with traditional options. Since the tickets are most likely tied to non-transferable fares, their function is pretty limited.

It's not an option, it's fare price insurance. Essentially airlines have taken the 'insure everything' game that retailers found out was massively profitable years ago. Also they've taken to selling cheap trinkets, charging fees for everything, and recently playing commercials on the plane's loudspeaker forcing every one in the cabin to listen. (Which if they really cared about airline safety/security they wouldn't play as the commercials train me to ignore everything that comes over the loudspeaker)

None of this is good for consumers, the only way the airlines make money off insuring things is if we loose more of it in the long run, and none of these expenses are large enough to justify the payment. Just like the service plans at best buy.

Man if I ever hear commercials on the loudspeakers I would find a way to get that airline banned from flying.

It should simply not be legal.

Airlines getting into banking? I understand that they've been facing cash-flow problems for years. But this seems like way too much diversification. Why would an airline expect to do well in the banking market, when banks are already struggling? Shifting focus from your core competency (running airplanes) to a struggling industry where you lack expertise or a competitive advantage (banking) makes little sense to me.

I've never understood all the gloom and doom surrounding the airline industry, anyway. There is still ample demand for air travel. Especially considering the lack of viable alternatives in the US, I can't imagine we'll reach a point any time soon when air travel isn't commercially viable.

The largest factor for Airline profitability, at least historically, is the cost of fuel. Airlines that sign a 1/2/5/10 year futures agreement at exactly the right moment can save an extraordinary amount of money compared to their competition.

Jet Blue, for example, has been doing quite well in the last few years. The biggest reason for this isn't their (quite wonderful) service or (relatively new) air fleet; it's because their fuel contracts were signed at a damn near perfect moment.

Airlines run razor thin margins. A few percent savings in fuel can easily double their margin, which can be then spent on marketing, fleet improvements, sniping experienced pilots by offering higher wages, or any other form of capital investment.

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