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I do not understand the airline's side of that argument, sorry. It seems like what you are describing is: 1. The airline is willing to sell a few tickets for $50 instead of $250, but only to the folks who it deems "worth it" and advertises accordingly. 2. Those $50 tickets are below cost, so each $50 ticket sold means everyone else will have to pay a little more. 3. If enough "general population" people find and buy those $50 tickets instead, the airline will discontinue the practice.

If this is indeed the case -- good riddance to that practice! Why should I be sorry that it goes?

Because not everyone has the same ability to pay.

Airlines backed themselves into these absurd corners by using really short sighted business practices.

Disney is doing similar stuff with their app and queuing nonsense.

Companies always willingly put themselves into these corners, and then start crying foul when they find out what it means.

Suppose you want to get people to a party, and offer $50 early bird tickets, and want eg a gender balance. But they just get scalped and resold for $300. Why should you care, you authoritarians? Scalpers have just as much right as anyone to purchase tickets…

Actually if I ran an airline I’d try to prevent everyone from being able to snipe the best seats with their agents as soon as they came out. Using lotteries, special manual two factor authentication etc.

What's the counterpart of gender balance in this analogy?

Maybe a balance of loyal customers (to keep them loyal) and first time customers (to hopefully fill the pipeline of future loyalties).

[delayed]

> If this is indeed the case -- good riddance to that practice! Why should I be sorry that it goes?

The effort you (and others) are willing to go to get the $50 doesn't seem to match up with the "fine, the practice should go". If it doesn't matter, why expend effort to do it?

Because while the $50 deal exists then everyone has the right to fight for it (I would even argue that it's rational!). I don’t see how that’s incompatible with wishing the $50 deal didn’t exist in the first place. Pricing that rewards whoever spends the most time searching is a bad system, and agents are a fair fix because they make that local price optima findable for everyone.

I imagine the argument is that it enables poorer people to fly when they otherwise would not be able to afford it.

Airlines have a large fixed cost and a small marginal cost for each passenger on a plane. If they charge $250 for each seat and half the seats are empty then they are wasting capacity and have to charge enough for each seat such that half the seats pay for an entire flight. If they can fill the second half of the plane with $50 passengers then they are providing more service (a social good!) and can perhaps reduce the expensive tickets to $200.

Of course everyone wants the $50 tickets, so the market gets all weird trying to both fill flights and charge as much as possible, while being competitive with other airlines that are trying to do the same thing. Because there are competing airlines, the final margins stay low, so the airlines are barely "maximizing" profits so much as they are simply maintaining profitability.

> The airlines are trying to reduce prices for everyone without giving specific people (atleast those who they don't deem "worthy") an edge. Here's a great, short comment: https://news.ycombinator.com/item?id=50459444

Your sentence and the comment you linked say completely different things. You say airlines are trying to reduce prices for everyone, the comment says they're trying to achieve perfect price discrimination to maximize revenue. Those are not the same thing.

This is true of a whole lot of stuff. Many special offers are loss leaders that largely rely on human behavior to make up for the losses, like a credit card that gives you $500 cash back if you spend $2500 in the first 3 months. This only works when a fair number of the humans stick with that card long term, if there are agents running around creditmaxxing then the offers don't work any more.

Many moats are plain inertia. Chase and other big banks bet that you won't switch to a different bank that actually pays interest.

> This is true of a whole lot of stuff. Many special offers are loss leaders that largely rely on human behavior to make up for the losses

Accepting this is currently true, should we prefer this equilibrium?

Perfect, if the business model is to scam you out of money because you don't use a service, then it should go away, regardless of the few people getting 'benefit'.

What is the scam here?

Loss leaders.

I don't follow why an mcp server buying a 50 dollar flight would make costs to up? Surely an mcp server booking flights doesn't mean there is more demand for flights overall? I'm not about to take a trip somewhere just because I have an mcp server to book it.

If you were going to take a flight anyway and it finds you a 50 dollar option instead of a 200 dollar option, that's very expensive for United.

if you're paying for flights you don't want to take, then I'm sure they're happy for the extra spending money of course. Why would you want to do that?

Why is United selling a ticket for $50 that they would prefer went unsold?

They might need to have seats on that flight offered to meet a contract with the airport, or they might be using personalized pricing to only offer the 50 dollar price to certain customers (if you keep searching often the price goes up for instance) or any number of other stuff. Airline pricing is like car pricing.

No it is not. Cars have static MSRPs and then you haggle over the price person-to-person at a dealer. Airlines prices are based on markets (literal demand and supply between city pairs,) expected load factor, and what can best be described as a min-maxing algorithm to minimize spoilage (% of unsold seats when the flight takes off.) It's all predictive analytics, constraints modeling, and optimization at scale while finding opportunities here and there to maximize within local factors.

Contractual discounts--which corporations do have--are usually balanced by a guaranteed spend figure. For small and midsized companies, the spend is often paid in advance, to the benefit of the airline, which can carry the float and lock up a portion of market certainty.

My two cents: I have a deep amount of respect for United's tech stack. It is the best amongst US airlines and among the best in the world. However, this is the wrong move for them, and unless other airlines follow (doubtful, since United taking the lead here gives others competitive advantage,) United will have to backtrack in a year or two.

I don't see why they would _ever_ prefer an unsold seat unless:

* they are trying to artificially inflate the price

* they could send cargo that is, per pound, more lucrative than the cost of a ticket

It's not like the weight of a person is going to cost an extra $50 in jet fuel

Ah ok. So the worry is me being able to shop around more and find better deals? What's stopping me from using an agent to shop around still, and I just do the final booking myself?

Just a little extra friction, but if they want to ban agents from booking I'm sure they'd love to ban them from looking up prices too. But showing prices is kind of their advertising too, so it's harder to just cut it off - same reason why Google flights is allowed I suppose

What's stopping me from using an agent to shop around still, and I just do the final booking myself?

Sounds like Google Flights.

> If you were going to take a flight anyway and it finds you a 50 dollar option instead of a 200 dollar option, that's very expensive for United.

And? They offered a $50 ticket. Did they expect people not to buy it?

If I search manually and find the $50 flight I planned spending $200 on, I’m not going to decide it’s too cheap. MCP acts the same. For at least a decade there have been services that will alert you when a specific flight drops in price, letting a human basically do what the agents are doing.

If United doesn’t want to sell a ticket for $50, then they should, y’know, not sell tickets for $50.

If airlines didn’t want to play pricing games, they could stop playing pricing games. List a standard fare for a route if you want to sell fares at a standard rate. If you want to try and squeeze me for an extra $20 because I’m buying during work hours, or $100 because I visited your site 5 days ago and now you think I’m desperate then you don’t get to complain when I use underhanded tactics to get the best deal. They make the rules, they shouldn’t be surprised when their convoluted system gets exploited by people that know the rules.

Morally sure, but they absolutely are going to complain even if they're in the wrong about it. And they'll try and ban things and stop you from getting the deal obviously. Why wouldn't they? Have you ever known airlines to deal fairly?

They make the rules, and so they'll try to do that again.

> If airlines didn’t want to play pricing games, they could stop playing pricing games. List a standard fare for a route if you want to sell fares at a standard rate. If you want to try and squeeze me for an extra $20 because I’m buying during work hours, or $100 because I visited your site 5 days ago and now you think I’m desperate then you don’t get to complain when I use underhanded tactics to get the best deal. They make the rules, they shouldn’t be surprised when their convoluted system gets exploited by people that know the rules.

Nicely put.

They did offer it. Now they only offer it to humans. They have no interest in games, only in making money.

And I have no interest in their pricing games, only saving money.

Because like with everything else people have been applying AI to, it's not going to stop at "I used it to book my flights" and it's going to turn into "we used it to book every flight and now we are reselling them at a massive markup so we can then use it as an excuse to spam you because you signed up for our 'service' and that counts as 'consent'."

dunno about that, tickets are non transferable generally. I'm cynical it is more to do with the 'buying experience' and the opportunity to up-sell, introduce tempting offers, and confuse with navigation patterns and such. Agents will breeze past all that, meaning the money the airlines make will reduce.

Scalping seems unlikely. Airline bookings are non-transferable.

Yes, the question about AI agents is whether they are actually increasing productivity, or just allowing individuals with more compute to outcompete for a larger share of a finite resource.

If AI agents were more effectively managing flight paths, determining pricing, managing communication channels on the supply side, it would technically decrease cost per flight, but on the demand side, if AI agents just find the cheapest flight and book it, all it does is beat someone else who likely would have gotten to that flight a bit later.

I do think eventually it's going to be supply agents communicating with demand agents that lead to a coordination equilibrium. But until then it's just a race to who has the faster, more integrated models, and now, who has models which can bypass the restrictions providers place on their use.

> or just allowing individuals with more compute to outcompete for a larger share of a finite resource.

It doesn’t take much compute or anything really above the cheapest claude subscription to do this.

Similar to how internet evened out access to many things that were in the past blocked by access to knowledge.

It takes a trivial amount of compute to do stuff like book flights or submit forms, but there are other dimensions where the marginal utility of compute doesn't taper off as fast, like legal defense or PR campaigns/mass manipulation.

Imagine two competing political candidates, one has funding from an AI lab and produces thousands of short-form AI videos per day and spends millions of analysis of the full spectrum of feedback and performance of the ads, simulates public sentiment, pruning every aspect of their persona, response strategy, channels to focus on, etc. Or a company accused of misconduct creating an AI psychological profile of the judge and every jury member via their social media history and demographic information and curating the best permutation of arguments from millions of options that maximize every predicable sentimental vector.

Your argument doesn't make any sense. Why is the flight even offered if it's such an issue for the airline?

Say Alice is willing to pay $100 for a given flight, while Bob would at most pay $50. The airline wants to charge Alice $100 and Bob $50, netting $75 per seat on average.

Agentic access would give Alice the chance to cross-shop and buy the cheaper flight as well. But now, to net the same amount, the airline has to charge $75 per seat, excluding Bob from participating in this market.

precisely. I worry people aren't "getting it". I edited my post to point to this comment as it's very short and precise.

It's not. Airlines do not make their money price discriminating economy customers over the same route at the same time.

Dynamic pricing is mostly a seasonal and timing game. And the actual money is made in higher classes of service.

This idea that Bob and Alice are shown drastically different pricing for the same seat because of insights into their specific purchasing behavior is just ludicrous.

Most people buy tickets from aggregators who have been already gutted the ability to do this anyway.

> This idea that Bob and Alice are shown drastically different pricing for the same seat because of insights into their specific purchasing behavior is just ludicrous.

You basically argued literally the entire thesis for customer segmentation and behavior based pricing and then called it ludicrous. I hope PhDs and statisticians who make living building these very models don't see this comment and begin to question their entire existence.

You say this as if consumer and producer surplus are new phenomena.

And you vastly overestimate the price discrimination that airlines have today for comparable classes of service.

They don't make their money on economy seats.

You said they’re “trying to reduce prices for everyone” and you’re describing them trying to maximize prices for everyone (which, yes, they want to do).

[Edit: didn't pay enough attention to the flow of the conversation here - this is really a response to ProblemExplorer's original post, which linked to _diyar's post (parent to this one) as explanation].

> You said they’re “trying to reduce prices for everyone” and you’re describing them trying to maximize prices for everyone (which, yes, they want to do).

No they did not. I am the grandparent and linked to their comment because they concisely explain how the airline made $150 off two sears instead of $100 while giving Bob the $50 deal he wanted (bay making Alice subsidize Bob).

If Alice used an MCP too, there would be no subsidy and neither Bob gets the $50 seat nor does Alice get her $100 seat

?

"made $150 off two seats instead of $100 while giving Bob the $50 deal he wanted" is maximizing the amount each passenger would pay.

In fact, I did not say that.

Ah - sorry! I understood ProblemExplorer's linking to your post as a link to a subsequent post of theirs, which it clearly isn't now that I look again!

My post was a response to ProblemExplorer's language, not yours.

This has already been going on for years. Google Flights and Kayak already have fare histories, fare forecasts, fare monitors with automated notifications. So now anybody can get the cheapest price with a low effort.

The industry responded with aggressive unbundling - basic eco now has no carry-on, no seat selection, no changes. All can then be bought as extras.

This is a scenario across many industries - hotels, car rental, cruise, concerts, online retail etc.

Basically - yes that trend is bad for Bob, but it makes things more transparent, fair, and increases competition. It's the way the world goes - hard to stop that.

Yes, but this type of stuff compounds. Moreover, the fact that agents are now the lowest friction interface for this stuff makes it a potential double-whammy.

A similar example discussed recently on the podcast ”The Real Eisman Playbook”[0] illustrates the point: Many retail investors have trading accounts with some cash sitting idle. The brokers earn a healthy margin by investing that cash into short-term money market funds (MMF).

Now obviously, the diligent investors could easily buy the MMFs and pocket the profit themselves. However, many of them are lazy or don’t care. But now with agentic access, even the laziest user can optimize their short-term cash holdings, which might cost the brokers relying on this income dearly.

  [0] https://youtu.be/y45yqiCdfI4?si=TzVcAb0mXjdXObUs&t=490

Sounds like algorithmic pricing works both ways. Good.

In your example ($50/$100), the airline is extracting all consumer surplus. This is called perfect price discrimination, and it is bad for consumers.

There is nothing stopping the airline offering Bob $50 per seat in the second scenario, other than profit preservation. If they were making a profit on the $50 ticket in the first scenario, they are making it in the second. They just happen to also be making less profit on the $100 ticket.

In effect you are making corporate profit a constraint on the market, which is not the case.

Your example actually shows that the welfare extractive pricing algos companies use today can be undermined by AI, which is good for consumers in this narrow example.

Well actually, price discrimination permits a kind of cross subsidy when there are large fixed costs involved, and flights have substantial fixed costs.

It might not be profitable to fly a route at all if not for high paying customers. But if you can get a few high paying customers and provide return on capital, then extra customers are, relatively speaking, gravy.

And the cheap flights for those customers? Consumer surplus, baby.

If they can afford to fly Bob for $50, Alice deserves that too. If that means the flight isn't profitable, then I guess they couldn't really afford to fly Bob or Alice for $50 and that price was a farce to begin with. I can understand airlines want to squeeze their customers for the maximum they are willing to pay, but I don't think that makes a good argument and I don't they should be entitled to it.

How does the airline sell the same type of ticket to Alice for $100 but Bob for $50? I don't think airlines show consumers different prices for identical tickets at the same moment in time. The prices are constantly in flux and vary by fare class, amenities, the time you book, etc. But if Alice and Bob both go online to buy a near identical ticket at the same time I don't see how they would get different prices.

> Why is the flight even offered if it's such an issue for the airline?

Why did airlines fly a 737 with full staff on board for just 3 economy grade passengers on a leg (like during times of COVID) ?

Largely to keep their airport slots that required flying. This isn't that.

Why did airlines fly a 737 with full staff on board for just 3 economy grade passengers on a leg (like during times of COVID) ?

Been there! CRW → CLT on Christmas Eve. Just me, and three air hostesses.

I assume it's so the planes will all be in the right place when they're needed the next morning.

Indeed - not sure if it is the case here, but businesses sometimes want to change richer people more and poorer people less for the same thing, if they can make more money doing that. One of the ways of doing that is by making the cheaper prices a hassle, a classic example being that you might have discount coupon vouchers at grocery stores that richer people won't regard as worth the hassle. If AI can get rid of that hassle for lots of people then the business case for doing it stops working.

A lot of airlines have started charging extra for a carry-on which does the same thing, except turning the packing part into the hassle instead of the finding+booking part.

I am copying my comment below here because there is a fundamental misunderstanding of consumer surplus here:

In your example ($50/$100), the airline is extracting all consumer surplus. This is called perfect price discrimination, and it is bad for consumers.

There is nothing stopping the airline offering Bob $50 per seat in the second scenario, other than profit preservation. If they were making a profit on the $50 ticket in the first scenario, they are making it in the second. They just happen to also be making less profit on the $100 ticket.

In effect you are making corporate profit a constraint on the market, which is not the case.

Your example actually shows that the welfare extractive pricing algos companies use today can be undermined by AI, which is good for consumers in this narrow example.

> For example, if you had an MCP connector to United and found a flight from SFO to DEN for $50, the rest of the seats have to go up in price to compensate.

Just to be clear, your argument is that it's "counterproductive" and a "local optima" for people to have complete and accurate price information available for purchasing their tickets? And that making this information harder for them to find is better for them? Can you point to any real-world examples of an asymmetry in pricing information ending up saving the side with less information money rather than the side with more information to use that in a way that disadvantages the other side?

So… please excuse my ignorance if I’m being ignorant…

But isn’t this the same argument, more or less, that police make for not wanting to have body cameras on all the time, because they would then be “forced” to give everyone who was breaking the law a ticket or to arrest them instead of letting them go if it “feels like they should”?

The analogy being that the police could pick and choose who they should arrest versus who they should not and let off with a warning - who is “worth it” (i.e. generally, people of, umm, not color, it turns out).

Anyways… it does seem that some kinda of preferential treatment could be lost here. But preferential good treatment for some is kind preferential bad treatment for others, so theres that.

Feel free to ridicule my argument.

If the 50$ flights are gone from the site, won't another site sell those instead?

Later on, assuming all of the carriers are affected by this, flights will get more expensive and maybe we will invest in other modes of transport that is cheaper

> Personal AI agents cause a local optima while overall increasing cost for rest of the travelers.

This has nothing to do with AI. Any sale pricing cause the average non-sale price to go up! This is why many companies outright refuse to participate in sales outside of damaged / opened goods.

> Now United isn't against offering a $50 flight to customers who they deem "worth it" - they just don't want it to be anyone who can run an MCP connector.

I don't understand the premise you're painting here.

Airlines lower the price because they have unfilled seats that are not selling at the current price. The price is lowered as an intentional choice to reduce margins on that seat because making any margin over the fuel cost of that passenger's additional weight is worth more than getting nothing at all.

They aren't thinking about the customer and how lil' Timmy wants to visit his dad in Idaho, they're maximizing profit by rapidly adjusting their service to the supply-demand curve.

> This is why many companies outright refuse to participate in sales outside of damaged / opened goods.

Do “many”? The companies I’m familiar with who used to do this have largely abandoned the practice due to consumer expectations of sales.

> Airlines lower the price because they have unfilled seats that are not selling at the current price

This is rarely the case for popular routes. Airlines lower the price for popular routes to increase margin per utilization which is why skiplagging is not encouraged because it decreases the margin per utilization.

> they're maximizing profit by rapidly adjusting their service to the supply-demand curve

if they were doing that, they would be booting off customers who paid less than those on the wait list.

> if they were doing that, they would be booting off customers who paid less than those on the wait list

If it was legal they would definitely do this. And the times they are allowed under the law to boot paying passengers, it is definitely someone in economy

> For example, if you had an MCP connector to United and found a flight from SFO to DEN for $50, the rest of the seats have to go up in price to compensate and not just by a few cents because the nominal cost of an economy seat is likely $250, not $50.

Your premise is false, as it rests on the logic that there is a zero sum game between passengers. Airlines offer tickets at the level and price they feel like they can sell them in the marketplace. There's not some invisible total allocated to passengers on each flight, where if one person "gets a deal" others pay for it.

Is there some issue with pricing being out in the open and the same for everyone. I understand discounts here and there to fill a flight, but why not offer them to everyone? Why do you care who is in the seat?

If I need to fill a seat last minute at a ridiculous low price, I'm glad an MCP client will fill it for me.

If the concern is that everyone will wait until last minute, that sounds like a problem that solves itself, last minute tickets will increase in price until the minimum price for air time is achieved.

Economics and all that...

> Is there some issue with pricing being out in the open and the same for everyone

Yes there is an issue.

An airplane can only fit a fixed number of people per leg. One way you can make money in a low margin business is make up in volume - this is the game gas stations, grocery and discount stores play - like Walmart.

You cannot play the volume game when you're physically constrained on volume, so you have to play another game.

That would make sense if not everyone was using comparators like Google Flights and SkyScanner. It doesn't make any sense in the real world.

Also: flight alerts and price tracking are a thing too.

I don’t know anyone that’s seen a cheap flight for sale and decided to wait for the price to go up.

There are less price sensitive customers, but even the most price sensitive people don’t ask United if they could please charge them a bit more than the listed price.