[mikeash]

If the wine were rare, the price would be high.

Here, we're talking about a product (an extra leg on an airline ticket) whose price is negative. You're being paid to take it. That pretty strongly implies the product is abundant. If it's not abundant, and the airline is still giving it a negative price, that's pretty dumb on their part, and I don't think we can be blamed for making decisions based on the (apparently wrong) information they give us.

Edit: it occurs to me that there's an excellent comparison to be had here with the electricity market, which also sometimes sees negative prices. With electricity, prices go negative when there's an overabundance of supply and it's cheaper to use up extra electricity than to shut down power plants. The electric company wants you to use that power and they don't care how. Whether it's running your refrigerator or just shooting a laser into space, it's worth it for them to pay you to use it.

A negative price means, "Please, I beg you, take this product, we have too much of it." If it's not actually beneficial to the airline for people to buy those tickets (regardless of use, which is a separate bit) then they're basically lying by way of pricing.

[TeMPOraL]

Negative price means they pay you to do something, not to take the money and then not do it. Doing otherwise is, well, unethical ;).

I doubt that negatively priced legs come from product abundance. It's most likely optimization - e.g. if they can get more people going A->B->C then they can merge them with B->C passengers group and fly them together on a bigger, more fuel-efficient plane, etc.

Anyway, we're already paying much less than we should when flying privately; price discrimination works in our favour, at the expense of business customers.

[mikeash]

Negative price means they're paying you to take the product. They're not paying you to do something unless doing that something is the product.

In the case of negative-priced airline tickets, they are not paying you to ride an airplane. They're paying you to take a ticket. That ticket then gives you an option to ride an airplane. Ticket use is not mandatory, not even ethically.

If it were somehow advantageous for the airline to actually have people take the trip from B->C, then they could pay people to actually do it by, for example, giving you a rebate when you step off the airplane at C, or charging you a fee for not boarding the airplane at B. But they don't do this. So either they benefit from just selling the ticket, or far more likely they don't benefit from selling the ticket but are trying to manipulate the system in some other way.

I don't understand your optimization comment. There is no scenario in which it's cheaper to fly more people from B->C than fewer. Larger, more efficient planes are still more expensive in total to operate, so if your passengers fit on a smaller plane you'll save money that way, not lose money. Even if the bigger plane were somehow cheaper in total, nothing says you need to fill it up. You can just fly your normal B->C passengers in a bigger plane with lots of empty seats, if that ends up being cheaper. Airliners don't require ballast. There is no scenario where the airline makes more money at the end of the day by having you use your B->C ticket compared to obtaining a B->C ticket but not using it.

I also don't understand your "flying privately" comment. Airlines are cheaper than the alternative, so it's OK if they play pricing games? Well, it's a free country, they can play as many pricing games as they want, but I'm going to play them too.

[TeMPOraL]

> They're paying you to take a ticket. That ticket then gives you an option to ride an airplane. Ticket use is not mandatory, not even ethically.

Fair enough, though I still feel there's an ethical problem with creating waste / disutility.

> I don't understand your optimization comment.

I was thinking about something like this: there are people who want to travel from B to C, but not enough to warrant a new route (or increase in service on that route). So the company figures, if they can get more people to travel from A to C by offering a cheaper ticket, they can bundle them together at B and now there's enough people on B->C route that it makes sense to fly it (more often). I'm also assuming that B acts as a hub - it makes no sense to have direct route between every city due to combinatorial explosion. So here, the cheaper A->B->C ticket exists to attract new people willing to go from A to C.

I guess you're right if you only look at the money made directly on tickets. I don't know if, and how often, airlines get subsidies based on the amount of people they move around but if they do, then having planes flying half-empty may be a loss for them. But personally, I don't consider the money earned by the airline as the most important variable. What matters more is, IMO, the amount of passengers being transported. More people getting to fly = better.

> I also don't understand your "flying privately" comment.

I don't know what's the usual short phrase to refer to people like tourists, who travel in their personal capacity - for leisure, to study abroad, to visit their family, etc. - as opposed to business travellers, who travel to make money, and whose tickets are often paid by their company.

A lot of price discrimination is designed around getting the business customers to subsidize the "casual" ones. My point was, as casual flyers, we wouldn't be able to afford the ticket if it was priced fairly. Pricing discrimination in airlines generally works in favour of ordinary people.

[mikeash]

Let's say you want to fly from A->B. You research prices, and you find two options. There's a direct flight from A->B that costs $400, or you can take an indirect flight through distant hub C that costs $200. Is it unethical or wasteful to choose A->C->B for $200? I think all of us would do this without a second thought, aside from willingly paying more in exchange for less hassle.

Compare to hidden city ticketing. Instead of buying A->C->B, you buy A->B->C for $200 and then stop at B. It's no more wasteful than buying A->C->B, it's just more comfortable for you. In fact, it's slightly less wasteful, because there's a possibility that the airline could give your empty B->C seat to a standby passenger.

Assuming you don't have an ethical problem with the A->C->B hub flight, why would you have a problem with the A->B(->C) hidden city ticketing flight because of waste or disutility (or indeed anything else)?

I have no problem with price discrimination. But there are good and bad ways to do price discrimination. For example, one common method for flight discrimination is to charge less for tickets purchased farther in advance. Casual travelers typically book their travel well in advance, whereas business and other travelers willing to pay more typically book their travel shortly before they fly. This is just smart business, and it ensures that people who really need it can fly when they need to, but people who are more price sensitive can still travel. And you can't really game this system.

Then you have airlines trying stupid tricks like charging negative prices for certain legs. This is just wasteful and stupid. Why should I feel in any way obligated to support this sort of price discrimination? They are welcome to try such nonsense, of course, but their customers are likewise welcome to take advantage of it. It is not our responsibility to make their pricing scheme work. They're the ones who need to figure out workable pricing schemes.