Airlines in Asia Offer Personalized Prices by Age, Race, Gender
Airlines in Asia Offer Personalized Prices by Age, Race, Gender.
Air India recently offered an airfare discount to Indian woman shoppers to overseas shopping destinations, South Korea's Asian Airlines has special deals for Russian passengers traveling between Khabarovsk and Seoul, and Japan Airlines offers occasional discount to Japanese living abroad.
Passengers from China who often go to Hong Kong to catch international flights are favorite targets for airfare discounts. Inside China, Air China and other mainland carriers have long offered deep discount to Chinese citizens that are denied to foreign passengers.
The discounts often are limited to groups of at least three people traveling on the same itinerary. The goal, airline officials say, is to tap growing segments of the travel market without losing the higher-income traffic that traditionally fills an airline's seats - and its bottom line.
These price discriminations are not primarily intended to skim off consumer surplus by charging customers according to what they could afford to pay. Rather, they are intended to expand market share by targeting easily identifiable groups and limiting price arbitrage among groups.
References:
- WSJ. 9/30/1996. "Airlines in Asia Offer Personalized Prices by Age, Race, Gender."
Glossary:
- price discriminationCharging different customers at or close to their reservation prices for the same goods. Price discrimination is intended to increase sellers' economic profit and reduce consumer surplus.
- arbitrageThe purchase of goods at a market where prices are lower to sell at a market where the prices are higher. These markets could be separated by geography or time. More generally, it is an attempt to gain profit by exploiting differences in prices, and other market-related conditions for similar products or situations.