Originally Posted by JohnMacWW

This reminds me of an economics (as in the study of economics,not the question of the economy) problem about selective pricing. A seller of say ten identical versions of a good will want to maximize their revenue. But the dilemma is how to best do that. In the old days (pre-computer age and pre-information age) sellers did not have many means to know about a given buyer. Haggling was one solution to try and get the highest price possible: simply set the price high and let each person pull it down to their give in price point.But today, sellers can offer goods to people at a price they are much more likely to accept and offer different prices to different buyers. This is a sellers dream: to sell each good each buyer at the highest price that buyer would pay.

An airline would of course want to try that out with upgrades. Say they have ten seats left to upgrade and they can divide potential buyers into several categories based on how much the buyers in each category are willing to pay. Elite versus GM is one such way to try and make that division. So is the amount the person paid for the economy seat.

Bottom line is that a seller is incentivized to do this in the short run. The problem of course is if there is competition, then the seller has to be careful not lose sales to competitors. And in the airline industry, they have to be careful not to lose the customer altogether to a competitor. This is the short term profit versus long term loss dilemma that I think many of think UACO is headed for.