Originally Posted by
richarddd
When thinking about the effect of reducing overbooking on airline pricing, consider why airlines haven't already raised prices.
We often think businesses price on a cost plus basis or in order to maintain some level of profitability, but market forces and competitive pressures (even in an oligopolistic industry) are very important.
I agree with you on how market forces affect price but I think you're overlooking that a reduction in overbooking is decreasing the supply of "seats" available for sale. A decrease is supply produces a higher price.
I don't think we'll see a chance in the published prices, though. Just a reduction in the number of "seats" available in the lower fare buckets. The cheapest tickets will just sell out a little faster resulting in an increase in average fare paid.