<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by fenstere:
Because certain people may be willing to pay for the priviledge of taking an earlier flight, offering free standby gives these people too much consumer surplus ("Consumer Surplus" = the value you derive from a service less what you paid for it). Airline pricing has nothing to do with what it costs to provide; it has only to do with what they think you might be willing to pay.
It is the same reason why you would be unsuccessful walking up to an empty flight and offering to pay $500 to be onboard when the walk-up rate if $2,000. All the airlines have to do is get one guy who is willing to pay the $2,000, and it justifies screwing the guy who was willing to pay $500, but only $500. The $2,000 guy would also only offer $500 if he thought he could get away with. By setting the high fare, you smoke out the people who REALLY need to get somewhere.
In effect, American Airlines is making a judgement that getting home (or wherever) a little bit earlier is probably worth about $100 to a lot of people. So why not collect that $100 instead of letting the customer keep the benefit?</font>
I see what you're saying. That's one side of the equation. I guess the other side is the potential costs I mentioned, plus consumer goodwill. I still think the latter side of the equation weighs heavier, but obviously AA thinks not. I hope others don't match. These sure are interesting times.