<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by MagMile:
I don't think it's the "reasonableness" of a restriction that determines whether it's price discrimination. After all, the ability to buy a last minute fare is just a form of convenience like not having to take a connection. The strictest definition of price discrimination is different prices for the identical good. But that's hard for firms to put into practice. It's often easier to sell two goods of slightly different quality or convenience and have consumers separate themselves by their willingness to pay for the extra quality/convenience.
Some people will take price discrimination to include price differentials for two goods that is not justified by cost differences between the goods. Other people view that as a form of non-uniform pricing and not literally price discrimination, although price discrimination is obviously a subset of non-uniform pricing.</font>
I disagree that buying a walk-up fare is a convenience and thus not price discriminatory. There is nothing you can do to avoid a walk-up fare short of delaying your trip by three weeks. That's like saying it's convenient to buy a monopoly-priced Microsoft product because you don't have to write the software yourself (not a great example, but I couldn't think of a good analogy).
Same for Saturday night stays. Staying at a destination three extra days just to get a lower fare is more than just inconvenient, it's stupid. It is easy to get around Saturday night stays, so I don't think that's such a big deal. However, there is NO WAY to get around a walk-up fare, and that's where the problem lies. Prohibiting non-transferability of airline tickets solves that problem instantly.
When you say "The strictest definition of price discrimination is different prices for the identical good.", I submit that the following meets your strict definition:
Person A pays $250 to fly JFK to SFO and back, leaving August 23 (three weeks from now).
On August 21, Person B pays $1500 to fly JFK to SFO and back, leaving in two days (also August 23).
On August 23, there are two people flying on precisely the same flight. Same class of service, same flight, same everything! There's no difference in the product consumed. That is price discrimination.
Here's another example, using the words "same product" a little more liberally:
Person A pays $250 to fly JFK to SFO, leaving on Friday and returning the following Tuesday.
Person B pays $1500 to fly JFK to SFO, leaving on Tuesday and returning the following Friday.
While A and B aren't on the same actual aircraft, they are flying between JFK and SFO on a Tuesday and a Friday. Yet the prices are much different.
Demand for travel between JFK and SFO may be different on Tuesdays than it is on Friday, but that is irrelevant since both A and B are on a plane between JFK and SFO on a Tuesday and a Friday.
Pricing Friday flights higher than Tuesday flights is supply-and-demand. Pricing the same Tuesday/Friday flights differently for different people is price discrimination, since the quantity demanded for those two people is exactly the same on Tuesday as it is on Friday: TWO.