Going Once... Airline Tickets for Auction?

Sept. 17, 2008— -- "Do I hear $300? No? All right, going once, going twice … sold! One roundtrip ticket from LA to New York for $290, sold to the lucky bidder in the yellow tie!"

Sound farfetched? Then you haven't been paying attention.

Surely you heard about a certain governor who put the state's private jet up for sale -- on eBay. And more to the point, JetBlue announced last week that it was putting up a few hundred seats for auction -- where else? -- on eBay.

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This got me to thinking -- maybe, just maybe, a new path to airline profits (and consumer nirvana) is to toss out the current "yield management" model for ticket sales -- and try the "auction" model.

Yield management? Even if you're not familiar with the term, you know the concept -- at least you should, if you've ever discovered that a fellow airline passenger shelled out less than half of what you paid for his ticket. Ouch. Yes, yield management: otherwise known as how to confuse customers and force them to shop four to six Web sites, several times a day, before they think they've found the lowest possible price.

Still confused? Don't worry, you're not alone. Here's a quick review: airline tickets have about 10 price points per seat on a plane and the price point you are quoted is based on dozens of variables, including how well seats on a particular route are selling now and how they sold in the past couple of years. What the airline tries to do is sell as many tickets as possible in the highest price points and then top off the rest of the plane by selling the cheapest price point.

What this means to you -- in theory -- is that every time you ask for a price quote, you might get a different price -- for no apparent rhyme or reason. Oh, and did I mention that all these price points can change along the way, as an airline experiments with sales and/or hikes? Confusing doesn't begin to cover it.

So are auctions the answer?

Well, if there were ever two entities that were made for each other, it would be auctions and the Internet.

Face it, both eBay and Google have been wildly successful in this Age of Internet by providing a new marketplace for both consumers and advertisers. Now, toss in the fact that airlines have been struggling to make ends meet since the late '80s; the survivors endured by trying to extract as much money as possible from business travelers and then, again, by topping off their planes with leisure travelers.

That mold developed some cracks, though, in the late '80s. By then, Southwest Airlines was consistently making a profit thanks to short haul routes for business travelers along with a much larger mix of leisure travelers who were taking advantage of the carrier's lower priced tickets (and corresponding lower operating costs).

And more recently, European rivals EasyJet and Ryanair have taken that model to a new level by virtually giving away tickets to those that book early, charging more for last minute purchases, and using the Internet to sell non-airline goods and services (insurance, hotel rooms and more).

Then in the '90s, during the great Internet bubble, there were several business plans in development for airline ticket auctions sites, most of which never saw the light of day.

That's not really so surprising. You see, the airlines have long loathed the Internet: after all, it turned their product -- airline tickets -- into a measurable commodity. No longer were fliers forced to call up a travel agent, ask for a quote, and then pay it, no questions asked.

The Internet turned us all into our own travel agents who could use the Web to make easy price comparisons and pay as little as possible.

Now will we amateur travel agents flock to auctions? Some of us already have -- by late last week, JetBlue's eBay experiment seemed to be doing a brisk business. Early reports said bidding for some tickets had reached a couple of hundred bucks, while the auction was still under way.

If you figure JetBlue was trying to get rid of tickets they weren't otherwise able to sell, well, they're already ahead of the game to get any bids at all.

And maybe -- just maybe -- the airline will find it actually makes a profit on the auction. JetBlue says it'll have to evaluate the process, and take a close look at the feedback they are getting, before they decide whether to put seats on the block again.

A question for you fliers out there: Would you go through the inconvenience of bidding if you were pretty sure you'd get a good deal? I can't see this working for business travelers of course, but what about you leisure fliers -- do the words "going once, going twice" get you going?

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Rick Seaney is one of the country's leading experts on airfare, giving interviews and analysis to news organizations, including ABC News, The New York Times, The Wall Street Journal, Reuters, The Associated Press and Bloomberg. His Web site FareCompare.com offers consumers free, new-generation software, combined with expert insider tips to find the best airline ticket deal.