Activity:

Experiential Exercise 2.1

Perishability is very important in the airline industry; unsold seats are gone forever, and too many unsold seats mean large losses. With computerized ticketing, airlines can easily use pricing to deal with perishability and variations in demand. a. Go to the Web site of an airline (Search Philippine Airlines) and get a fare for an eight-day stay between two cities it serves. Get prices on the same route for 60 days in advance, two weeks, one week, and tomorrow. Is there a clear pattern to the fares?

b. When a store is overstocked on ripe fruit, it may lower the price to sell out quickly. What are airlines doing to their prices as the seats get close to "perishing? Why are tomorrow's fares often higher?