To compete for the same passengers as cheap airlines, Nunes says, you have to give people the opportunity not to pay for certain things, which has the unfortunate effect of making the classic coach flyer aware that they’re being charged for what used to just come in their bundle. That middle-class experience can still be reproduced in the aggregate, but it’s going to require you to pay more than some of the people sitting nearby. “In economics,” Nunes says, “there is the notion that to maximize profits, the firm has to get close to what they call perfect price discrimination, which charges each individual customer their maximum willingness to pay for the product.” While airlines aren’t perfect, they’ve gotten as close to this as anyone has been able to.
— Read on www.bloomberg.com/news/features/2024-11-21/why-airlines-investing-in-premium-seats-affects-all-travelers
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