Living Economics

Why Are Plane Tickets Nontransferable?
Nontransferable plane tickets maximize airline revenues

Summary of a report by Erin Davies


December 21, 1998

When you buy a ticket for just about anything, you're free to use it yourself or give it away to anyone you choose. Why are airline tickets nontransferable?

If you think the answer is security, you're wrong. According to the FAA, carriers must request passenger identification, but there is no requirement that tickets be nontransferable. And the Air Transport Association says it's a choice made by individual airlines. So why don't most airlines allow it?

Because of the peculiar nature of airline tickets' pricing structure, whereby fares typically skyrocket as the travel date nears, they could fall prey to speculators, who would snap up blocks of tickets at the reduced prices and then resell them later, undercutting the airlines' last-minute fares. Nontransferability prevents such shenanigans, which have the potential to completely undo the airlines' attempt to revenue by price discriminating among customers with different reservation prices.

Access Tools
• Advanced Search
• Browse Micro
Comparative advantage (14) Competitive strategy (27) Costs and opportunities (53) Entrepreneurship (3) Externality (28) Free Market Solutions (17) Free Ridership (3) Game Theory (22) Incentives (13) Income Distribution (25) Information (19) Labor Market (24) Marginal optimization (33) Market Demand (17) Market Entry (9) Market Exit (2) Market Intervention (12) Market Structure (29) Market supply (4) Material Flow (2) Miscellaneous (3) Price Discrimination (17) Pricing Strategy (46) Profit maximization (48) Property Rights (42) Regulation (16) Rent Seeking (2) Risk Taking (12) Scarcity (10) Tastes & Preferences (27) Taxes (7) Technology (9) Type of goods (31) What Price Means (27)
• Browse Macro
Boom and Bust (9) Budget Balance (12) Comparative advantage (13) Economic Development (1) Economic Indicators (6) Fiscal Policy (12) Incentives (1) Income and output (25) Income Distribution (5) Labor Market (6) Money and Credit (20) Regulation (5) Rent Seeking (1) Saving (6) Taxes (4) Technology (1) Trade and Foreign Exchange (30)
• Glossary
List All

• Microeconomics Lectures • Macroeconomics Lectures
• Instructor Log in • Sample TOC • Demo/Register • Video Tour
• Student Log in
Instructor Log in

Student Log in

Open Menu