Summary of a report by Erin Davies

Fortune

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.