Airline ticket exchange barred because of economics

The Baltimore Sun

It seems as though every ticket I buy -- except plane tickets -- can be transferred to someone else. I understand the airline's need to know who is on a plane, but they must have the ability to change the passenger name on a reservation. Why are plane tickets nontransferable?

Ask a simple question; get an answer that's so complicated it takes a professor of economics to explain it. On its face, this seemed like a pretty easy question. Surely, this just had to be a government regulation.

This was surely wrong, said Bill Mosley of the U.S. Department of Transportation.

"We don't prohibit [airlines from letting customers transfer tickets)]," he said. "That's an airline policy. It has nothing to with a federal regulation."

OK, but surely there must be security issues. Although airlines toughened policies after Sept. 11, insisting that the name on a ticket match the name on an ID, that still doesn't quite explain it. After all, you can change the date of your flight, so why not the name, if the passenger has the proper identification?

Well, that didn't quite make sense, so surely it must have something to do with thievery or the law.

"Disallowing transfers or name changes [except in the case of errors or misspellings] helps prevent theft and fraud," Tim Wagner, an American Airlines spokesman, wrote in an e-mail. "A criminal couldn't steal a ticket and simply transfer it to his or her name."

Furthermore, Wagner wrote, what you've bought is a contract for carriage, and you can no more transfer a contract for an airline seat than you can change a contract to rent an apartment.

But if we believe all of this we are surely naive, some experts say. Airline analyst Terry Trippler says the matter is "economics only -- and don't let anyone tell you otherwise."

So I sought out an oracle on transportation economics, and here's his answer: It's third-degree price discrimination.

George Hoffer, professor of transportation economics at Virginia Commonwealth University in Richmond, Va., explains that third-degree price discrimination means prices are based on market segments. In other words, a business traveler who needs a seat right now will pay more than a leisure traveler who can plan far in advance and snag a lower fare.

So if transfers were possible, someone would snap up all the inexpensive seats and resell (transfer) those tickets to people who would have had to pay more. The early smart buyer would reap the benefit, not the airline.

Surely, you didn't think it was about you?

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