If you’ve ever needed to book a plane or a train at the last minute, you’ll know how expensive that can be.
In the complex and profit-enhancing universe of yield management, travel companies make pricing decisions in a way that allows them to extract the most value from each customer based on their personal characteristics.
This is known as discriminatory pricing, and despite the obnoxious-sounding name, it’s perfectly legal, and economically helps everyone. It means that the people who are willing to pay the most are the people who pay the most, and those who want to pay less are able to pay less, and are used to fill up the empty space to ensure that the operators of the train run as close to full capacity as possible.
The way the train, plane and other companies do this is by setting up a payment structure based on certain rules that allow people to self-select into the category of price that they want, without ever being aware of it. Once you know how this works, and with a little effort, forward planning and creative economic behaviour, you can easily access the best deals.