There is nothing stopping the airline offering Bob $50 per seat in the second scenario, other than profit preservation. If they were making a profit on the $50 ticket in the first scenario, they are making it in the second. They just happen to also be making less profit on the $100 ticket.
In effect you are making corporate profit a constraint on the market, which is not the case.
Your example actually shows that the welfare extractive pricing algos companies use today can be undermined by AI, which is good for consumers in this narrow example.
It might not be profitable to fly a route at all if not for high paying customers. But if you can get a few high paying customers and provide return on capital, then extra customers are, relatively speaking, gravy.
And the cheap flights for those customers? Consumer surplus, baby.
The industry responded with aggressive unbundling - basic eco now has no carry-on, no seat selection, no changes. All can then be bought as extras.
This is a scenario across many industries - hotels, car rental, cruise, concerts, online retail etc.
Basically - yes that trend is bad for Bob, but it makes things more transparent, fair, and increases competition. It's the way the world goes - hard to stop that.
A similar example discussed recently on the podcast ”The Real Eisman Playbook”[0] illustrates the point: Many retail investors have trading accounts with some cash sitting idle. The brokers earn a healthy margin by investing that cash into short-term money market funds (MMF).
Now obviously, the diligent investors could easily buy the MMFs and pocket the profit themselves. However, many of them are lazy or don’t care. But now with agentic access, even the laziest user can optimize their short-term cash holdings, which might cost the brokers relying on this income dearly.
[0] https://youtu.be/y45yqiCdfI4?si=TzVcAb0mXjdXObUs&t=490[Edit: didn't pay enough attention to the flow of the conversation here - this is really a response to ProblemExplorer's original post, which linked to _diyar's post (parent to this one) as explanation].
No they did not. I am the grandparent and linked to their comment because they concisely explain how the airline made $150 off two sears instead of $100 while giving Bob the $50 deal he wanted (bay making Alice subsidize Bob).
If Alice used an MCP too, there would be no subsidy and neither Bob gets the $50 seat nor does Alice get her $100 seat
"made $150 off two seats instead of $100 while giving Bob the $50 deal he wanted" is maximizing the amount each passenger would pay.
My post was a response to ProblemExplorer's language, not yours.
And you vastly overestimate the price discrimination that airlines have today for comparable classes of service.
They don't make their money on economy seats.
Dynamic pricing is mostly a seasonal and timing game. And the actual money is made in higher classes of service.
This idea that Bob and Alice are shown drastically different pricing for the same seat because of insights into their specific purchasing behavior is just ludicrous.
Most people buy tickets from aggregators who have been already gutted the ability to do this anyway.
You basically argued literally the entire thesis for customer segmentation and behavior based pricing and then called it ludicrous. I hope PhDs and statisticians who make living building these very models don't see this comment and begin to question their entire existence.
You've just read past what I said because you want to disagree.