WHILE electronic airline reservations existed earlier, 1996 was a landmark year for consumer-friendly online bookings, shifting the power from travel agents to automated, internet-based systems. The current pricing model, known as dynamic pricing or yield management, is designed to maximise revenue for airlines, not necessarily to provide the lowest cost to the consumer.

Airlines do not sell every seat on a plane for the same price. They divide the cabin into ‘fare buckets’. The cheapest seats are released months in advance to lock in early demand. As the flight fills up, these cheaper buckets disappear, leaving only the most expensive ones available for last-minute travellers. Because such travellers have little flexibility, they are categorised as ‘price insensitive’, meaning the airline can charge significantly higher prices because the passenger has no other choice. Due to fluctuation in fuel prices, these seats are often used by airlines as a cover to adjust for volatile oil prices without changing the ‘base fare’ in their computer systems. The irony is that this arrangement is rarely as responsive to price drops as to price spikes.

A shift back to a ‘fixed price’ system would likely require significant govern-ment intervention or regulation, as airlines are unlikely to abandon a system that is statistically proven to maximise profit margins. Without such a regulation, the industry continues to prioritise ‘revenue per available seat’ over passenger accessi-

bility. It is time to consider going back, at least partially, to a more regulated and predictable fare system. Under such a framework, fares could be adjusted perio-dically in line with fuel price fluctuations — both upward and downward. Airlines must end one-sided fare manipulation.

Lt-Col (retd) Mukhtar Ahmed Butt
Karachi

Published in Dawn, July 27th, 2026