Soon after the pandemic hit, the world’s airlines turned off their pricing algorithms and resumed pricing flights manually. Everything the software had learned from people’s past behaviour was suddenly rendered irrelevant.
The software had been created for a world of discretionary travel where demand was elastic. If a plane seemed likely to leave half-empty, the software dropped prices to fill remaining seats. In March this once-efficient approach failed spectacularly. The few people who were still flying were doing so only in desperation: everyone else was unwilling to travel at any price. Far from reducing prices to respond to a drop in demand, it now made sense to hike them.
Large institutions are prone to a kind of conceptual locked-in syndrome
It is sometimes said that insanity is doing the same thing again and again and expecting a different result. But doing the same thing under different circumstances while expecting similar results is no less a form of derangement.
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in