Running Head: SOUTHWEST AIRLINES BOARDING AND GAME THEORY
SOUTHWEST AIRLINES BOARDING AND GAME THEORY
Southwest Airlines is unique in its process f boarding. Instead of giving assigned seats there is a policy adopted by Southwest Airlines of “open-seating”. This means that in the process of boarding the plane the travelers are granted the freedom of sitting in any seats that are available. The relationship of open seating is loved and hated by people in an equal manner. The worst part is that families and groups cannot do reservation of their seats and thus they may end up being split up during the boarding process. The best part of it is that open seating is quicker compared to assigned seating. Reduced times at the Southwest Airlines gates assisted in saving money for the organization and has assisted in keeping the airfares low. While individual seats are not assigned by the Airlines, there is a systematic procedure established by the company of how boarding should be done by the passengers to the aircraft. Before 2007 passengers used to board the aeroplanes on a first come, first served basis. This means that the traveller who made to the gate first were able to pick the most favourable seats that they desired. This led to more passengers assembling at the gate so that they would secure a nice boarding position which also involved some minor arguments when people tried to cut, in line or save seats. Southwest Airlines decided to end this “cattle call” process. The new method involved assigning every traveller a boarding group B, C or A as well as a boarding number.
The travellers who belonged to group A went first followed by B then within every group, the traveller who had the lower boarding number boarded the plane first. Travellers could still make choices of the seats that they wanted when they boarded the aeroplane, but more order was maintained at the gate since people lined up in an orderly fashion. Assigning of the board number was by the time of arrival of a traveller for the flight. Anyone who checked in at the earliest time that is 24 hours in advance for the flight was able to secure an excellent boarding assignment. A traveller who forgot to check in online was often disadvantaged and was forced to wait at the end of the line. The boarding designation hilariously changed the game. Instead of giving rewards to the passenger who remained for a long time at the gate the rewards were mainly focused on the people who checked online in advance. These were the people through to be affluent and organized (Talwalkar, 2013). A secondary market emerged to capitalise on the online boarding technology where some websites provided automatic check-ins for travellers in at the earliest time that is 24 hours before the flight. The service was cost efficient and reliable whereby cost incurred was $1 which was a desirable offer to the busy business travellers. Southwest tolerated such third party websites till it shut them down and made a decision that it should be the sole profit maker. Southwest came up with a current change in the Open boarding in 2009 referred to as the Early Bird Check-in. This particular option attracted millions of dollars in extra fees.
How Southwest Airlines used the game theory approach to increase its profits.
Cost savings was the primary goal that southwest wanted to achieve when it established the open seating for its entire 42-year history in working. Over the past six years however notable changes have been introduced. One change individually led to the accumulation of revenues totalling $98 million and $ 144 million in 2010 and 2011 respectively. However, the revenue is the result of pitting customers in a style game referred to as the prisoner’s dilemma.
The outcomes of the game that involved early bird check-in were increased profits for the airlines. It is evident that there are these travellers who would not pay $10, but a good percentage are willing to pay for the privilege, and thus they find themselves in the Prisoner’s dilemma. The Early Bird check-in has enabled Southwest to profit tremendously. For instance, in 2010 reports by Southwest indicated that it achieved $ 98 million in revenue from the process exceeding their expectations. In 2011 there was a 44% increase in the southwest revenue from the Early Bird check-in. This service resulted in more than $142 million in revenues. At first, few people paid for the Early Bird check-in, and this meant that they got a good seat. Today most of the people pay for the service and Southwest even admits that paying for the service may not even guarantee one getting the first 60 positions. The best things about it are that many people are stuck in the game. Individual travellers cannot avoid this game since this means that they would get bad seating. In addition to this as most of the people pay for priority boarding then those who remain are sent to worse boarding positions. In that case, the game is appealing to the people who decide for the Early Bird check-in (Miller, 2018). However, there exists a limiting factor with this game which is the lack of getting good seating from Southwest when numerous individuals opt for the Early Bird check-in. Some people will still get the bad boarding positions, and thus they will be bored since they paid for it thus eroding the value of Early Bird check-in.
Travelers are presented with the prisoner’s dilemma associated with the early-bird check-in process. Instead of playing the seating lottery the customers who were willing to pay could secure some good positions in the aeroplane by paying $10 per one way flight. The worst thing about the early bird check-in is that there is a guarantee of getting a good seat. It only means that travellers have only checked in automatically (Talwalkar, 2013). However, on a broader level, such discussions did not get the truth of the matter. The genius is that the Early bird check-in set the travellers in a Prisoners dilemmas. Southwest might acquire huge profits. The game is that an individual traveller wonders whether they should pay the $10 so that they are checked in automatically for flight. In their mind, they wonder whether they should pay $10 to get a good seat or pay nothing for the lottery style seating. However, there is more complexity linked to the game. There is also another traveller competing and making similar decisions. When considering the game between two travellers who are competing for the best seat the outcomes would be if none of them pays for the early bird then both would be expecting okay seats in the seating lottery. If one of them pays the $10 for the Early bird they are guaranteed for a good seat then if both pay $10 for Early bird then they are placed in the lottery for priority seats. This is where the prisoner’s dilemma lies.
The dominant strategy used by southwest to its passengers is paying the $10 for the Early Bird check-in. If one of the passengers who does not care about the seating position pays the $10, then someone who cares would pay the amount, and thus they would be guaranteed a good seating position. If the other person does it, then the latter is forced to buy Early Bird check in so that they may get a good seat. But since they compete, then they end up paying$10 to acquire the privilege of playing a seating lottery (Talwalkar, 2013).
Analyze the advantages and disadvantages of the early-bird check-in process for Southwest Airlines
This early Bird deal enables the people to pay $10 each way so that they may board after the A-listers or the business class. The advantage comes in whereby southwest does a sweep 36 hours before to determine the departure and assign every person in the group a number in the order that it was bought. They then take another sweep 25 hours before the departure to get anyone who had booked their flight during this time. At 24 hours before departure then general boarding is opened up. In that case, anyone is guaranteed a chance of getting the seat that they desire after paying up the $10.However, the main disadvantage is that there is no limit on the number of people who purchase an Early Bird seat. In that case, one could still buy the Early Bird boarding and still find themselves in the B group, and since the number may be significant, they may end up in the C group. This calls for the Airline to introduce a rule whereby people who belong to a specific group should remain in that group no matter what happens rather than being pushed to the lower groups yet they purchased Early Bird boarding. However, Southwest Airline has not managed to implement this because of their dreaded technology issues. Another disadvantage falls to the Business select individuals. The most significant benefit of paying the $10 is early boarding. This has been stopped, however, and the Airline should put some efforts to ensure that they maintain the select business class. The disadvantage of Early Bird check-in that they do not tell the people their seating positions before purchasing it. This forces people to pay without any doubts to get good seating positions. South West may limit such horrors by charging more for the highest spots or cap the number of seats for each group so that everyone gets what they desire. Many people have complained that the Early Bird boarding is a fee, but Southwest denies this vehemently. They argue that there is no existence of hidden fees in its fares, but at some point, this looks like a fee that guarantees one a good seating position (Crunky Flier, 2018).
Suggest ways in which other companies, or the company you work for, can utilise a similar game approach to maximise profits.
One of the companies that should use the game theory utilised by Southwest Airlines is the United Airlines that had to use the police to forcibly remove the passengers to remove the passengers from the flights that are overfull. This was one of the public relations disasters that the Airline highlighted that most of the airlines have faced which is enticing the people to give up their seats. Some of the top experts in the world of “game theory” suggested that it could be used in the industry to ensure a better job. Some of the ways that game theory may be used include treating the issue as a game. Overbooking has been done by many airlines so that they may keep their seats full hoping that some people may never show up. However, the situation becomes hotter when there are 100 seats on the aeroplane while 105 tickets have been sold out. This is a problem but also a game. It is fair to say that United Airlines did not utilise this game very well when the game ultimately ended up when one of the passengers had to be dragged out while screaming and bloodied down the aisle. Gans who is a game theorist suggests several things should be done to ensure that aeroplanes play the overbooked flight game much better. One of the ways involves refusing to let passenger board the plane then take their seats away. If that is done, then they should be offered a lot of money. For instance, this game may be played in a way that the airline may provide passengers with like $200 to give up their seat which would work a lot better in the airport terminal. If the passengers board the plane, then the airline should be aware that it requires to offer a lot more money. Another way would be making good use of technology for instance if the United Airlines would have texted the passenger who had been dragged out and offered him some money like $500 then he would certainly give up his seat (Arnold,2017). Through such game plans then airlines would save up on shame that they suffer when they are unable to cater for excess passengers. It would also reduce costs that the airline may incur in lawsuits for failing to honour their duty or inhuman treatment on its passengers.
Arnold, C. (2017). NPR Choice page. Retrieved from https://www.npr.org/2017/04/13/523726313/how-game-theory-relates-to-airline-booking
Crunky Flier. (2018). The Good and Bad of Southwest’s EarlyBird Check-In. Retrieved from com/2009/09/04/the-good-and-bad-of-southwests-earlybird-check-in/” rel=”nofollow”>https://crankyflier.com/2009/09/04/the-good-and-bad-of-southwests-earlybird-check-in/
Miller, E. (2018). What Is Southwest Early Bird Check-In — Do I Really Need It? . Retrieved from https://upgradedpoints.com/southwest-early-bird-check-in
Talwalkar, P. (2013). Southwest Airlines boarding and game theory – Mind Your Decisions. Retrieved from https://mindyourdecisions.com/blog/2013/03/05/southwest-airlines- boarding-and-game-theory/
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