An Exploration of Exchangeable Ticket Airfare: Advantages and Potential Challenges

Abstract

Exchangeable Ticket airfare (ET) are airline tickets sold at a small premium to standard non-refundable tickets where, for a determined window before the planned departure date, the original ticket holder can attempt to resell the ticket via an exchange and, assuming the ticket holder is able to sell the ticket, the original ticket holder is rebated the selling price (listed on the exchange) of the ticket minus a transaction fee. If a match is not made to resell the ticket, the customer receives no rebate. It is possible under such a system that the original ticket holder may receive a larger rebate than what they originally paid for the ticket, although the airline always has the option of repurchasing these tickets to avoid such an arbitrage opportunity. The airline can set the conditions of the ET such as the transfer fees, floors on the price a ticket can be exchanged for and the length of the no-transfer window; the length of the time period before the date of departure where the tickets can no longer be exchanged. The setting of these conditions will balance the airline's dual goals of making the ETs attractive to the targeted set of customers while limiting the potential cannibalization of “last-minute” ticket sales, which typically sell for higher fare prices.