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The term online travel auction is a system of buying and selling travel products and services online by offering them up for auction and then awarding the item to the highest bidder.^[1] The need for travel auctions emanated principally due to the high cost of travel. This high cost is also what led to the growth in popularity of low-cost carriers, a concept initially pioneered by Southwest Airlines, and later mimicked by Ryanair.

As with a standard auction, the bidders, having made a judgment on how much a particular voyage is worth to them, place their bid over a set period of time. At the end of this period of time, the highest bidder wins the product at whatever price is finally reached.^[2] There are many variations to the way in which Auctions are carried out.

Like a number of other travel websites, travel auction sites pull their stock inventory in from a wide variety of suppliers. The range of products may include cruises, package holidays, hotels and flights.

Types of Flight Auctions

As well as the most familiar English auction (or open ascending price auction) model, where the participant places a bid higher than the last, a handful of operators run no-reserve auctions or absolute auctions.

Some sites also operate a system of mystery auctions, whereby the bidder is unaware of the product they are bidding on. Another variation on the theme is proxy bidding which involves the bidder stating their maximum bid for a particular product, and the auction site placing the bids for them automatically.

Other sites offer pay to bid or Penny auctions. In these auctions, each bid that the user makes only increases the final price of the flight by 1 cent, while each bidder is charged a small participation fee for each bid that he or she makes. Research from Brown University ^[3] suggests that such penny or pay per bid auctions have been able to survive thanks to customer retention initiatives such as the Buy-Now functionality which offsets the outright purchase price option of the good by the cost of the bids that the user has incurred, and also by limiting the number of times a particular user can win, leading to a greater pool of winners.

References

^ Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. ISBN 0-12-426297-X.
^ Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. ISBN 0-12-426297-X.
^ http://cs.brown.edu/research/pubs/theses/ugrad/2012/estix.pdf ^{[bare URL PDF]}

[1] Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. ISBN 0-12-426297-X.

[2] Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. ISBN 0-12-426297-X.

[3] ttp://cs.brown.edu/research/pubs/theses/ugrad/2012/estix.pdf ^{[bare URL PDF]}

[1]

[2]

[3]

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+{{Auction}}
-{{multiple issues|
+The term '''online travel auction''' is a system of buying and selling travel products and services online by offering them up for auction and then awarding the item to the highest bidder.<ref>Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. {{ISBN|0-12-426297-X}}.</ref> The need for travel auctions emanated principally due to the high cost of travel. This high cost is also what led to the growth in popularity of [[low-cost carrier]]s, a concept initially pioneered by [[Southwest Airlines]], and later mimicked by [[Ryanair]].
-{{Orphan|date=February 2009}}
-{{No footnotes|date=March 2010}}
-}}
+As with a standard [[auction]], the bidders, having made a judgment on how much a particular [[Travel|voyage]] is worth to them, place their bid over a set period of time. At the end of this period of time, the highest bidder wins the product at whatever price is finally reached.<ref>Krishna, Vijay (2002). Auction Theory. San Diego, USA: Academic Press. {{ISBN|0-12-426297-X}}.</ref> There are many variations to the way in which [[Auction]]s are carried out.
-An '''online travel auction''' is a system of buying and selling travel products and services online by proffering them up for bid and then awarding the item to the highest bidder.
+Like a number of other travel [[website]]s, travel auction sites pull their stock [[inventory]] in from a wide variety of suppliers. The range of products may include [[Cruising (maritime)|cruises]], [[package holidays]], [[hotels]] and [[Air travel|flights]].
-As with a standard (offline) [[auction]], the bidders, having made a judgment on how much a particular [[Product (business)|product]] is worth to them, place their bid over a set period of time. At the end of this period of time, the highest bidder ‘wins’ the product at whatever price is finally reached.
+== Types of Flight Auctions ==
-Like a number of other travel [[websites]], travel auction sites pull their stock [[inventory]] in from a wide variety of suppliers. The range of products may include [[Cruising (maritime)|cruises]], [[package holidays]], [[hotels]] and [[flights]].
+As well as the most familiar [[English auction]] (or ''open ascending price auction'') model, where the participant places a bid higher than the last, a handful of operators run no-reserve auctions or ''absolute auctions''.
+Some sites also operate a system of [[Mystery auction|''mystery auctions'']], whereby the bidder is unaware of the product they are bidding on. Another variation on the theme is [[proxy bidding]] which involves the bidder stating their maximum bid for a particular product, and the auction site placing the bids for them automatically.
-== Types of Travel Auction ==
-As well as the most familiar [[English auction]] (or ''open ascending price auction'') model, where the participant places a bid higher than the last, a handful of operators run [[no-reserve auctions]] or ''absolute auctions''.
+Other sites offer [[pay to bid]] or [[Bidding fee auction|Penny auction]]s. In these auctions, each bid that the user makes only increases the final price of the flight by 1 cent, while each bidder is charged a small participation fee for each bid that he or she makes. Research from Brown University <ref>http://cs.brown.edu/research/pubs/theses/ugrad/2012/estix.pdf {{Bare URL PDF|date=March 2022}}</ref> suggests that such penny or pay per bid auctions have been able to survive thanks to [[customer retention]] initiatives such as the Buy-Now functionality which offsets the outright purchase price option of the good by the cost of the bids that the user has incurred, and also by limiting the number of times a particular user can win, leading to a greater pool of winners.
-Some sites also operate a system of ''mystery auctions'', whereby the bidder is unaware of the product they are bidding on. Another variation on the theme is [[proxy bidding]] which involves the bidder stating their maximum bid for a particular product, and the auction site placing the bids for them automatically.
 == References ==
+{{Reflist}}
-*{{cite book
-|last=Krishna
-|first=Vijay
-|title=Auction Theory
-|year=2002
-|publisher=Academic Press
-|location=San Diego, USA
-|isbn=0-12-426297-X
-|ref=Krishna2002
-}}
-*{{cite book
-|last=Milgrom
-|first=Paul
-|authorlink=Paul Milgrom
-|title=Putting Auction Theory to Work
-|year=2004
-|publisher=Cambridge University Press
-|location=Cambridge, United Kingdom
-|isbn=0-521-55184-6
-|ref=Milgrom2004
-}}
-[[Category:Auctioneering]]
 [[Category:Travel websites]]
-[[Category:Online auction websites]]
+[[Category:Online auction]]
+[[Category:Contexts for auctions]]