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. 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 A low-cost carrier or low-cost airline (occasionally referred to as '' no-frills'', ''budget'' or '' discount carrier'' or ''airline'', and abbreviated as ''LCC'') is an airline that is operated with an especially high emphasis on minimizing op ...

s, a concept initially pioneered by

Southwest Airlines Southwest Airlines Co., typically referred to as Southwest, is one of the major airlines of the United States and the world's largest low-cost carrier. It is headquartered in Dallas, Texas, and has scheduled service to 121 destinations in the U ...

, and later mimicked by

Ryanair Ryanair is an Irish ultra low-cost carrier founded in 1984. It is headquartered in Swords, Dublin, Ireland and has its primary operational bases at Dublin and London Stansted airports. It forms the largest part of the Ryanair Holdings family ...

. As with a standard

auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...

, the bidders, having made a judgment on how much a particular

voyage Voyage(s) or The Voyage may refer to: Literature *''Voyage : A Novel of 1896'', Sterling Hayden * ''Voyage'' (novel), a 1996 science fiction novel by Stephen Baxter *''The Voyage'', Murray Bail * "The Voyage" (short story), a 1921 story by ...

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. There are many variations to the way in which

Auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...

s are carried out. Like a number of other travel

website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google Search, Google, Facebook, Amaz ...

s, travel auction sites pull their stock

inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shap ...

in from a wide variety of suppliers. The range of products may include cruises,

package holidays A package tour, package vacation, or package holiday comprises transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided such as a rental car, activities or outings during the ho ...

hotels A hotel is an establishment that provides paid lodging on a short-term basis. Facilities provided inside a hotel room may range from a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a ref ...

and

flights Flight is the process by which an object moves without direct support from a surface. Flight may also refer to: Arts, entertainment, and media Films * ''Flight'' (1929 film), an American adventure film * ''Flight'' (2009 film), a South Korean d ...

Types of Flight Auctions

As well as the most familiar

English auction An English auction is an open-outcry ascending dynamic auction. It proceeds as follows. * The auctioneer opens the auction by announcing a suggested opening bid, a starting price or reserve for the item on sale. * Then the auctioneer accepts incre ...

(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 Proxy bidding is an implementation of an English second-price auction used on eBay, in which the winning bidder pays the price of the second-highest bid plus a defined increment. It differs from a Vickrey auction in that bids are not sealed; the ...

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 A bidding fee auction, also called a penny auction, is a type of all-pay auction in which all participants must pay a non-refundable fee to place each small incremental bid. The auction is extended each time a new bid is placed, typically by 10 to 2 ...

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 http://cs.brown.edu/research/pubs/theses/ugrad/2012/estix.pdf 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

{{Reflist Travel websites Online auction Contexts for auctions