Why did Airlines partner with

Priceline.com?

1. Sell empty seats

 In early 1999, the percentage of seats sold in flights were between
65-75% only. Airline companies benefited from the model as they
could sell last-minute tickets.
 The new method enabled them to clear out inventory that would
have their value vanished, using a non-disruptive distribution
channel which generated incremental revenues for them.
 By targeting a niche market with lower and unique fares they could
reach a huge number of potential customers and fill thousands
of seats that went empty every day (500000 empty seats a day).
Why did Airlines partner with
Priceline.com?

2. Non-disclosure of price of tickets

 The way in which airlines liquidated excess seats would not be publicly
disclosed.
 It gets a brand shield. If it had publicly advertised a lower price for
its product or service, it would have eroded its brand. But since it can
accept the unit of demand without letting the buyer know in
advance, it suffers no such erosion.
 Second, the seller gets a price shield. It can maintain the integrity
of its established prices because it never advertises that a lower price
is being filled. Hence the sellers could avoid cannibalization from
customers who would be willing to pay higher fares.