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ML Academy

Statistics, experimentation, causal reasoning · insight-1003

Randomise fare tests by departure or route when treated and control passengers draw on the same seats

Evidence type
documented fact
Difficulty
hard
Roles
Data scientist
Industries
aviation, retail, e-commerce

Summary: situation, action, reason, boundary

  1. Situation

    A fare experiment splits sessions between a discounted and the standard fare on the same departures.

  2. Action

    Randomise at the level where inventory is shared (departure or route-week) and compare those units. With few units, pair similar routes or alternate in time. Describe the user-level difference as an upper bound for a rollout effect, not the launch estimate.

  3. Reason

    Individual randomisation assumes one customer's treatment does not change another's outcome; a shared capacity pool breaks that assumption.

  4. Boundary

    Price, ancillary and upsell tests on constrained inventory such as seats, rooms and slots.

Symptom or risk

Discounted buyers take seats control would have bought, so the user-level lift overstates what a full rollout delivers, or even has the wrong sign.

Exceptions

Departures that never approach capacity during the test window.

Trade-offs

Far fewer randomisation units, so longer tests or larger detectable effects.

Pitfalls

Checking the average load factor instead of load at the booking-curve moment when demand peaks.

Example

Hypothetical: 10 seats left, half of visitors see a 20% discount; discount buyers take the seats and control sells fewer, so the per-user comparison counts the same seats twice.

Lessons and concepts

Claims and their sources

  • In price A/B tests where market participants interfere with each other, the standard estimator of the change in profit can have the wrong sign in expectation under a standard revenue-management pricing model.

    Price Experimentation and Interference